Statutory appeal remains maintainable despite no subsisting demand; tribunal must decide challenge to section 34 proceedings.

A statutory appeal under section 33 of the Income-tax Act, 1922 remained maintainable even though no subsisting demand survived after remand by the Appellate Assistant Commissioner. The Tribunal was therefore required to decide the assessee's substantive challenge to the validity of proceedings under section 34, because that legal objection had not been determined below and could be resolved on the existing record. It could not dismiss the appeal as infructuous on the mistaken view that the absence of demand extinguished the appellate right. The reference was answered in favour of the assessee, with costs.

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Issues: Whether an appeal to the Appellate Tribunal could be dismissed as infructuous merely because there was no subsisting demand after the Appellate Assistant Commissioner had remanded the assessment, and whether the Tribunal was bound to decide the assessee's challenge to the validity of the proceedings under section 34.

Analysis: The right of appeal under section 33 of the Income-tax Act, 1922 depended on an order passed by the Appellate Assistant Commissioner under section 31, and the absence of a subsisting demand did not take away that statutory right. The appeal before the Tribunal raised a substantive legal objection to the initiation of proceedings under section 34, and that question had not been decided by the Appellate Assistant Commissioner. The Tribunal therefore could not refuse adjudication on the mistaken view that the appeal had become infructuous. The legality of the proceedings under section 34 had to be determined on the material already on record.

Conclusion: The Tribunal was not justified in dismissing the appeal as infructuous, and the assessee's objection to the validity of the section 34 proceedings ought to have been decided.

Final Conclusion: The reference was answered against the Revenue and in favour of the assessee, with costs awarded to the assessee.

Ratio Decidendi: The maintainability of a statutory appeal under section 33 of the Income-tax Act, 1922 does not depend on the existence of a subsisting demand, and a tribunal must decide a substantive legal challenge raised in appeal instead of dismissing it as infructuous.

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