1967 (7) TMI 14 - HC - Income Tax

Appealability of Appellate Assistant Commissioner's Directions under Section 31(2)

Lalji Haridas Versus Commissioner of Income-Tax, Gujarat.

The High Court held that no appeal lies against a decision of the Appellate Assistant Commissioner under section 31(2) to direct further inquiry, relying ... Order passed by the AAC calling for a remand report from the ITO is not appealable to the Tribunal Issues:- Appealability of an order passed by the Appellate Assistant Commissioner directing further inquiry to be made by the Income-tax Officer under section 31(2).Analysis:The judgment pertains to a reference arising from an assessment proceeding for the assessment year 1949-50. The Income-tax Officer served a notice on the assessee to file a return of income, which led to an assessment order holding certain cash credit entries as undisclosed income. The Appellate Assistant Commissioner directed further inquiry into the case, leading to an appeal by the assessee to the Tribunal. The Tribunal discussed the maintainability of the appeal, with a preliminary objection raised by the Income-tax Officer. The Tribunal rejected the objection, citing a decision of the Patna High Court, and proceeded to discuss the merits of the appeal, ultimately rejecting it. The assessee then sought a reference to the High Court on the question of law decided against him by the Tribunal.The High Court considered the first question referred, which questioned the appealability of the order passed by the Appellate Assistant Commissioner under section 31(2). Section 33(1) allows an appeal to the Tribunal against an order passed by the Appellate Assistant Commissioner under section 31. However, the Court noted that section 31(2) does not contemplate an order to be passed on the appeal but allows for further inquiry. The Court held that no appeal lies against a decision of the Appellate Assistant Commissioner under section 31(2) to make further inquiry himself or to cause further inquiry to be made by the Income-tax Officer. The Court relied on the decision of the Bombay High Court in Girdher Javer's case, which established that no appeal lies against a direction given by the Appellate Assistant Commissioner under section 31(2).The Tribunal had relied on the decision of the Patna High Court, but the High Court noted that the decision did not support the appealability of a direction issued under section 31(2). The Patna High Court's decision concerned a substantive order under section 31(3)(b), which was appealable. The High Court concluded that no appeal lay to the Tribunal against the order directing further inquiry by the Income-tax Officer, and the Tribunal erred in holding the appeal maintainable. Consequently, the High Court answered the first question in the negative, rendering the second question irrelevant. The assessee was directed to pay the costs of the reference to the Commissioner.