Judgment:
1. These appeals are filed by revenue for assessment years 1962-63 and 1963-64.
2. Facts which have led to the filing of these appeals are that for assessment year 1962-63 ITO had levied a penalty of Rs. 5,000 under Section 271(1)(c) of the Act by an order passed on 16-3-1973.
Similarly, for assessment year 1963-64, ITO had levied a penalty of Rs. 11,749 under Section 271(1)(c) by an order passed on 28-1-1970. The dates when these penalty orders were served have not been brought on record. But it is admitted by both sides that they were served in due course. Appeals against these orders were filed on 13-4-1983. ITO when apprised of the filing of the appeals raised an objection that there was abnormal delay in the filing of the appeals. It was also intimated by the ITO that these appeals appeared to have been filed only because the complaints for the prosecution of the appellant had been filed. The assessee did not deny the allegation made by the ITO but submitted that the delay in filing the appeals was because of the negligent conduct of his previous counsel Mr. D.P. Mahajan and his erroneous advice.
Although Mr. D.P. Mahajan had got the appeal papers prepared and made over to the Accountant of the assessee but he did not pursue the matter thereafter as the amounts levied as penalties were negligible in his view. Shri D.P. Mahajan after bringing out these facts on record expired. According to the counsel appearing for the assessee, it was submitted that the delay had occurred because of the negligent conduct and erroneous advice of his previous counsel late Mr. D.P. Mahajan. It was only when the notice issued in connection with the prosecution reached him, the assessee became aware of the penalties and he caused the appeals to be filed.
3. CIT(A) placing his reliance on some judicial pronouncements where erroneous advice rendered by a counsel to his client was considered to constitute reasonable cause for condoning the delay caused the appeals to be admitted after condoning the delay under Section 249(3). It is against this order passed under Section 249(3) where he further directed in his order passed under Section 249(3) that the appeals for the two years be fixed and both the parties, the assessee and the ITO may be given intimation for the date of hearing of the appeal, that revenue has come in appeal before the Tribunal.
4. Revenue felt aggrieved by this order and has preferred the appeals against the order passed by the CIT(A) under Sub-section (3) of Section 249. According to the DR, CIT(A) was not justified in condoning the abnormal delay in preferring appeals against these orders. Penalty orders were passed for assessment year 1962-63 on 16-3-1973 and for assessment year 1963-64 on 28-1-1976. CIT(A) has condoned the delay of 10 years in one case and 13 years in the other case. According to him, CIT(A) in condoning the abnormally long delay did not make a proper appraisal of facts. Learned counsel for the assessee, on the other hand, objected to the competency of the appeals filed by revenue. He referred to the provision contained in Sub-section (2) of Section 253 to emphasise that the assessee is authorised to prefer an appeal before the Appellate Tribunal if the order passed by CIT(A) or AAC that order is passed under Section 154 or Section 250. There was no provision for filing an appeal against an order passed under Section 249 Sub-section (3) of the Act. He supported his contention by referring to several judicial pronouncements which differentiated an order passed under Section 249(3) from an order passed under Section 250(2). In particular he relied on the Allahabad Pronouncement in J.K. Synthetics Ltd. v.A4C[1976] 103 ITR 759. In this case, their lordships observed, that an order under Section 249 Sub-section (3) was not subject to the power of rectification under Section 154 and, therefore, the AAC was not competent to look into muchless rectify any mistake which appeared to him to have occurred in an order passed under Section 249(3). On the other hand, DR relied on the Supreme Court pronouncement in the case of Mela Ram & Sons v. CIT [1956] 29 ITR 607 to emphasise that where an order of the AAC held that there was no sufficient reason for excusing delay under Section 32 of the I.T. Act and rejected the appeal as time barred was in effect an order under Section 31. It was held by their Lordships that such an order being one under Section 31 was liable to be impeached in an appeal to be filed before the Appellate Tribunal. He also referred to the observations made in the famous commentary of Palkhivala on page 1125 to emphasise that an order passed under Section 30(2) refusing to condone the delay should be considered as an order passed under Section 31. Similarly, an order passed under Section 249(3) should be read as an order passed under Section 250. But his main emphasis was on the Supreme Court judgment in the case of Mela Ram (supra).
5. Having heard the respective contentions by both sides, we are of the view that an order passed under Section 249(3) cannot be considered to be an order passed under Section 250 in all circumstances. There is unanimity in the opinion of all Courts now. Whatever conflict there was earlier has been resolved by the Supreme Court judgment in Mela Ram's case (supra) relied on by Revenue. Supreme Court dealt with a case where an AAC had refused to condone the delay in filing the appeal and had accordingly dismissed the appeal. It was held that the order passed by the AAC under Section 30(2) of the 1922 Act was in effect an order passed under Section 31 of that Act. But the Supreme Court in disposing of the appeal did not confine itself to the facts of the case only but went ahead to make the following observation : Taking the plea of limitation - which is what we are concerned with in this appeal - when there is a judgment or order against which the statute provides a right of appeal but none is preferred within the time prescribed therefor, the respondent acquires a valuable right, of which he cannot be deprived by an order condoning delay and admitting the appeal behind his back. And when such an order is passed ex parte, he has a right to challenge its correctness at the hearing of the appeal That is that position under the general law (vide Krishnasami Panikondar v. Ramasami Chettiar 1) and there is nothing in the provisions of the Income-tax Act, which enacts a different principles. Therefore, if an appeal is admitted without the facts of delay in presentation having been noticed, clearly it must be open to the Department to raise the objection at the time of the hearing of the appeal That would also appear to be the practice obtaining before the income-tax Tribunal, as appears from the decisions cited before us and that, in our opinion, is right.
A perusal of the above observation will bear out in general and the underlined portion in particular will show that even their lordships admitted the right of the respondent to raise and objection to the admission of the appeal after condoning the appeal at the hearing of the appeal only. The appeal of the assessee is still lying unheard. It is still to be heard and disposed of by the CIT(A). Therefore, Revenue cannot claim that it has a right to object to the admission before the hearing of the appeal passed against the order under Section 249(3).
Looked at from this angle it would appear that where an order is passed under Sub-section (3) of Section 249 the assessee is not entitled to castigate such an order by filing an appeal against it before the Appellate Tribunal. Learned counsel for the assessee had rightly referred to the provision contained in Sub-section (2) of Section 253 which authorises the Commissioner to file an appeal against an order passed by the AAC or CIT(A) under Section 154 or 250 of the I.T. Act.
The present order not being passed under Section 250 or under Section 154 there was no provision in the Act for authorising the filing an appeal against such an order. We are not inclined to be led by the contention of Revenue that an order passed under Sub-section (3) of Section 249 should be read as an order passed under Section 250. Their Lordships of Punjab and Haryana High Court in disposing of the appeal in (he case of CIT v. Ram Lal Mansukh Rai [1970] 77 ITR 964 explained that the right of appeal is an express grant by the statute and it cannot be implied. If statute has not specifically provided for an appeal against an order it cannot be acquired by implication. Taking this view of the matter, we reject the second contention of Revenue also that we must take an order passed under Section 249(3) as an order passed under Section 250. This is enough, in our view, to dispose of the appeals filed by Revenue. In our view, the appeals filed by Revenue for the two years are not competent and have to be dismissed. We order accordingly.
7. I am unable to share the conclusion of the learned Judicial Member in para 5 of his order that the two appeals filed by the Revenue against the order of the CIT(A), purported to be passed under Section 249(3) of the Income-tax Act, are incompetent. It appears from that para that one view expressed is that the appeal of assessee was still lying unheard before the CIT(A) and it is still to be heard and disposed of by him and, therefore, the Revenue could not claim that it has a right to object to the admission before the hearing of the appeal against the order passed under Section 249(3). It is finally concluded that it would appear that where an order is passed under Sub-section (3) of Section 249 the assessee is not entitled to castigate such an order by filing an appeal against it before the Appellate Tribunal. The view appears to be based on a quoted extract from the Supreme Court decision in the case of Mela Ram & Sons (supra). Another view is also expressed that an order under Section 249(3) was not an order passed under Section 250 of the Income-tax Act and hence no appeal before the Tribunal would lie as per Section 253(2) of the Act. In ray opinion, an order labelled as under Section 249(3) of the Act by the CIT(A) is an order under Section 250 of the Act, which is appealable before the Tribunal as per Section 253(2) of the Act. It is too much to think that in the face of Supreme Court authority in Mela Ram & Sons' case (supra) the CIT(A)'s action in labelling his order to be passed under Section 249(3) will not make that order to be passed under Section 250 and appealable before the Tribunal. Again when it is not in dispute that an order of the first appellate authority dismissing an appeal of the assessee as time-barred is an order under Section 250 and appealable before the Tribunal, the same is not true of the order passed by that appellate authority condoning the delay, with which aspect the Revenue can have a grievance.
8. In support of the first view expressed by my learned brother, reliance is placed on an extract from a para in Supreme Court's decision in Mela Ram's case (supra) at pp. 618-619. The extract itself indicates that the Supreme Court was discussing the position about a valuable right accruing in favour of the respondent due to the appellant not preferring an appeal within the prescribed time and in that background commenting upon the right of the respondent where an appellate authority admits an appeal without noticing the fact of delay behind the back of the department. Only in that situation, the Supreme Court has laid down that the department would have the right to raise the objection at the time of hearing of the appeal. These observations cannot apply in a situation with which we are concerned. Here the CIT(A) has duly noticed the question of delay and proceeded to condone the delay after hearing the assessee's authorised representative and the ITO. In such a situation, in my opinion, the Revenue will have to come in appeal when the CIT(A) has condoned the delay and has not to wait till the appeal is taken up on merits to be heard by the CIT(A).
9. Again if the last paragraph in the Supreme Court judgment at pp.
618-619 is fully read along with certain further observations in another para at page 618, I find it becomes clear that the order of the CIT(A) in hand is in truth and law passed under Section 250 of the Income-tax Act. In para first beginning on page 618, the Supreme Court has summed up the position about the nature of orders disposing preliminary grounds from the angle of appealability in following words :- There is thus abundant authority for the position that Section 31 should be liberally construed so as to include not only orders passed on a consideration of the merits of the assessment but also orders which dispose of the appeal on preliminary issues, such as limitation and the like.
Then in the last para beginning on the same page, the Supreme Court referred to the respondent acquiring a valuable right on the ground of expiry of limitation in filing the appeal and later considered a specific situation from the angle of Revenue, which is dealt with in the preceding part of the para. The extract quoted in the order of my learned brother is there in that paragraph but there are other observations summing up the position in the same paragraph, which have been omitted from consideration and I will quote those below:- Similar considerations would apply to other objections of a preliminary character such as the one based on Section 30, Sub-section (3). We should be slow to adopt a construction which deprives parties of valuable rights. We are, therefore, of opinion that contentions relating to preliminary issues are open to consideration at the time of the hearing of the appeal and that the jurisdiction of the Appellate Assistant Commissioner is not limited to the hearing of the appeal on the merits of the assessment only.
In this view, the orders of the Appellate Assistant Commissioner holding that there were no sufficient reasons for excusing the delay and rejecting the appeals as time-barred would be orders passed under Section 31 and would be open to appeal and it would make no difference in the position whether the order of dismissal is made before or after the appeal is admitted....(pp. 618-619) The Supreme Court has clearly referred to the position that a construction, which deprives parties of valuable rights should ordinarily not be adopted and then finally laid down that contentions relating to preliminary issues are open to consideration at the time of the hearing of the appeal and that the jurisdiction of AAC is not limited to the hearing of the appeal on the merits of the assessment only. Basing on this general principle, the Supreme Court held in the context of the case in hand that orders of the AAC holding that there were no sufficient reasons for excusing the delay and rejecting the appeals as time-barred would be orders passed under Section 31 and would be open to appeal. Now, it will be a strange travesty that if the CIT(A) were to condone the delay as well as dispose of the appeal on merits in this case the order passed would be an order under Section 250, which would be appealable before the Tribunal but if he chooses to dispose of only the question of limitation in assessee's favour and desists from deciding the appeal on merits and dubs the order under Section 249(3) of the Income-tax Act, the order ceases to be under Section 250 of the Act and thus not appealable before the Tribunal.
This is not what is stated by the Supreme Court in its judgment and the Supreme Court was treating both the parties to the litigation in a similar fashion. Consequently, I will hold that even though the CIT(A) has disposed of the appeal piece-meal the order emerging is an appealable order under Section 250 of the Act; to hold otherwise will be to leave the question of appealability or otherwise of the order of the CIT(A) to his manner of handling a particular appeal and dubbing his order under Section 249(3). Clothing of CIT(A) with such discretion to the destruction of the rights of the respondent cannot be the intention of law or of the judgment of the Supreme Court, in the case of Mela Ram & Sons (supra).
10. I find that out of several commentaries on Income-tax Act available to me only one commentary refers to a situation arising in this case.
This commentary is of V.S. Sundaram on Law of Income-tax in India, 11th Edition, Volume 3 and the matter is dealt with at page 3115. The learned commentator considered eight situations and the eighth situation is the one I am dealing with and he has also stated that it would presumably be open to the Commissioner to appeal against the appellate order to the Tribunal, inter alia, on the ground of the appeal having been wrongly admitted inspite of time-bar or of the delay having been unjustifiably condoned. As per the reasoning given above by me, I hold that the Revenue had rightly come up in appeal against the condonation of delay by the CIT(A). Consequently, the appeals are competent and are directed to be posted for hearing on merits.
1. As we have a difference of opinion on the following point, we refer the case to the President of the Appellate Tribunal for further action as provided in Section 255(4) of the Income-tax Act:- Whether on the facts and in the circumstances of the case, the appeals of the Revenue for the assessment years 1962-63 and 1963-64 against the order of the CIT(A) under Section 249(3) of the Income-tax Act condoning the delay on the part of the assessee in filing of the two appeals, are competent and valid in the eye of law? 1. There being a difference of opinion between the Members constituting the Division Bench, the following point of difference arose and which was referred to me as a Third Member under Section 255(4) of the Income-tax Act: Whether on the facts and in the circumstances of the case, the appeals of the Revenue for the assessment years 1962-63 and 1963-64 against the order of the CIT(X) under Section 249(3) of the Income-tax Act condoning the delay on the part of the assessee in filing of the two appeals, are competent and valid in the eye of law 2. At the time of hearing of the reference, there was no representation on the part of the respondent-assessee inspite of service of notice by Regd. Post AD. The AD card has been received and is placed on filed and the third member reference is decided on merits considering the submissions of the learned Departmental Representatives appearing on behalf of the Department.
3. The relevant facts are well set out in the orders passed by the Learned Members constituting the Division Bench but to summarise these the Assessing Officer levied penalties under Section 271(1)(c) for the assessment years 1962-63 and 1963-64 in sums of Rs. 5,000 and Rs. 11,749 respectively. The assessee filed appeals against these orders on 13th April, 1983 whereas the orders levying the penalties were passed for the assessment year 1962-63 on 16th March, 1973 and for the assessment year 1963-64 on 28th January, 1970 respectively. There is no dispute between the parties that the appeals were inordinately late and out of time.
4. The appeals were fixed for hearing before the learned CIT(A) and at which stage the question of limitation was considered at length and detailed arguments were advanced by the parties. The main thrust of the arguments advanced on behalf of the assessee was that his earlier Counsel late Sh. D.P. Mahajan had given wrong advice and it was because of his default that the appeals had not been filed and the assessee came to know of the implications only when the notices for prosecution had been issued. In support of the aforesaid arguments, reliance was placed on certain reported decisions and the learned CIT(A) in considering the arguments advanced held in the ultimate analysis as per para 6-7 of the appellate orders, as follows : 6. I have carefully considered the aforesaid contentions of the A/R w.r.t. the facts & circumstances of the case as given in the aforesaid paragraphs and I am inclined to agree with him that these have considerable force. The peculiar facts of this case would make it clear that when the penalties were imposed the appellant's counsel, the late Sh. D.P. Mahajan never took them seriously even though it is alleged that some action for filing of the appeals had been taken but thereafter, no care was taken to keep a track of those appeals. It is only now when the appellant had received the courts notices for the complaints filed that the whole matter has been checked up and the late Sh. D.P. Mahajan, then filed both these appeals. Hence, after taking into account the totality of the peculiar circumstances of the case. I am inclined to condone the delay which has occurred in this case for filing these appeals, which will now be fixed for hearing on merits at the earliest and the ITO may also be given an intimation of the same because he wants to be present at the time of hearing.
7. In the result, both the appeals are admitted in accordance with the provisions of Section 249(3).
5. Being aggrieved with the common order so passed for the assessment years 1962-63 and 1963-64 the revenue filed appeals to the Tribunal raising the common ground, which reads as under : 1. On the facts and in the circumstances of the case, the learned CIT(A) has erred in passing order under Section 249(3) and in condoning the delay in the presentation of the appeal filed by the assessee against the order of the IAC passed by him under Section 271(1)(c) of the I.T. Act.
6. At the time of hearing before the Division Bench, the case of the Revenue was that the learned CIT(A) was not justified in condoning the abnormal delay in preferring appeals against these penalty orders, more so, when in one of the years, the delay was of 10 years and in the other 13 years. According to the learned DRs appearing on behalf of the Revenue, the learned CIT(A) had not appraised the facts in proper perspective.
7. As against the said submissions on behalf of the Revenue, the assessee's counsel questioned and in fact objected to the competency of the appeals filed by the Revenue. In doing so, he referred to the provisions of Section 253(2) to emphasise that an appeal could be preferred to the Tribunal in case the order was passed by the ld.CIT(A) under Section 250 or under Section 154 and there was no provision for filing an appeal against the order passed under Section 249(3) of the I.T. Act. In support of the aforesaid arguments, a number of decisions were cited, more particularly that of the Allahabad High Court in the case of J.K. Synthetics Ltd. (supra). Their lordships had held in the aforesaid case that an order passed under Section 249(3) could not be subject matter of rectification under Section 154 and therefore, the first appellate authority was not competent to look into muchless rectify any mistake which appeared to have occurred in the order passed under Section 249(3) of the Act. The learned DR on the other hand placed reliance on the judgment of the Hon'ble Supreme Court in the case of Mela Ram & Sons (supra), to emphasise that where an order of the First Appellate Authority held that there was no sufficient reason for excusing delay under Section 30(2) of the IT. Act and rejected the appeal as time barred it was in fact an order under Section 31 and such an order was liable to be impeached in an appeal before the Tribunal. The assessee's learned counsel also referred to the obser-vations made in the commentary of Kanga & Palkhivala to emphasise that an order passed under Section 30(2) refusing to condone the delay should be considered as an order passed under Section 31. The plea in other words was that the order passed under Section 249(3) condoning the delay should be read as an order passed under Section 8. The learned Judicial Member who passed the initial order at the outset opined that every order passed under Section 249(3) could not be considered to be an order passed under Section 250. According to the Ld. J.M. the matter stood resolved by the judgment of the Hon'ble Supreme Court in the case of Mela Ram & Sons (supra) relied upon by the Revenue. It was noted by the Ld. Judicial Member that the Hon'ble Supreme Court dealt with a case where the AAC had refused to condone the delay in filing the appeal and dismissed the same and it was held by the AAC on the aforesaid facts that the order passed by the AAC under Section 30(2) of the 1922 Act was in fact an order passed under Section 31 of that Act, but according to the Id. Judicial Member, the following observations of their lordships were relevant and which he reproduced at page 4 of his order, as under : Taking the place of limitation - which is what we are concerned with in this appeal - when there is a judgment or order against which the statute provides a right of appeal but none is preferred within the time prescribed therefore, the respondent acquires a valuable right, of which he cannot be deprived by an order condoning delay and admitting the appeal behind his back. And when such an order is passed ex-parte, he has a right to challenge its correctness at the hearing of the appeal That is that position under the general law (vide Krishnasami Panikondar v. Ramasami Chettiar I) and there is nothing in the provisions of the Income-tax Act, which enacts a different principles. Therefore, if an appeal is admitted without the facts of delay in presentation having been noticed, clearly it must be open to the Department to raise the objection at the time of the hearing of the appeal That would also appear to be the practice obtaining before the Income-tax Tribunal, as appears from the decisions cited before us and that, in our opinion, is right.
9. In applying the aforesaid judgment, the Hon'ble Judicial Member held that objection to the admission of the appeal after condoning the delay can only be taken up at the hearing of the appeal itself and in the present case, the appeals were still lying unheard and these were still to be disposed off on merits by the learned CIT(A). The conclusion, in other words was that the Revenue could not claim that it had a right to object to the admission before the hearing of the appeal. According to the Hon'ble Judicial Member, where an order was passed under Section 249(3), the party aggrieved was not entitled to castigate such an order by filing an appeal before the Tribunal. According to him, it had been rightly contended on behalf of the assessee that the provisions contained in Sub-section 2 of Section 253 authorised the learned CIT to file an appeal only against the orders passed by the first appellate authority under Section 154 or 250 of the I.T. Act and the present order passed by the CIT(A) condoning the delay and directing the appeals to be heard on merits was not an order passed either under Section 250 or under Section 154. The Ld. Judicial Member rejected the contention of the Revenue that the order passed under Section 249(3) be treated as an order passed under Section 250. The Ld. Judicial Member further relied on the judgment of the Hon'ble Punjab and Haryana High Court in the case of Ram Lal Mansukh Rai (supra) wherein it had been held that the right of the appeal was expressly granted by the statute and it cannot be implied and where the rjght of the appeal had not specifically been provided against an order it cannot be acquired by implication. This led to the rejection of the assessee's arguments that the order passed under Section 249(3) be treated as an order passed under Section 250. In the final analysis, the appeals filed by the Revenue were dismissed on the ground that these were not competent.
10. The learned Accountant Member did not subscribe to the views expressed by the learned Judicial Member. According to him, an order passed by the Ld. CIT(A) under Section 249(3) was in fact an order passed under Section 250 of the Act which was appealable before the Tribunal as per Section 253(2). According to the Ld. Accountant Member "it is too much to think" that in the face of the Hon'ble Supreme Court decision in the case of Mela Ram & Sons (supra), CIT(A)'s action in labelling his order to be passed under Section 249(3) would not make that order to be passed under Section 250 and therefore, appealable to the Tribunal. The Ld. Accountant Member further observed that there was no dispute on the preposition that the order of the first appellate authority dismissing the assessee's appeal on the ground that it was time barred was an order under Section 250 and appealable before the Tribunal and the same position prevailed in the case of an order passed by the first appellate authority condoning the delay when the Revenue can have a grievance. In relying upon the judgment of the Hon'ble Supreme Court in the case of Mela Ram & Sons (supra), the learned AM referred to a number of observations and held that the said judgment mentioned about the valuable right accruing in favour of the respondent due to the appellant not preferring an appeal within the prescribed time and in that background commenting upon the right of the respondent where an appellate authority admitted an appeal without noticing the fact of delay behind the back of the Department and only in such a situation, the Hon'ble Supreme Court had laid down that the Department would have the right to raise the objection at the time of hearing of the appeal. The relevant observations according to the Ld. AM were not applicable to the facts of the assessee's case where the Ld. CIT(A) had noticed the question of delay and proceeded to condone the same after hearing the Assessing Officer and also assessee's Authorised Representative and accordingly in his opinion, the Revenue would have to come in appeal to the Tribunal when the learned CIT(A) condoned the delay and it was not necessary to wait till the appeal was taken up on merits to be heard by the learned CIT(A).
11. The Ld. Accountant Member also referred to certain observations in the judgment of the Hon'ble Supreme Court in the case of Mela Ram & Sons (supra), more so, at pages 618 and 619 and observed that orders in appeal passed by the ld. CIT(A) were in law passed under Section 250 of the I.T. Act and for the purposes of deciding the present reference extract the observations of the Hon'ble Supreme Court in the case of Mela Ram & Sons (supra) and which find place at pages 8 and 9 of the order of the Hon'ble Accountant Member as follows : There is thus abundant authority for the position that Section 31 should be liberally construed so as to include not only orders passed on a consideration of the merits of the assessment but also orders which dispose of the appeal on preliminary issues, such as limitation and the like.
Similar considerations would apply to other objections of a preliminary character such as the one based on Section 30, Sub-section (3). We should be slow to adopt a construction which deprives parties of valuable rights. We are therefore of opinion that contentions relating to preliminary issues are open to consideration at the time of the healing of the appeal and that the jurisdiction of the Appellate Assistant Commissioner is not limited to the hearing of the appeal on the merits of the assessment only.
In this view, the orders of the Appellate Assistant Commissioner holding that there were no sufficient reasons for excusing the delay and rejecting the appeals as time-barred would be orders passed under Section 31 and would be open to appeal and it would make no difference in the position whether the order of dismissal is made before or after the appeal is admitted....(pp. 618-619) According to the Ld. AM, the Hon'ble Supreme Court had categorically referred to the position that a construction, which deprived parties of valuable rights should be ordinarily not be adopted and then finally laid down that the contentions relating to preliminary issues are open to consideration at the time of hearing of the appeal and that jurisdiction of the AAC is not limited to the hearing of the appeal on the merits of the assessment only and based on the said general principle, the Hon'ble Supreme Court held in the context of the case in hand that the orders of the AAC holding that there were no sufficient reasons for excusing the delay and rejecting the appeal as time-barred would be orders passed under Section 31 and would be open to appeal.
According to the Ld. Accountant Member, it would be a strange travesty that if the Ld. CIT(A) were to condone the delay as also disposed of the appeal on merits then the order passed would be one under Section 250 which would be appealable before the Tribunal and if he chooses to dispose of only the question of limitation in assessee's favour and desist from deciding the appeal on merits and dubbed the order as one passed under Section 249(3) of the I.T. Act, the order ceased to be one under Section 250 of the Act and thus not appealable before the Tribunal. According to the Ld. AM this was not what the Hon'ble Supreme- Court had held in its judgment in the case of Mela Ram & Sons (supra) since both the parties were treated in a similar fashion. He accordingly held that even though the learned CIT(A) had disposed off the appeal piecemeal, the order emerging was an appealable order under Section 250 of the Act and to hold otherwise would be to leave the question of appealability or otherwise of the order of the CIT(A) to his manner of handling a particular appeal and dubbing his order as one passed under Section 249(3) of the Act. According to the Ld. AM, in case the Ld. CIT(A) was clothed with such discretion to the destruction of the rights of the respondent then the same cannot be the intention of law or of the judgment of the Hon'ble Supreme Court in the case of Mela Ram & Sons (supra).
12. Lastly, in coming to the conclusion that the appeals preferred to the Tribunal by the Revenue against the order passed by the Ld. CIT(A) condoning the delay and admitting assessee's appeal were competent, the Ld. Accountant Member referred to the commentary of V.S. Sundaram on the "Law of Income-tax in India".
13. Before me, the learned DRs argued at length supporting vehemently the order passed by the learned Accountant Member whereby the appeals of the Department to the Tribunal had been admitted for the hearing.
Reliance was reiterated on the judgment of the Hon'ble Supreme Court in the case of Mela Ram & Sons (supra) and further reliance was placed on the decision of the Hon'ble Orissa High Court in the case of CIT v.Kalipada Ghosh [1987] 167 ITR 173 : 29 Taxman 197 In coming to the latter decision, the Ld. DRs contended that in that case, the question was one of the dismissal or an appeal filed by the assessee for violation of Section 249(4) and the issue before their lordships was whether order passed by the first appellate authority was one under Section 250 and, therefore, appealable to the Tribunal under Section 253. It was highlighted by the Ld. DRs, that before coming to the conclusion their lordships relied on the judgment of the Hon'ble Supreme Court in the case of Mela Ram & Sons (supra) which had also been considered by the Learned Member of the Division Bench while passing their respective orders. In concluding, the learned DRs supported the view taken by the Ld. Accountant Member to admit the appeals of the Revenue for adjudication urging that the same be approved.
14. I have considered the submissions of the Learned DR's and have also minutely perused the orders passed by the Learned Members constituting the Division Bench. The Ld. Judicial Member has initially held as a proposition of law that every order passed under Section 249(3) is not to be treated as an order under Section 250 and in referring to "circumstances" he has impliedly accepted that certain types of orders passed under Section 249(3) could be treated as orders passed under Section 250. According to him, the law has been settled by the Supreme Court decision in Mela Ram & Sons' case (supra), but he has taken the view that in case the matter has to be agitated then it has to be at the stage of the "hearing of the appeal" although he ultimately held that the order passed by the CIT(A) under Section 249(3) in the case in hand was not to be considered as an order passed under Section 250 and, therefore, the appeals of the Revenue were not competent and liable to be dismissed.
15. The Learned Accountant Member, in my opinion rightly noted from the same judgment of the Hon'ble Supreme Court viz-a-viz observations extracted by the Ld. Judicial Member at page 4 of his order that the observations "hearing of the appeal" were relevant only when an order had been passed ex parte behind the back of the respondent condoning the delay and under these circumstances there was.no question of agitating the same at any earlier point of time. The Id. Accountant Member in turn referred to certain observations in the same judgment whereby it had been held that where the statute provided a right of appeal but none was preferred within the time prescribed, the respondent acquired a valuable right, of which he was deprived by an order condoning delay and admitting an appeal behind his back. The question of acquisition of a valuable right by the respondent is not a point of difference between the learned Members and it is also not a dispute that the question of condonation can be agitated by a party in an appeal before the first appellate authority and such appeal may consist of not only considering the question of delay but also a decision on merits. The Id. Accountant Member held that where an order passed under Section 249(3) declining to admit an appeal on the ground of limitation and rejecting the same was treated to be an order under Section 250 then by the same logic it could not be held that an order of the first appellate authority condoning the delay and admitting the appeal was anything other than an order passed under Section 250. I agree with the view of the Id. Accountant Member in opining so because the appeals before the CIT(A) if these had not been disposed of piece meal but in full i.e. on two counts, the first pertaining to the condonation of delay and secondly the merits of the case would have ultimately resulted in a consolidated order on both issues and it is nobody's case that such an order of the ld. CIT(A) was not one passed under Section 250. All that has happened in the present case is that the ld. CIT(A) decided the appeals piece meal and the consolidated order challenged before the Tribunal deciding the question of condonation of delay and directing the appeals to be admitted and the merits of the case to be decided subsequently, but this by itself does not make the portion disposed off i.e. one pertaining to condonation of delay, an order passed under Section 249(3) and not appealable before the Tribunal. As the position of law laid down by the Hon'ble Supreme Court in the case of Mela Ram & Sons (supra) gives a valuable right to the party to challenge the limitation aspect of the matter, it is not possible to come to the conclusion that one part of the proceedings results in an order under Section 249(3) and the other part results in an order under Section 250. During the course of the hearing nothing has been brought to my notice which would show that there has been any change in the position of law viz-a-viz the point at issue which forms the subject matter of the reference to the Third Member under Section 255(4).
16. The ld. Judicial Member in his order has stated and reiterated that the matter can be argued subsequently at the time of the hearing of the appeals which are still pending but it seems to have been overlooked that the matter has been thrashed out by the parties before the ld.CIT(A) and nothing remained to be said or argued on the delay when the ld. CIT(A) decided the appeals on merits. On the facts of the case, I have to uphold the view taken by the ld. Accountant Member that although the appeals of the Revenue before the Tribunal arose out of an interim order of the CIT(A) condoning the delay in filing of the appeals by the assessee, the matter need not await, the hearing of the appeals on merits. The ld. AM has aptly extracted certain relevant observations of the Hon'ble Supreme Court at page 8 of the order and which I have also adverted to, in the present order. This leaves no doubt in my mind that the provisions of the relevant section are to be liberally construed so as to take into account not only the orders passed on merits but also those which decide appeals on preliminary issues, including question of limitation. Further, there should be no construction which deprives any party of a valuable right and the delay in filing of the appeal on the part of a party does gives to the respondent a valuable right from which he should not be deprived without a proper hearing. I have to further hold that one does not have to see the nomenclature of the order passed but the substance thereof and by this I would like to refer to the facts of the present case that even if an order passed by the Id. CIT(A) is purported to be one under Section 249(3). It is in substance an order passed under Section 250 and, therefore, appealable before the Tribunal.
17. In the final analysis, I agree with the learned Accountant Member in coming to the conclusion that he did on facts and law to hold that the appeals of the Revenue were competent and these were to be posted for hearing on merits. The Registry is directed to place these files before the Division Bench for passing orders in confirming with the majority opinion.