1963 PLP 668 (PTD)

JAGDISH SAHAI, J.‑This is a reference under section 66(1) of the Indian Income‑tax Act (hereinafter referred to as the Act). The statement of the case submitted by the Income-tax Appellate Tribunal (hereinafter called the Tribunal) gives the following facts. The assessee, Messrs Kashiram Bhajanlal (hereinafter called the assessee), carries on business of cloth and arhat at Farrukhabad and also manufactures utensils. For the assessment years 1945‑46, 1946‑47 and 1947‑48 the assessee was assessed on income shown as below; Year Income Under section Date of Rs. 1945‑46 65,667 23(3)/34 28‑2‑1950 1946‑47 25,762 do. do. 1947‑48 90,343 do. do. Demand notices were sent for the tax due from the assessee but the demand not having been satisfied the follow ing orders of penalty were passed under section 46(1) of the Act on October 1, 1951; Rs. For the year 1945‑46 ... 6,000. 1946‑47 ... 2,000. 1947‑48 ... 10,

000. The assessee did not pay the tax nor did he pay the amounts of penalty as ordered by the Income‑tax Officer. Instead he filed three appeals against the quantum of assessment and three others against the order of imposition of penalty. All these appeals were filed on November 2, 1951. The Appellate Assistant Commissioner allowed the appeals against the quantum of assessment on November 22, 1951, and out of those directed against the orders of imposition of penalty he dismissed two on December 15, 1951, and the third on December 31, 1951, on the ground that the assessee not having paid up the tax on or before November 2, 1951, when the appeals were filed the same were incompetent under the first proviso to section 30(1) of the Act. The assessee then filed three appeals before the Tribunal against the orders of the Appellate Assistant Commissioner dismissing the appeals against the order of imposition of penalty. The Tribunal by its judgment dated August 12; 1952, dismissed those appeals affirming the view of the Appellate Assistant Commissioner the assessee then made applications to the Tribunal for referring a question of law to this Court and the Tribunal has referred the following question to us; "Whether on the facts and in the circumstances of this case the Tribunal was justified in holding that the appeals preferred by the assessee before the Appellate Assistant Commissioner against the imposition of penalty under section 46(1) of the Income‑tax Act were incompetent on the ground that the taxes for the non‑payment of which the penalty was imposed had not been paid on or before the date on which the appeals were filed?" We have heard learned counsel for the assessee as also for the department. The relevant portions of section 30 which are material for the decision of the case before us read as follows; " Any assessee objecting to . . . . . any penalty imposed by an Income‑tax Officer under subsection (6) of section 44‑E or subsection (5) of section 44‑F or subsection (1) of section 46 . . . . may appeal to the Appellate Assistant Commissioner against the assessment or against such refusal or order Provided that no appeal shall lie against an order under subsection (1) of section 46 unless the tax has been paid." It has already been noticed in an earlier part of this judgment that on November 2, 1951, when the appeals against the orders imposing penalty were filed the tax assessed on the assessee had not been paid, and the question that requires consideration is whether the Appellate Assistant Commissioner and the Tribunal were right in interpreting the proviso to section 30(1) of the Act so as to mean that the appeals could not be entertained. On behalf of the department it has been contended that the language of section 30 is clear and the words " no appeal shall lie" occurring in the proviso to section 30(1) create a complete bar to the entertainment of the appeals, while on behalf of the assessee it has been contended that those words only bar the hearing of an appeal in the event of the amount of tax remaining unpaid even up to the date of hearing. It is noteworthy that the words " no appeal shall lie " occur not in the main clause of section 30(1) but in the proviso. Section 30(1) specifically and in clear language confers a right of appeal against an order imposing a penalty. The proviso only qualifies that right. The right of appeal has been conferred by section 30(1) of the Act and the only effect of the proviso is that the right which has been so conferred by the main clause remains ineffective so long as the tax is not paid. It is well known that the right of appeal is determined by and is dependent upon the nature of the cause and not by or upon the conduct of a party. The effect of reading the main clause along with the proviso is that though the right of finding an appeal exists and the cause qualifies for an appeal, the appellant due to his conduct of not paying the tax remains disqualified from enforcing that right. No sooner the disqualification is removed the right becomes enforceable. The Legislature in the proviso did not use the words "no appeal shall be enter tained " but used a much more doubtful expression "no appeal shall lie". If the intention had been not to provide for the entertainment of an appeal if the tax had not been paid the Legislature would have said so in clear language. In the Shorter Oxford English Dictionary the word " lie " has been given the meaning "to be admissible or sustain able ". It is obvious that the word " lie " is not equi valent to the word "present" or "presented". It is true that in some cases the expressions "an appeal lies" or "an appeal shall lie" are used in the sense of an appeal being entertainable but in those cases the context in which those words are used justify such a conclusion. The words "no appeal shall be . . ." used in the proviso have to be interpreted in the context that in the main clause the right of appeal has been expressly conferred. If in the main clause the right to file an appeal had also been granted by laying down that an appeal shall lie in such and such circumstances, the context may have required the interpretation that the proviso bars the entertain ment of an appeal altogether unless the tax is paid but, when the Legislature deliberately used different expressions in the main clause and in the proviso, it must be held that the proviso was not intended to have the same meaning as the different expression in the main clause so as to take away the right of appeal altogether. We must hold that the Legis lature intended to confer a right of appeal in every case of imposition of a penalty but qualified that right by saying that it shall not be effective unless the tax is paid. The tax becomes payable only after the service of a notice under section 29 of the Act. Section 30(2) provides that an appeal shall be filed ordinarily within 30 days from the receipt of the notice of demand. Consequently, the right of appeal accrues on the date when the notice is received by an assessee and limitation for filing an appeal begins to run from that date. In our opinion if the appeal is filed within the period of limitation, even though the tax has not been paid, there would be no bar to its entertainment and on the date of hearing the Appellate Assistant Commissioner would have to determine whether the appeal is effective and any relief can be given under it by seeing whether the tax has been paid or not by that date. In our opinion the word "lie" can also be used in the sense of sustainable and we read the proviso to the effect that "no appeal shall be sustainable against an order under subsection (1) of section 46 unless the tax has been paid". The expression "unless the tax has been paid", clearly shows that the right to file the appeal is there but the appeal becomes effective only after the tax has been paid. The proviso does not say that " no appeal shall lie . . . unless the tax is paid by the date on which the appeal is sought to be filed or by the time the limitation for filing the same has expired." In other words, the proviso is silent on the point by which time the tax shall be deposited in order to make the appeal lie. A proviso must be strictly construed and its scope cannot be widened by adding some words to it which do not exist in it. We, therefore, con clude that even if the tax is paid till the appeal is actually heard on the date of hearing, the appeal would be competent and relief can be given on its basis. The fact that the Legislature has purposely not used the words "shall be presented" but a more elastic expression "no appeal shall lie" clearly indicates that it was not the inten tion to bar the entertainment itself but only to make the appeal ineffective till the tax has been paid. The rule that no appeal shall lie unless the tax has been paid is a rule of public policy meant to make the realisation of taxes easy and has got nothing to do with the merits of the controversy or the nature of the cause on the basis of which alone the right of appeal depends. In our judgment it is not possible to construe this rule of public policy and convenience so as to destroy the right altogether and it should be so read as to harmonise with the right of appeal and yet implement the intention of the Legislature to provide for an easy recovery of the tax. It is well established that statutes pertaining to the right of appeal should be given a liberal construction in favour of the right since they are remedial and the right should not be restricted or denied unless such a construction is unavoid able and in case of doubt the same should be resolved in favour of the right of appeal (see Statutory Constructions by Crawford, 1940 edition, section 336 at pages 392‑393 and the footnote on page 693). It may also be remembered that the Income‑tax Act is a fiscal statute and if there is any doubt with regard to the interpretation of section 30 the same must be resolved in favour of the subject, i.e., the assessee. These principles would also lend support to our view that the proviso should be so read as not to destroy the right of appeal altogether and it must be held that if the tax is paid even by the date of the hearing of the appeal, the same would be competent and should be heard on the merits. The Patna High Court in the case of Kamdar Brothers of Jharia v. Commissioner of Income‑tax ((1955) 27 I T R 176), and the Bombay High Court in the case of Commissioner of Income‑tax v. Filmistan Ltd. ((1958) 33 I T R 334), have also taken the same view as we are taking. Our attention was drawn to the case of Raja of Venkatagiri v. Commissioner of Income‑tax ((1955) 28 I T R 189), where the Andhra High Court took a different view and held that the presentation of the appeal would be barred if on the date when it is sought to be presented the tax has not been paid. We respectfully disagree with that decision and find ourselves in agreement with the views expressed by the learned Judges of the Patna and the Bombay High Courts in the cases mentioned above. In the present case on the date when the appeals against the imposition of the penalties were heard the assessee was no longer in arrears of tax as the appeals against the quantum of assessment had been allowed. We do not think that it is necessary in this case to decide as to whether the effect of the setting aside of the assessments would be that no tax was at all due from the assessee in the eye of law at any time and conse quently, the assessee cannot be deemed to have been in arrears of tax. On this question we would prefer to express no opinion, but for the reasons which we have already mentioned for holding that, if the payment of the tax is made up to, or that there are no arrears on, the date of hearing of the appeals, the proviso would not stand in the way of the appeals being heard, we answer this reference in the negative and hold that the appeals before the Appellate Assistant Commissioner against the orders imposing penalty were competent and should be heard on merits. The department shall pay to the assessee costs of this reference. We fix the fee of learned counsel for the department at Rs. 200 for purposes of assessment of costs and the same amount as costs of the assessee. Reference answered in the negative.