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Petitioner: SHRIMANT GOVINDRAO NARAYANRAO GHORPADE VS Respondent: COMMISSIONER OF INCOME-TAX, BOMBAY SOUTHHonorable Justice V. S. DESAI
1968 P T D 584
1968 P T D 584
[Bombay India]
Before Y. S. Tambe and V. S. Desai, JJ
SHRIMANT GOVINDRAO NARAYANRAO GHORPADE
Versus
COMMISSIONER OF INCOME‑TAX, BOMBAY SOUTH
Income‑tax Reference No. 33 of 1960 decided on 21st June 1962.
Appeal‑--Appeal to Appellate Assistant Commissioner-- Assessment proceedings against Court of Wards as guardian of ward‑Ward whether entitled to appeal‑Ward whether "assessee " Delay-- Condonation-‑Statutory obligation of appellate authority Minority of assessee‑Whether period of limitation extended‑‑income‑tax Act, 1922, Ss. 2(2), 30, 40, & 41(1), (2) ‑ Limitation Act, 1908, S. 6.
The applicant, who was the jagirdar of Ichalkaranji, attained Majority on June 23, 1956. His estate, which was under the management of the Court of Wards during his minority, was released from Management on April 4, 1957.
In regard to the assessment years 1950‑51 to 1954‑55 which fell within the period of minority of the applicant, notices of assess ment proceedings were served on the Court of Wards, returns were filed by it and the notices of demand were served on it. In the assessment orders which were made sometime in 1954‑55, the name of the assessee given was "Shri Govindrao alias Abasaheb Ghorpade, Minor Jagirdar of Ichalkaranji, Guardian Court of Wards . . . ", the status of the assessee was shown as "individual" and the opening sentence was : "The assessee is the present Jagirdar of Ichalkaranji."
On April 23, 1957, the applicant filed appeals from the assess ment orders. Along with the memorandum of appeal he filed an affidavit explaining the delay in filing the appeals. He stated that it was only after he attained majority and his estate was restored on April 4, 1957, that he came to know for the first time that the assessments were made on him and that the Court of Wards had failed to file appeals. No counter‑affidavit was filed by the Department challenging the truth of the statements in the applicant's affidavit. The Appellate Assistant Commissioner held that the applicant was not the person entitled to file the appeals and merely observed that the appeals were very much out of time and there was no sufficient cause to condone the delay. On further appeals the Appellate Tribunal held that the property of the applicant had vested in the Court of Wards, that the tax liability was on the Court of wards under section 40(1) of the Indian Income‑tax Act, 1922, and that the applicant was not the assessee. The Tribunal further observed that it was difficult to believe that the applicant came to know of the assessments for the first time only on April 4, 1957. On a reference:
Held, (i) the department conceding, that the proceedings were taken against the Court of Wards under section 41 of the Income‑tax Act and the finding of the Tribunal that the property of the applicant vested in the Court of Wards was not the true legal position;
(ii) that section 41(1) only enabled the Department to levy and recover tax from the Court of Wards and under section 41(2) the Income‑tax Officer was competent to proceed against and levy and recover tax from the ward if he so chose to do;
(iii) that there was no provision in the Court of Wards Act which restrained the income‑tax Officer from proceeding against the ward and assess him to income‑tax;
(iv) that the fact that the Court of Wards assumed superin tendence and Management of the estate did not have the effect of making the income of his estate that of the Court of Wards';
(v) that the applicant was the assessee against whom the assessment orders were in fact made and the applicant had a right to file an appeal under section 30 ;
(vi) that, even assuming that the assessment orders were passed against the Court of Wards, the applicant was an "assessee" within the meaning of section 30 having a right to file appeals. The applicant was a person "in respect of whom any proceeding under the Act has been taken for the assessment of his income" within the meaning of the definition of "assessee" in section 2(2) and there was nothing repugnant in the context or subject of section 30 to understand the word "assessee" in any sense other than that defined` in section 2(2);
(vii) that section 6 of the Limitation Act applied only to suits and applications for executions and had no application to appeals. That section did not arrest the commencement of the period of limitation for filing an appeal under section 30 ;
(viii) that where an appellant contended before the appellate authority that the delay on his part in filing the appeal should be condoned, it was the statutory obligation cast on the appellate authority to consider whether sufficient cause for not presenting the appeal was shown by the appellant ;
(ix) that the rejection of the applicant's affidavit by the Appellate Tribunal was founded on surmises and not on any material on record ; and
(x) that the Appellate Assistant Commissioner and the Appellate Tribunal had not dealt with the question whether sufficient ground had been made out by the applicant entitling him to condonation of delay in filing the appeals.
STATEMENT OF CASE
By these applications, which are consolidated for the sake of convenience, the assessee requires the. Appellate Tribunal to refer to the High Court certain questions of law which are said to arise out of the Tribunal's consolidated order in I. T. As. Nos. 6969 'to 6973 of 1958‑59. Inasmuch as, in our opinion, questions of law do arise out of the aforesaid order of the Tribunal, we hereby draw upon statement of the case and refer it to the High Court of Judicature at. Bombay under section 66(1) of the Indian Income‑tax Act, 1922.
2. G. N: Ghorpade, the applicant herein, is the jagirdar of Ichalkaranji of the former Kolhapur State. Kolhapur State sub sequently got merged with the Bombay State on March 1, 1949. Under Notification No. W. R. D. 1435 of 1950 dated July. 26, 1950, of the Collector of Kolhapur, the Court of Wards, Kolhapur, had assumed the superintendence and control of the state of the said G. N. Ghorpade who was then a minor. This was in accordance with the provisions of the Bombay Court of Wards Act and the resolution of the Government of Bombay No. 1033/49 dated July 26, 1950, R. D., under section 4 (1) read with section 5 (1) (a) of the said Act. The superintendence and control by the Court of Wards was removed and the estate restored to the said Ghorpade by Notification No. W. R. D. 6, dated April 4, 1957, read with the orders of the Government of Bombay G. R. R. D. No. 3256‑III‑K dated September 29, 1956, and the memorandum of the Government of Bombay, No. COW‑3256/152104‑N dated December 18, 1956. This was to take effect from April 4, 1957. The estate and property of the said Ghorpade, jagirdar of Ichalkaranji, was thus under the superintendence and control of the court of wards, Kolhapur, between July 26, 1950 and April 4, 1957, i.e. during the minority of the said jagirdar. Though the jagirdar attained majority on tune 23, 1956, the estate, in fact, was restored to him only on April 4, 1957.
3. In the meanwhile, income‑tax assessments for the assessment years 1950‑51 to 1954‑55 for which returns had been filed by the Court of Wards, had been made. The assessment orders for the years 1950‑51 to 1954‑55 show the name of the assessee as "Shri Govindrao Narayanrao alias Abasaheb Ghorpade, minor jagirdar of Ichalkaranji Guardian Court of Wards, Kolhapur". All these orders ex facie also show that they were made under section 23 (3). There is no mention any where in these orders that they were made under section 40 (1). Copies of the assessment orders for the years 1950‑51 to 1954‑55 are Annexures "A‑1" to "A‑5" respectively and form part of the case. The notices of demand were served on the Court of Words for 1950‑51 on January 15, 1955, for 1951‑52 on December 15, 1954 for 1952‑53 on March 15, 1954 for 1953‑54 on March 15, 1954, and for 1954‑55 on December 15 1954. The Collector and court of wards did not prefer any appeals to the Appellate Assistant Commissioner up to April 4, 1957, against these several assessment orders. Immediately after the estate was restored to the applicant, he, however, preferred appeals on April 23, 1957, against these several assessment orders under section 30 read with section 2 (2) of the Act. An affidavit dated May 22, 1957; 'stating the circumstances under which the applicant preferred the appeals late was also filed before the Appellate Assistant Commissioner. A copy of the said‑affidavit is Annexure "B" and forms part of the case. It was affirmed before the Appellate Assistant Commissioner that the assessee came to know about the assessments for the years under consideration only on April 4, 1957, when the superintendence and control was removed and that the applicant having preferred these appeals within 30 days of the removal for the superintendence and control, the appeals should be treated as within time. Reliance was placed on the provisions of section 6(1) of the Indian Limitation Act. No counter‑affidavit of the Department challenging the truth of the statements contained 14 the applicant's affidavit is on record. The Appellate Assistant Commissioner held;
"It was, therefore, the right of the guardian to file appeals within time and as the appeals are preferred by the appellant who is major at the time of hearing the appeals cannot acquire the right from April 4, 1957, when the property under the guardianship was returned to him. So far as the guardian is concerned, who was the real person to file the appeals, it is clear from the records that no appeals had been filed by that person who was treated as an assessee under the provisions of the Income‑tax Act. Shri G. N. Ghorpade himself could not have the right to appeal as contended by him. As a matter of fact as is seen from the records of the case and the above position, appeals have not been submitted by the person entitled to file an appeal. Thus, so far as the appeal petitions are concerned, they are very much out of time and as there is no sufficient cause the late (delay) cannot be condoned."
A copy of the Appellate Assistant Commissioner's order for the year, 1950‑51 is Annexure "C" and forms part of the case.
4. Appeals were preferred to the Appellate Tribunal and it was contended that the appeals by Ghorpade were competent, that Ghorpade was the assessee, that the estate having been restored to him only on April 4, 1957, he could not have preferred appeals earlier and the appeals having been preferred within 3t) days of the restoration of the estate, these appeals must be treated as having been filed in time or in any event it ought to be held that there was sufficient cause for not preferring the appeals in time. It was also contended that the assessments were not made under section 40 (1) of the Act ; and that the Appellate Assistant Commissioner should be directed to admit the appeal as having been preferred within time and in accordance with law and in any event should be directed to condone the delay, if any, in preferring the appeals. Before the Tribunal the Departmental Representative raised two preliminary objections (1) that the appellant is not the assessee, the assessee was the guardian and (1) that no appeal lay to the Tribunal against the Appellate Assistant Commissioner's refusal to, admit the appeals on the ground of limitation. The Tribunal for reasons recorded in paragraphs 2 to 8 of its order agreed with the first contention of the department and held that the assessee had no locus standi to file the appeals as he was not the assessee during the relevant period. As regards the second contention raised by the depart ment the Tribunal held that an appeal did lie to the Tribunal against the Appellate Assistant Commissioner's order rejecting the appeals as time‑barred. It also held that the provisions of section 6 (1) of the Limitation Act are not applicable to the facts of the case. As regards the affidavit filed before the Appellate Assistant Commissioner the Tribunal observed:
"It has also to be observed that the appellant admittedly attained majority on June 23, 1956 ; therefore, it is difficult to believe his words in the affidavit that he came to know of the assessments on the 4th April 1957, for the first time and that‑he never knew anything about these assessments or the guardian's failure to appeal against them prior to 4th April 1957."
In the result, the appeals were dismissed by the Tribunal. A copy of the Tribunal's order dated April 13, 1959, is Annexure "D" and forms part of the case.
5. On these facts the following questions of law arise:
"(1) Whether in the facts and circumstances of the case the applicant was the assessee and entitled to prefer appeals before the Appellate Assistant Commissioner in respect of the assessment years 1950‑51 to 1954‑55?
(2) Whether in the facts and circumstances of the case the assessments were made under section 40 (1) of the Act?
(3) Whether in the facts and circumstances of the case, assuming the assessments were made on the Court of Wards, the applicant is barred from preferring the appeals?
(4) Whether in the facts and circumstances of the case the appeals were filed in time?
(5) Whether in the facts and circumstances of the case there is any material for the Tribunal to reject the applicant's statement's in the affidavit that he came to know about the assessment on April 4, 1957, when the superintendence and control over his estate was removed?
(6) Whether in the facts and circumstances of the case the Tribunal exercised its discretion judicially in not condoning the delay?"
6. The applicant‑assessee agrees to the statement of the case as drawn up. The Departmental Representative while accepting the statement of facts objects to questions Nos. (2), (5) and (6) as not arising out of the order of the Tribunal. We, however, do not agree with the Departmental Representative.
N. A. Palkhivala with F. N. Kaka for the Assessee.
G. N. Joshi with R. J. Joshi for the Commissioner.
JUDGMENT
TAMBE, J.‑‑This is a reference at the instance of the applicant assessee under subsection (1) of section 66 of the Indian Income-tax Act (hereinafter referred to as the Act). The applicant assessee is the present jagirdar of Ichalkaranji of the former Kolhapur State. He attained majority on 23rd June 1956. During his minority his estate was under the management and superintendence of the court of wards, the Collector of Kolhapur being the Court of Wards. We are here concerned with five assessment years 1950‑51 to 1954‑55 which fell during the minority of the applicant. The assessment orders in respect of these years were made under section 23 (3) of the Act some time in the year 1954‑55. On 4th April 1957, the applicant's estate was released from the management of the Court of Wards. On 23rd April 1957, the applicant filed five appeals before the Appellate Assistant Commissioner against the assessment orders for the aforesaid five years. Along with the memo of appeals the applicant filed an affidavit explaining the delay in the matter of filing the appeals. After stating that he attained majority on 23rd June 1956, and, that his estate was restored to him on 4th April 1957, under the orders of the Government, he further stated:
"That it was for the first time on April 4, 1957, I came to know that certain assessments were made on me by the Income‑tax Officer, Kolhapur, for the assessment years 1950‑51 to 1954‑55 (both inclusive) and that the Collector and Court of Wards, Kolhapur, my guardian, had failed to file appeals against those assessments within the prescribed 'time. I never knew anything about these assessments or failure to appeal against the same, on part of my guardian, the Collector and Court of Wards, Kolhapur, prior to the aforesaid date viz., the 4th day of April 1957.
That immediately after 4th April 1957, I have taken all the necessary and adequate steps to protect my rights by preferring appeals against all the aforesaid assessments before then?"
No counter‑affidavit was filed by the Department challenging the truth of the statements contained in the aforesaid affidavit of the applicant. At the hearing of the appeals on behalf of the Department two contentions were raised : firstly, that the applicant was not the assessee but the assessee was the Court of Wards ; the appeals filed by the applicant, therefore, were incompetent, not having been filed by an assessee and, secondly, that the delay should not be condoned. The‑ Appellate Assistant Commissioner accepted the first contention of the department and held that the applicant was not the person, who was entitled to file an appeal. In upholding the second conten tion of the Department, the Appellate Assistant Commissioner has only observed the following sentence in his order:
"Thus so far as the appeal petitions are concerned, they are very much out of time and as there is no sufficient cause the late (delay) cannot be condoned."
The applicant took a second appeal before the Tribunal challenging the aforesaid findings of the Appellate Assistant Commissioner. A further contention appears to have been raised on behalf of the Department that no appeal lay to the Tribunal against the Appellate Assistant Commissioner's refusal to admit the appeal on grounds of limitation. The Tribunal held that an appeal lay to the Tribunal against the Appellate Assistant Commissioner's refusal to admit an appeal on grounds of limita tion. It held that the property of the applicant had vested in the Court of Wards, that the tax liability was on the Court of Wards under sub‑section (1) of section 40 of the Act, and that the assessee was the court of wards and not the applicant. The applicant, therefore, was incompetent to file the appeals.
On the question of condonation of delay, the tribunal observed :
"Even otherwise, section 6 (1) of the Limitation Act has no relevance because it is not applicable to `appeals'. Therefore, the appellant had no right to file an appeal after the cessation of the disability. It has also to be observed that the appellant admit tedly attained majority on June 23, 1956; therefore, it is difficult to believe his words in the affidavit that he came to know of the assessments on the 4th April, 1957, for the first time and that he never knew anything about these assessments or the guar dian's failure to appeal against them prior to 4th April, 1957,"
In this view of the matter the appeals were dismissed by the Tribunal.
On an application made by the applicant, the Tribunal, after drawing up a statement of case, has referred the following six questions of law to this Court:
"(1) Whether in the facts and circumstances of the case the applicant was the assessee and entitled to prefer appeals before the Appellate Assistant Commissioner in respect of the assess ment years 1950‑51 to 1954‑55?
(2) Whether in the facts and circumstances, of the case the assessments were made under section 40 (l) of the Act?
(3) Whether in the facts and. circumstances of the case, assuming the assessments were made on the Court of. Wards, the applicant is barred from preferring the appeals?
(4) Whether in the facts and circumstances of the case the appeals were filed in time?
(5) Whether in the facts and circumstances of the case there is any material for the Tribunal to reject the applicant's state ment in the affidavit that he came to know about the assess ments on April 4, 1957, when the superintendence and control over his estate was removed?
(6) Whether in the facts and circumstances of the case the Tribunal exercised its discretion judicially in not condoning the delay?
Even though six, questions have been referred to this Court, the questions that fall for consideration are only two‑fold : in the first instance, whether the applicant is factually an assessee in the 'sense that the person against whom an assessment order has been made or in the alternative whether, at any rate, on the facts and in the circumstances of the case, the applicant is an assessee within the meaning of section 30 of the Act having a right to file appeals; and, secondly whether the Tribunal had any material before it to reject the applicant's statement in the affidavit that he (the applicant) came to know about the assessment on April 4, 1957, when the superintendence and control over his estate was removed.
Mr. Palkhivala appearing for the applicant contends that, on the material on record, the applicant is a person against whom assessment orders had been made, he is factually the assessee and, therefore, in that capacity he has a right to file appeals. It is also his contention that, even assuming that the position is not so, the assessment proceedings taken were in respect of his income and, therefore, he was an assessee within the meaning of section 30 of the Act entitled to file an appeal.
Mr. Joshi, appearing for the revenue, on the other hand, urged that the Court of Wards is the assessee as the tax was payable by the Court of Wards. Notice of assessment proceedings were served on it, returns were filed by it and even the notice of demand was served on it and, therefore, it is the Court of Wards alone that could have filed the appeals and not the applicant.
Referring us to sections 4, 5, 23 and 37 of the Court of Wards Act, Mr. Joshi further argued that the applicant was a disqualified person, and, therefore the only person, who was liable to pay tax, was the Court of Wards. Consequently, on this ground alone the Court of Wards is the assessee.
It may be stated in fairness to Mr. Joshi that he frankly conceded that the assessment proceedings taken against the Court of Wards were not under section 40 (1) of the Act as is assumed by the Tribunal. According to him the proceedings against the Court of Wards were taken under section 41 of the Act and the finding of the Tribunal that the property of the applicant vested in the Court of Wards was not the true legal position.
The Tribunal has included the assessment orders of all the five years as part of the statement 'of ease and a perusal of these five orders is sufficient to show that the person against whom assess ment orders were made was the applicant and not the Court of Wards. It is not necessary to reproduce the material parts of all the five assessment orders. They are more or less identical in terms. It would be sufficient, therefore, to refer to the assessment order of only one year and we will refer to the assessment order of 1950‑51. Now, in this assessment order, the name of the assessee given is "Shri Govindrao alias Abasaheb Ghorpade, minor jagirdar of Ichalkaranji, Guardian Court of Wards, Kolha pur." The status of the assessee is shown as "individual". The section under which the assessment is made is shown to be section 23 (3). The opening sentence of the assessment order is: "The assessee is the present jagirdar of Ichalkaranji." That being the position on record, there cannot be any doubt that the conten tion of Mr. Palkhivala that the applicant is really the assessee in the sense that he is the person against whom the assessment orders were made is well founded.
The argument of Mr. Joshi, however, was that the Income-tax Officer may have shown the applicant as a person against whom the assessment order was made but that was not the correct legal position. In law, ix was only the Court of Wards that was liable to pay the tax and, therefore, it must be held that it was the Court of Wards against whom the assessment orders have been made.
Turning to section 41 of the Act, it does not appear that the position contended for by Mr. Joshi is the correct legal position. Subsection (1) enables the Income‑tax Officer to levy upon and recover the tax from the Court of Wards in the same manner and to the same amount as would be leviable and recover able from the person on whose behalf such income, profits or gains are receivable. It shows that subsection (1) of section 41 only enables the revenue to levy and recover the tax from the Court of Wards. That does not, however, mean that it is the Court of Wards and the Court of Wards alone which can be proceeded against and not the ward. Subsection (2) of section 41 does not leave any doubt in the matter. It provides:
"Nothing contained in subsection (1) shall prevent either the direct assessment of the person on whose behalf income, profits or gains therein referred to are receivable, are the recovery from such person of the tax payable in respect of such income, profits or gains."
It is clear from the provisions of subsection (2) of section 41 that it is perfectly competent to the Income‑tax Officer to proceed against, levy and recover the tax from the ward of the Court of Wards if the Income‑tax Officer chose to do so. The other circum stances in support of his contention to which Mr. Joshi referred us were that a notice under section 22…
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