1972 PLP 200 (PTD)

Income‑tax Act (XI of 1922)

S. 30(1), first proviso [as substi tuted by Finance Act, 1967]‑Appeal‑Vested unconditional right of appeal available to an assessee under provisions of S. 30(1) before amendment in 1967‑Restriction of payment of tax before filing appeal placed by substituted proviso to S. 30(1)‑Held, abridg ment of such right previously vesting in an assesses‑Mere fact that appeal preferred by assesses after coming into force of new pro viso‑Held, would not in any way affect his right of appeal without depositing any part of tax. It is clear from the provisions of section 30(1) of the Act, as it originally stood, that there was a vested right of appeal in the assesses and that right was not circumscribed by any con dition. But the new first proviso added to the said section 30(1) of the Act by the Finance Act of 1967 has put a restriction on the right of appeal of the assessee in the manner that unless the tax payable under section 22‑A or one‑half of the sum demanded under section 29 of the Act after regular assessment under section 23, whichever is the greater, has been paid, no appeal shall lie against any order under subsection (1) of section 30. This is undoubtedly an abridgment of the right of appeal vesting in the assesses up to 30‑6‑1967. Now the question is whether this amendment is of a procedural nature or of a substantive nature. Right of appeal is undoubtedly a creature of statute but once the statute has granted this right, it can be taken away only by an express provision of the law and that too prospectively unless the Legislature has intended either expressly or impliedly that the right is taken away retrospectively. A change in the procedural law can be construed to be retrospective, but not so in the case of substantive law. Once it is held that the right of appeal is a substantive right and not a procedural right there is no difficulty for us to hold in the present case that the right of appeal vesting in the assessee up to the 30th of June 1967, could not be affected by the introduction of the new first proviso to section 30(1) of the Act by the Finance Act of 1967 which came into force on the 30th of June 1967. The mere fact that the appeal was preferred in the present case by the assessee after the coming into force of the new first proviso to section 30(1) of the Act will not in any way affect his right of appeal without depositing any part of the tax as required under the provisions of the new first proviso because of the fact that the pre‑existing right of appeal continues to exist, must, in its turn, necessarily imply that the old law which created that right of appeal must also exist to support the continuation of that right. As the old law continues to exist for the purpose of supporting the pre‑existing right of appeal, that old law must govern the exercise and enforcement of that right of appeal and there can then be no question of the amended provisions prevent ing the exercise of that right. The fact of existence of the old law for the purpose of support ing the pre‑existing right and really amounts to begging the question. The new proviso is wholly inapplicable in such a situation and the jurisdiction of the authority has to be exercised under the old law which so continues to exist. Colonial Sugar Refining Company v. Irving 1905 A C 369; Messrs Hoosein Kasam Dada v. The State of Madhya Pradesh and others A I R 1953 S C 221; Sardar Ali v. Dolimuddin A I R 1928 Cal. 640; Negendra Nath v. Mon Mohan Singh A I R 1931 Cal. 100 and Essential Industries v. Central Board of Revenue P L D 1969 Lah. 24 ref. 12 D L R 25 (SC) ; 20 I T R 33; P L D 1965 S C 681; (1868) 3 Q B D 160; (1905) 2 KB 335; (1716) 2 Ch. 1; (1954) 3 A E R 17 and 1960 A C 965 distinguished. SIDDIKY, C. J.‑This is an application under Article 98 of the Constitution of 1962 made by one Ansaruddin, Proprietor of Messrs United Engineer of `Tarek Cottage', Maghbazar, Dacca‑2, challenging the validity of an order dated 2‑8‑1967 made by the Appellate Assistant Commissioner of Income‑tax, 'A' Range. Dacca, in Income‑tax Appeal No. 14‑D/B of 1967‑68. The petitioner, as is stated in the petition, is a businessman and proprietor of Messrs United Engineer and deals in works contracts. The petitioner on 16‑5‑1963 filed a return of his income for the assessment year 1962‑63 with the income‑tax Officer, Circle `B' Dacca. Notice under section 22(4) of the Income‑tax Act was issued by the Income‑tax Officer on 10‑3‑1964 and notice under section 23(2) was also issued on the said date which were received by the assessee on 17‑3‑1964. On 24‑6‑1967 the Income‑tax Officer assessed the total income of the petitioner at Rs. 1,07,290 and demanded a tax of Rs. 51,771 cry notice of demand dated 24‑6‑1967 under section 29 of the Income‑tax Act, 1922 (hereinafter referred to as the Act) which was received by the assessee petitioner on 14‑7‑1967. The assessee being aggrieved by the order of assessment preferred an appeal on 31‑7‑1967 under section 30 of the Act to the Appellate Assistant Commissioner of Income‑tax, "A" Range, Dacca, (respondent herein) on various grounds. In the relevant column of the form of appeal the petitioner stated that the new proviso to section 30(1) of tree Act introduced by the Finance Act of 1967 was not applicable to his case, as such the petitioner filed the aforesaid appeal without paying one‑half of the sum demanded under section 29 of the Act. The petitioner did not apply to the Central Board of Revenue for relaxation of the said provisions of the proviso to section 30 (1) of the Act. The respondent by his order dated 2‑6‑1967 summarily rejected the appeal and ordered the appeal to be struck off as the provisions of the new first proviso to section 30 of the Act was not fulfilled, holding that the appeal having been filed after 1‑7‑1967 the provisions of the new proviso to section 30(1) were attracted to the case. The petitioner challenges this order dated 2‑8‑1967 on grounds that the assessment being for the assessment year 1962‑63 and having been made on 24‑6‑1967 the new proviso to section 30(1) of the Act, introduced by the Finance Act of 1967 passed on the 36th of July 1967, was not attracted to the present case and the right of appeal, as it was before the amendment was available to the petitioner for the purpose of this case, and that non‑payment of the amount of tax as required under the new first proviso to section 30(1) of the Act at the tine of presentation of the appeal cannot be a ground for summarily rejecting and striking off the appeal and this summary rejection of the appeal by the respondent is without lawful authority. The respondent has appeared in this case but did not file any affidavit‑in‑opposition. Before we proceed further to deal with the points raised for our consideration we would like to reproduce the provisions of section 30(1) of the Act, as it originally stood, which are as under: "30(1). Any assessee objecting to the amount of income assessed under section 23 of the amount of loss computed under section 24 or the amount of tax determined under section 23 or denying his liability to be assessed under this Act, or objecting to his assessment being made under subsection (4) of section 23 or objecting to the cancellation by an Income‑tax Officer of the registration of a firm under subsection (4) of section 23 or sub section (4) of section 26‑A or to a refusal to register a firm under subsection (4) of section 23 or section 26‑A, or objecting to any order under subsection (z) of section 25 or section 25‑A or subsection (2) of section 26 or section 28 made by an Income tax Officer or objecting to any penalty imposed by an Income tax Officer under subsection (6) of section 44‑E, or subsec tion (5) of section 44‑F of subsection (1) of section 46, or object ing to a refusal of an Income‑tax Officer to allow a claim to refund under section 48 or 49‑F, or to the amount of the refund allowed by the Income‑tax Officer under any of those sections and any assessee, being a company, objecting to an order made by an Income‑tax Officer under subsection (1) of section 23‑A, may appeal to the Appellate Assistant Commissioner against the assessment or against such refusal or order: Provided that no appeal shall be filed under this section in any case in which the total income of an assessee or in the case of partners of a registered firm, the total income of the firm, exceeds two lakh rupees: The first proviso to section 30(1) of the Act was substituted by a new proviso by the Finance Act of 1967 to the following effect :‑ "Provided that no appeal shall lie against any order under this subsection unless the tax payable under section 22‑A or one half of the sum demanded under section 29 after regular assess ment under section 23, whichever is the greater, has been paid: Provided further that the Central Board of Revenue may, upon an application made in this behalf, in any case,‑ (a) Modify or waive the requirement of the first proviso, and (b) extend the period within which an appeal is required to be presented under subsection (2)." The learned Advocate for the petitioner Mr. Ishtiaq Ahmed has raised for our consideration in this case only one point, viz., whether the right of appeal that was available to the petitioner until the 30th of June 1967 under the original provisions of sec tion 30(1) of the Act was available to the petitioner in respect of the present case as a vested right or the new proviso to section 30(1) of the Act has in any way altered or modified that right of appeal or, in other words whether the right of appeal granted by the statute under the original provisions of section 30(1) could in any way be affected by the new first proviso to section 30(1) of the Act introduced by the Finance Act of 1967. It is clear from the provisions of section 30(1) of the Act as it originally stood, that there was a vested right of appeal in the assessee and that right was not circumscribed by any condition. But the new first proviso added to the said section 30(1) of the Act by the Finance Act of 1967 has put a restriction on the right of appeal of the assessee in the manner that unless the tax payable under section 22‑A or one‑half of the sum demanded under section 29 of the Act after regular assessment under section 23, whichever is the greater, has been paid, no appeal shall lie against any order under subsection (1) of section 30. This is undoubtedly an abridgment of the right of appeal vesting in the assessee up to 30‑6‑1967. Now the question is whether this amendment is of procedural nature or of a substantive nature. Right of appeal is undoubtedly a creature of statute but once the statute has granted this right, it can be taken away only by an express provision of the law and that too prospectively unless the Legis lature has intended either expressly or impliedly that the right is taken away retrospectively. A change in the procedural law can be construed to be retrospective, but not so in the case of substan tive law. Once it is held that the right of appeal is a substantive right and not a procedural right there is no difficulty for us to hold in the present case that the right of appeal vesting in the assessee up to the 30th of June 1967 could not be affected by the introduction of the new first proviso to section. 30(1) of the Act by the Finance Act of 1967 which came into force on the 30th of June 1967. If any authority is needed in support of the view that we take that the right of appeal is a substantive right then we can mention the case of Colonial Sugar Refining Company v. Irving (1905 A C 369) a decision of the Judicial Committee. This is a leading case on the point and it has been followed since 1905 in all the countries where the principles of English law are observed. That the right of appeal that was available to the assessee in the present case under section 30(1) of the Act, as it originally stood, and that the new first proviso to the said subsection of section 30 is not applicable to this case, becomes all the more clear when it is found that the appeal related to the assessment year of 1962‑63 and the assessment was computed and a notice of demand was issued on 24‑6‑1967 which was 6 days prior to the coming into force of the new first proviso to section 30(1) of the Act. The mere fact that the appeal was preferred in the present case by the assessee after the coming into force of the new first proviso to section 30(1) of the Act will not in any way affect his right of appeal without depositing any part of the tax as required under the provisions of the new first proviso because of the fact that the pre‑existing right of appeal continues to exist, must, in its turn necessarily imply that the old law which created that right of appeal must also exist to support the continuation of that right. As the old law continues to exist for the purpose of supporting the pre‑existing right of appeal, that old law must govern the exercise and enforcement of that right of appeal and there can then be no question of the amended provisions preventing the exercise of that right. The argument of the learned Advocate for the respondent that the authority has no option or jurisdiction to admit the appeal unless it be accompanied by the deposit of the assessed tax. as required by the amended proviso to section 30(i) of the Act overlooks the fact of existence of the old law for the purpose of supporting the pre‑existing right and really amounts to begging the question. The new proviso is wholly inapplicable in such a situation and the jurisdiction of the authority has to be exercised under the old law which so continues to exist. The Supreme Court of India expressed itself in the above terms in the case of Messrs Hossein Kasam Dada v. The State of Madhya Pradesh and others (A I R 1953 S C 221). We may cite two other cases on the point in Sardar Ali v. Dolimuddin (A I R 1928 Cal. 640) and Negendra Nath v. Mon Mohan Singh (A I R 1931 Cal. 100). In a recent decision of the West Pakistan High Court in the case of Essential Industries v. Central Board of Revenue (P L D 1969 Lah. 24), a similar view that we are taking was taken and some of the cases that we have referred to above were taken notice of. We are in full agreement with the decision of the West Pakistan High Court on the point. Mr. Afzalul Haque appearing on behalf of the respondent cited the following decisions in support of his contention, but none of them, in our view, is applicable to the case as those relate to procedural law. 12 D L R 25 (S C) ; 20 I T R 33 ; P L D 1965 S C 681 ; (1868) 3 Q B D 160 ; (1905) 2 K B 335 ; (1716) 2 Ch. 1; (1954) 3 A E R 17 and 1960 A C 965. In the result, therefore, we are of the opinion that the respon dent has acted without lawful authority in summarily dismissing the appeal of the petitioner and ordering the striking off the same from the register. The Rule is, therefore, made absolute. We accordingly direct that the respondent do hear the appeal of the petitioner on merits and dispose it of in accordance with the law. We leave the parties to bear their own costs. ABDUL HAKIM, J.‑‑I agree. Rule made absolute.