Appellate jurisdiction over an incompetent first appeal still allows Revenue challenge before the Tribunal

An appeal entertained by the Appellate Assistant Commissioner despite being incompetent under section 31 was nevertheless an order passed in purported appellate jurisdiction. The penalty had arisen from non-payment of admitted tax, and although the first appeal itself was not maintainable, the authority cancelled the penalty. The Revenue was therefore entitled to challenge that order before the Appellate Tribunal. The Tribunal was right that the first appeal was incompetent, but it erred in holding that the second appeal was not maintainable; the Revenue's appeal could proceed and had to be dealt with on that basis.

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Issues: Whether a second appeal before the Appellate Tribunal was maintainable when the Appellate Assistant Commissioner had entertained an appeal against a penalty order passed under section 17A(3) of the Agricultural Income-tax Act, 1950, though such appeal was not maintainable under section 31 of the Act.

Analysis: The penalty arose from non-payment of admitted tax. The appeal before the Appellate Assistant Commissioner was incompetent under section 31, but that authority nevertheless exercised appellate powers and cancelled the penalty. In that situation, the order passed by the Appellate Assistant Commissioner was an order rendered in purported appellate jurisdiction, and the Revenue was entitled to challenge it before the Tribunal. The Tribunal erred in holding that the second appeal was not maintainable, even though its view that the first appeal itself was incompetent was legally correct.

Conclusion: The second appeal before the Appellate Tribunal was maintainable, and the dismissal of the Revenue's appeal on maintainability was incorrect. The matter had to be dealt with by the Tribunal on that basis.

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