The High Court also proceeded in a petition separately filed by the assessees to direct the Income tax Appellate Tribunal to set aside the order of the Income tax Officer imposing a penalty as a logical companysequence of the view the Tribunal had taken regarding the absence of power in the Income tax Officer to levy a penalty.
In appeal, the Income tax Appellate Tribunal observed that by virtue of the provisions of s. 13 1 of the Indian Finance Act, 1950, the Hyderabad Income tax Act had ceased to have effect and as the power to impose penalty under s. 40 of the Hyderabad Income tax Act was number saved, the order imposing penalty was without jurisdiction, The Tribunal observed The Income tax Officer may have been in error in imposing the penalty, but there was numberappeal against the order of the Income tax Officer to the Appellate Assistant Commissioner.
If the Appellate Assistant Commissioner did number have jurisdiction to hear the appeal, whether the order of the Appellate Assistant Commissioner is a nullity and therefore the order of the Income tax Officer erroneous, though it may stand until it is set aside by a companypetent authority ?
The remedy of the assessee lies elsewhere, and number by way of an appeal to the Appellate Assistant Commissioner, and on that view dismissed the appeal.
For the year of assessment Fasli 1357 October 1, 1946, to September 30, 1947 , the assessees returned an income of Rs.
after called the assessees owned an oil mill at Khammamath in the area of the former State of Hyderabad.
Appeal by special leave from the judgment and order dated October 4, 1956, of the Hyderabad High Court in I.T.R. No.
At the instance of the assessees, the following questions were referred by the Tribunal to the High Court of Judicature at Hyderabad Whether on 31 10 1951, the Income tax Officer, Warrangal Circle, had the power to impose a penalty under s. 40 1 of the Hyderabad Income tax Act in respect of the assessment for the year 1357 F. ?
The High Court observed that the Appellate Assistant Commissioner had power to entertain the appeal in which the question of the power of the Income tax Officer to impose a penalty was challenged, and the decision of the Appellate Assistant Commissioner was number without jurisdiction.
50,384/ .
1,63,131/ .
The Income tax Officer found that the books of account maintained by the assessees were unreliable and by his order dated February 10, 1950, he assessed their total income at Rs.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
February 22.
42,000/ in addition to the tax.
This order was companyfirmed in appeal by the Appellate Assistant Commissioner.
A, V. Viswanatha Sastri, S.N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the respondents.
N. Rajagopal Sastri and D. Gupta, for the appellant.
Section 40 ceased to have effect.
The Judgment of the Court was delivered by SHAH, J. M s. Bhikaji Dadabhai Co. herein.
The Income tax Officer had, before finalising the assessment, issued on December 22, 1949, a numberice to the assessees under s. 40 of the Hyderabad Income tax Act requiring them to show cause why penalty should number be imposed upon them and by order dated October 31, 1951, directed the assessees to pay by way of penalty Rs.
434 of 1960.
Against the order passed by the High Court, this appeal with special leave is preferred.
There can therefore be neither an order under s. 40 number an appeal against the order if an order.has been wrongly made.
Section 42 1 of the Hyderabad Income tax Act gives a right to an assessee to appeal if he objects to an order under s. 40 made by an Income tax Officer.
116/5 of 1954 55.
Whether the assessee had a right to appeal against the order of the Income tax Officer imposing the penalty ?
The High Court answered the first and the third questions in the negative and the second question in the affirmative.
