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PETITIONER: MESSRS MELA RAM & SONS

       Vs.

RESPONDENT: THE COMMISSIONER OF INCOME-TAX,PUNJAB.

DATE OF JUDGMENT: 21/02/1956

BENCH: AIYYAR, T.L. VENKATARAMA BENCH: AIYYAR, T.L. VENKATARAMA DAS, SUDHI RANJAN BHAGWATI, NATWARLAL H.

CITATION:  1956 AIR  367            1956 SCR  166

ACT:  Indian Income Tax Act,1922 (XI of 1922),ss.23,30(1)(2),31, 33-Assessment of Income-tax-Notice of demand-Appeal  against assessment-Received  in Appellate  Assistant  Commissioner’s Office out of time-Prayer for condonation of delay rejected- Order of Assistant Commissioner dismissing an appeal as  out of time-Whether one under s. 30(2)or under s. 31 of the Act- Whether appeal competent therefrom.

HEADNOTE: The appellant firm filed appeals against orders assessing it to  income-tax  and super-tax for the  years  1945-1946  and 1946-1947  beyond  the time prescribed by s.  30(2)  of  the Income-tax Act.  The appeals were numbered, and notices were issued for their hearing under s. 31.  At the hearing of the appeals  before  the Appellate Assistant  Commissioner,  the Department  took the objection that the appeals were  barred by time.  The appellant prayed for condonation of delay, but that  was refused, and the appeals were dismissed  as  time- barred.   The appellant then preferred appeals  against  the orders of dismissal to the Tribunal under s. 33 of the  Act, and  the  Tribunal  dismissed them on the  ground  that  the orders  of  the  Assistant Commissioner  were  in  substance passed  under  s. 30(2) and not under s. 31 of the  Act  and that no appeal lay against them under s. 33 of the Act. On a reference under s. 66(1) of the Act the High Court held that the orders of the Appellate Assistant Commissioner were made  under s. 30(2) and were not appealable under s. 33  of the Act. On appeal by special leave to the Supreme Court the question for determination was whether an order dismissing an  appeal presented under s. 30 as out of time was one under s.  30(2) or under s. 31 of the Act because if it was the former there was  no appeal provided against it; if it was the latter  it was open to appeal under s. 33. Held that the orders of the Appellate Assistant Commissioner fell within s. 31. A  right of appeal is a substantive right and is a  creature of the statute.  S. 30(1) confers on the assessee a right of appeal  against  certain orders and an order  of  assessment under  s. 23 is one of them.  The appellant had therefore  a

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substantive  right under s. 30(1) to prefer appeals  against orders of assessment made by the Income Tax Officer. 167 An  appeal presented out of time is an appeal and  an  order dismissing it as time-barred is one passed in appeal. Section 31 is the only provision relating to the hearing and disposal of appeals and if an order dismissing an appeal  as barred by limitation as in the present case is one passed in appeal  it  must fall within s. 31 and as s.  33  confers  a right  of appeal against all orders passed under s.  31,  it must also be appealable. To  fall  within s. 31 it is not necessary  that  the  order should expressly address itself to and decide on the  merits of  the assessment and it is sufficient that the  effect  of the order is to confirm the assessment as when the appeal is dismissed on a preliminary point. An  order rejecting an appeal on the, ground  of  limitation after it had been admitted is one under s. 31, though  there is no consideration of the merits of the assessment. Held  therefore that 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 s. 31 and would be  open to  appeal, and it would make no difference in the  position whether  the orders of dismissal were made before  or  after the appeals were admitted. Commissioner  of  Income-tax,  Madras v. Mtt.  ‘r.   S.  Ar. Arunachalam Chettiar, ([1953] S.C.R. 463), explained. Case-law discussed.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 17 of 1954. Appeal  by Special Leave from the Judgment  and  Order-dated the 11th day of June 1951 of the Punjab High Court in  Civil Reference No. 2 of 1951. Hardyal Hardy and Sardar Singh, for the appellant. C. K. Daphtary, Solicitor-General of India (G.  N. Joshi and R. H. Dhebar, with him) for the ’respondent. 1956.  February 21.  The Judgment of the Court was delivered by VENKATARIAMA  AYYAR J.--The appellant is a firm carrying  on business at Ludhiana in the Punjab.  The Income-tax  Officer assessed  its  income for 1945-1946 at Rs.  71,186,  and  on 17-9-1947  a  notice  of demand -was served on  it  for  Rs. 29,857-6-0  on  account of income-tax  and  super-tax.   The appellant preferred an 168 appeal against the assessment, and it was actually  received in the office of the Appellate Assistant Commissioner on  5- 11-1947.  It was then out of time by 19 days; but the appeal was  registered  as  No. 86, and notice  for  hearing  under section  31 was issued for 13-12-1947, and after  undergoing several  adjournments, it was actually heard  on  1-10-1948. For the year 1946-1947, the Income-tax Officer assessed  the income  of  the  firm at Rs. 1,09,883, and  on  29-9-1947  a notice  of  demand was served on it for Rs.  51,313-14-0  on account   of  income-tax  and  super-tax.    The   appellant preferred  an  appeal against this assessment,  and  it  was actually  received in the office of the Appellate  Assistant Commissioner  on  5-11-1947, and it was then 7 days  out  of time.   It was registered as No. 89, and notice for  hearing under  section 31 was issued for 24-6-1948.  Eventually,  it was heard along with Appeal No. 86 on 1-10-1948.

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 At the hearing, the Department took the objection that the appeals  were  presented  out of time,  and  were  therefore liable   to   be  dismissed.   The  appellant   prayed   for condonation of the delay on the ground that following on the partition of the country the conditions were very unsettled, that curfew order had been promulgated and was in force, and that the post office did not accept registered letters,  and that  the traffic on the Grand Trunk Road was  closed.,  and that  in  view of these exceptional  circumstances,  it  bad sufficient cause for not presenting the appeals in time.  On 31-12-1948  the  Appellate  Assistant  Commissioner   passed orders  in  both  the appeals, holding that  there  was  not sufficient  ground  for condoning the delay,  and  rejecting them  in limine.  These orders were purported to  be  passed under section 31 read along with section 30(2).   Against  these  orders, the  appellant  preferred  appeals under section 33 of the Act to the Appellate Tribunal  which by  its  order dated 4-4-1950 dismissed them on  the  ground that  the  orders  of the  Assistant  Commissioner  were  in substance passed under section 30 (2) and not under  section 31 and that no appeal lay against them under section 33,  On the applica- 169 tions of the appellant, the Tribunal referred under  section 66(1)  of the Income Tax Act the following question for  the decision of the High Court of Punjab:  "Whether  in the circumstances of the case appeals  lay  to the  Tribunal  against  orders of  the  Appellate  Assistant Commissioner dismissing the appeals against the  assessments for the years 19451946 and 1946-1947 in limine".   The  reference was beard by Khosla and Harnam  Singh  JJ., who  held  following an earlier decision of  that  court  in Dewan Chand v. Commissioner of Incometax(1) that the  orders of  the Appellate Assistant Commissioner were under  section 30(2)  and not appealable under section 33.  Certificate  to appeal to this Court against this order having been  refused by  the High Court, the appellant applied for  and  obtained leave to appeal to this Court under article 136 of the  Con- stitution, and that is how the appeal comes before US.   The provisions of the Act bearing on the question may  now be  referred  to.  Section 30(1) confers on the  assessee  a right  of  appeal against orders passed under  the  sections specified  therein.  Section 30(2) provides that the  appeal shall  ordinarily  be presented within thirty  days  of  the order   of   assessment,   but   the   Appellate   Assistant Commissioner may admit an appeal after the expiration of the period if he is satisfied that the appellant bad  sufficient cause  for  not presenting it within that  period.   Section 30(3)  provides that "the appeal shall be in the  prescribed form  and  shall  be verified  in  the  prescribed  manner". Section  31(1) enacts that "the Appellate Assistant  Commis- sioner  shall  fix a day and place for the  hearing  of  the appeal,  and  may from time to time  adjourn  the  hearing". Section  31(3)  specifies the orders that may be  passed  in appeals according as they are directed against orders passed under the one or the other of the sections of the Act  which are specified in section 30(1).  When the appeal is  against an order of assessment under section 23-and this is what  we are con- (1)  (1951] 20 1 T.R. 621, 170 cerned with in this appeal-it is provided in section  31(3), clauses  (a)  and (b) that in disposing of  the  appeal  the Appellate  Assistant Commissioner may (a)  confirm,  reduce, enhance  or  annul  the assessment, or  (b)  set  aside  the

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assessment  and  direct the.  Incometax Officer  to  make  a fresh  assessment after making such further enquiry  as  the Income-tax Officer thinks fit.  Section 33(1) enacts that, "Any  assessee objecting to an order passed by an  Appellate Assistant  Commissioner under section 28 or section  31  may appeal  to the Appellate Tribunal within sixty days  of  the date on which such order is communicated to him".  Stated succinctly, section 30 confers a right of appeal  on the  assessee,  section  31 provides  for  the  hearing  and disposal  of the appeal, and section 33 confers a  right  of further appeal against orders passed under section 31,  Now,  on these provisions the question is whether an  order dismissing  an appeal presented under section 30 as  out  of time  is one under section 30(2) or under section 31 of  the Act.   If  it  is the former, there is  no  appeal  provided against it; if it is the latter, it is open to appeal  under section  33.   On  this question, there  has  been  a  sharp conflict  of  opinion among different High Courts  and  even among different Benches of the same High Court.  The  Bombay High Court has held that when an appeal is presented out  of time,  and there is no order of condonation of  delay  under section  30(2),  there  is, in law,  no  appeal  before  the Appellate  Assistant Commissioner, and that an order by  him rejecting the appeal does not fall within section 31 and  is not  appealable: Commissioner of Income-tax v.  Mysore  Iron and Steel Works(1) and K. K. Porbunderwalla v.  Commissioner of  Income-tax(2); but that if the appeal is admitted  after an  order  of condonation is made under  section  30(2),  an order  subsequently  passed dismissing it on the  ground  of limitation  would  be  one under section  31  and  would  be appealable under section 33 and the result will be the  same even when the appeal is admitted without (1) .[1949] 17 I.T.R. 478, (2) [1952] 21 I.T.R. 63. 171 any  order of condonation under section 30(2):  Champalal  A sharam v. Commissioner of Income-tax(1).  The  High Court of Allahabad has also taken the same  view, and  held  that  an  order refusing  to  condone  delay  and rejecting an appeal before it was admitted was not one under section  31 and was not appealable: Vide Shivnath Prasad  v. Commissioner  of  Income-tax,  Central  and  U.  P.(3)   and Municipal Board, Agra v. Commissioner of Income-tax, U.  P.( 3 ); but that ail order dismissing the appeal as time-barred after it had been admitted was one under section 31 and  was appeable: Mohd.  Nain Mohd.  Alam v. Commissioner of Income- tax(1).   The  High  Court  of  Punjab  has  held  following Shivnath  Prasad v. Commissioner of  Incometax, Central  and U.  P.(2) and Commissioner of Incometax v. Mysore  Iron  and Steel   Works(5)   that   when   the   Appellate   Assistant Commissioner  declines  to  condone delay  and  rejects  the appeal,  it is one under section 30(2) and  not  appealable. It  has  further  held  that even if  the  appeal  bad  been admitted  without an order of condonation and  dismissed  at the  hearing  on the ground of limitation, it would  not  be under section 31, because the scheme of the Act contemplated that an order to be passed under that section must relate to the  merits of the assessment.  It is on this decision  that the judgment under appeal is based It may be mentioned  that the decision in Dewan Chand v. Commissioner of Income-tax(6) was  dissented from in a recent decision of the Punjab  High Court in General Agencies v. Income-tax Commissioner(7) . In  Commissioner of Income-tax v. Shahzadi Begum the  Madras High Court has held that an order-declining to excuse  delay and rejecting the appeal is one under section 31, whether it

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is made before the appeal is admitted or after, and that  an appeal which is filed out of time is, nonetheless, an appeal for purposes of section 31, and that an order dismissing  it would be appealable under section 33.  In Gour Mohan (1)  [1953] 23 I.T.R. 464, (3)  [1951] 19 I.T.R. 63. (5)  [1949] 17 I.T.R. 478. (7)  A.I R. 1956 Punjab 26. (2)  [1936] 3 I.T.R. 200. (4)  [1951] 19 I.T.R. 58. (6)  [1951] 20 I.T.R. 621. (8)  [1952] 21 I.T.R. 1. 172 Mullick  v. Commissioner of Agricultural Income-tax(1),  the Calcutta  High Court has, after a full discussion,  come  to the  conclusion that an order of dismissal on the ground  of limitation  at  whatever  stage was  one  which  fell  under section  31.   It  is  unnecessary to  refer  to  the  views expressed  in decisions of other High Courts, as  the  point now  under  discussion did not directly arise  for  decision therein.   The question is which of these views is the correct one to adopt.  We start with this that under section 33 it is  only orders  under section 31 that are appealable.  The  question therefore narrows itself to this whether an order  declining to condone delay and dismissing the appeal as barred by time is  an order under section 31.  It will be, if it is  passed in  appeal against an order of assessment, and is one  which affirms  it.   Now, the conflicting views expressed  by  the several  High  Courts centre round two points: (1)  when  an appeal is presented out of time and there has been a refusal to condone delay under section 30(2), is an order  rejecting it as time-barred one passed in appeal; and (2) if it is, is such  an order one confirming the assessment within  section 31(3)(a)?   On the first point, as already stated, it has been held by the  Bombay  High Court that while an  order  dismissing  an appeal  as  time-barred after it is admitted  is  one  under section 31, a similar order passed before it is admitted  is one  under section 30(2).  The ratio of this distinction  is stated  to  be that in law there is no appeal unless  it  is presented in time, and if presented beyond time, unless  the delay  is excused.  In Commissioner of Income-tax v.  Mysore Iron  and Steel Works(2), Chagla, C.J. stated  the  position thus:   "An  asseesee has a statutory right to present  an  appeal within thirty days without any order being required from the Appellate  Assistant  Commissioner  for  admission  of  that appeal.   But  if  the time prescribed  expires,  then  that statutory right to present an appeal goes; and an appeal can only be entertained provided it is admitted by the Appellate Assistant Commissioner after condoning the delay. (1) [1952] 22 I.T.R. 131. (2) [1949] 17 I.T.R. 478. 173 Therefore  before an appeal could be admitted in this  case, an  order  from  the Appellate  Assistant  Commissioner  was requisite  that the delay had been condoned and it was  only on  such  an  order  being made that  the  appeal  could  be entertained  by the Appellate Assistant  Commissioner.   Now section 31 deals only with such appeals which are  presented within the prescribed period or admitted after the delay has been  condoned,  and the procedure laid down in  section  31 with  regard to the hearing of appeals only applies to  such appeals.   Therefore,  in  my opinion,  when  the  Appellate

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Assistant  Commissioner refused to condone the delay,  there was no appeal before him which he could hear and dispose  of as  provided under section 31 of the Act.  Section  33  then gives the right of appeal to the assessee from an order made by the Appellate Assistant Commissioner either under section 28  or under section 31.  Therefore the Legislature did  not give  the right of appeal to the assessee against  an  order made  by the Appellate Assistant Commissioner under  section 30 of the Act". Learned  counsel for the appellant disputes the  correctness of  the  last  observation that an order  of  the  Appellate Assistant  comissioner refusing to condone the delay is  one under  section 30(2), and contends that the only order  that could  be passed under that section was one excusing  delay, and  an order refusing to condone it will fall  outside  it, and that such an order could only be made under section  31. We  find  it difficult to accede to this  contention.   When power  is  granted to an authority to be  exercised  at  his discretion, it is necessarily implicit in the grant that  he may  exercise it in such manner as the  circumstances  might warrant.  And if the Appellate Assistant Commissioner has  a discretion to excuse the delay, he has also a discretion  in appropriate cases to decline to do so.  We are therefore  of opinion  that the refusal to excuse delay is an order  under section 30(2.).  But  the question still remains whether the view  taken  in Commissioner of Income-tax v. Mysore Iron 23 174 and  Steel Works(1) and K. K. Porbunderwalla v  Commissioner of  Income-tax (2) that an appeal which is filed beyond  the period  of  limitation  is, in the eye of  law,  no  appeal, unless and until there is a condonation of delay, and  that, in consequence, an order passed thereon cannot be held to be passed  in appeal so as to fall within section 31 is  right. Now,  a  right of appeal is a substantive right,  and  is  a creature  of  the  statute.  Section 30(1)  confers  on  the assessee  a right of appeal against certain orders,  and  an order  of assessment under section 23 is one of  them.   The appellant  therefore had a substantive right  under  section 30(1) to prefer appeals against orders of assessment made by the  Income-tax  Officer.  Then, we come to  section  30(2), which enacts a period of limitation within which this  right is  to be exercised.  If an appeal, is not presented  within that time, does that cease to be an appeal as provided under section  30(1)?   It  is  well  established  that  rules  of limitation,  pertain  to the domain of adjectival  law,  and that  they  operate  only  to bar  the  remedy  but  not  to extinguish  the  right.  An appeal preferred  in  accordance with section 30(1) must, therefore, be an appeal in the  eye of  law,  though  having been presented  beyond  the  period mentioned  in section 30(2) it is liable to be dismissed  in limine.   There might be a provision in the statute that  at the  end of the period of limitation prescribed,  the  right would  be  extinguished, as for example, section 28  of  the Limitation  Act; but there is none such here.  On the  other hand,  in conferring a right of appeal under  section  30(1) and  prescribing  a period of limitation  for  the  exercise thereof separately under section 30 (2), the legislature has evinced  an  intention  to maintain  the  distinction  well- recognised   under  the  general  law  between  what  is   a substantive  right and what is a matter of  procedural  law. In  Nagendranath  Dey v. Suresh Chandra Dey(3)  Sir  Dinshaw Mulla  construing the word ’ appeal’ in the third column  of article 182 of the Limitation Act observed:

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"There is no definition of appeal in the Civil Pro- (1) [1949] 17 I.T.R. 478.     (2) [1952] 21 I.T.R. 63. (3)  59 I.A. 283, 287. 175 cedure  Code,  but their Lordships have no  doubt  that  any application by a party to an appellate, Court, asking it  to set aside or revise a decision of a subordinate Court, is an appeal within the ordinary acceptation of the term, and that it  is  no  less  an  appeal  because  it  is  irregular  or incompetent".  These  observations  were  referred to  with  approval  and adopted by this Court in Raja Kulkarni and others v.   The State of Bombay(1).  In Promotho Nath Roy v. W.   A. Lee(2), an  order dismissing an application as barred by  limitation after  rejecting  an  application under  section  5  of  the Limitation Act to excuse the delay in presentation was  held to  be one "passed on appeal" within the meaning of  section 109  of  the Civil Procedure Code.  On the  principles  laid down in these decisions, it must be held that an appeal pre- sented out of time is an appeal, and an order dismissing  it as time-barred is one passed in appeal. Then,  the  next question is whether it is an  order  passed under  section  31  of the Act.  That section  is  the  only provision  relating to the hearing and disposal of  appeals, and if an order dismissing an appeal as barred by limitation is  one  passed in appeal, it must fall within  section  31. And  as  section 33 confers a right of  appeal  against  all orders passed under section 31, it must also be  appealable. But  then,  it  is  contended  that  in  an  appeal  against assessment the only order that could be passed under section 31 (3)(a) is one which confirms, reduces, enhances or annuls the  assessment, that such an order could be made only on  a consideration of the merits of the appeal, and that an order dismissing it on the ground of limitation is not within  the section.   That  was  the  view  taken  in  Dewan  Chand  v. Commissioner  of Income-tax(3).  But there is practically  a unanimity of opinion among all the other High Courts that to fall within the section it is not necessary that the-  order should expressly address itself to and decide on the  merits of the assessment, and that it is sufficient that the effect of the order is to confirm the assessment (1) [1954] S.C.R. 384, 388.   (2) A.I.R. 1921 Cal. 415.                  (3) [1951] 20 I.T.R. 621. 176 as when the appeal is dismissed on a preliminary point.   In Commissioner    of   Income-tax   v.   Shahzadi    Begum(1), Satyanarayana Rao, J. said:  "If  the appeal is dismissed as incompetent or is  rejected as  it  was filed out of time and no  sufficient  cause  was established,  it  results  in an affirmation  of  the  order appealed against".  In  Gour  Mohan  Mullick v.  Commissioner  of  Agricultural Income-tax(2),  construing  sections 34, 35 and  36  of  the Bengal  Agricultural  Income-Tax  Act  which  are  in  terms identical with those of sections 30, 31 and 33 of the Indian Income-Tax Act, Chakravarti, J. observed:   "I  would base that view on the ground that the order,  in effect,  confirmed the assessment or, at any rate,  disposed of  the  appeal  and was thus an  order  under  section  35, because what that section really contemplates is a  disposal or  conclusion  of  the  appeal  and  the  forms  of  orders specified in it are not exhaustive.  An appellate order  may not,  directly and by itself, confirm, or reduce or  enhance or  annul an assessment and may yet dispose of  the  appeal. If  it  does so, it is immaterial whether the  ground  is  a

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finding that the appeal is barred by limitation or a finding that  the  case is not a fit one for extension  of  time  or both".  This  reasoning is also the basis of the decisions  of  the Bombay  and Allahabad High Courts which bold that  an  order rejecting an appeal on the ground of limitation after it had been  admitted is one under section 31, though there  is  no consideration of the merits of the assessment.  Thus, in  K. K. Porbunderwalla v. Commissioner of Income-tax(3),  Chagla, C. J. observed: ‘‘....  although the Appellate Assistant Commis  sioner  did not  hear the appeal on merits and held that the appeal  was barred by limitation his order was under section 31 and  the effect of that order was to confirm the assessment which bad been made by the Income-tax Officer". In Special Manager of Court of Wards v. Commissioner (1) [1952] 21 I.T.R. 1.          (2) [1952] 22 I.T.R. 131. (3)  [1952] 21 I.T.R. 63. 177 of  Income-tax(1), the Allahabad High Court stated that  the view was "possible that even though the period of limitation is  prescribed  under  section 30 and  the  power  to  grant extension is also given in that section the power is  really exercised  under  section  31  as  the  Appellate  Assistant Commissioner  when  he decides not to extend the  period  of limitation  may  be said in a sense to  have  confirmed  the assessment".   The  respondent  relied  on  a  later  decision  of   the) ’Allahabad  High  Court  in Mahabir  Prasad  Niranjanlal  v. Commissioner  of Income-tax(2), wherein it was held  by  the learned  Judges,  departing  from  the  previous  course  of authorities  of that court, that an order of  the  Appellate Assistant  Commissioner dismissing an appeal as  time-barred was  one under section 30(2) and not under section  31,  and was  therefore  not appealable.  This conclusion  they  felt themselves bound to adopt by reason of certain  observations of this Court in Commissioner of Income-tax, Madras v.  Mtt. Ar.  S. Ar.  Arunachalam Chettiar(3).  But when read in  the context  of  the point that actually arose for  decision  in that  case,  those  observations  lend  no  support  to  the conclusion reached by the learned Judges.  There, the  facts were  that  an appeal was preferred by  the  assessee  under section  30(1) against an order of the  Income-tax  Officer, and   that   was  dismissed  by  the   Appellate   Assistant Commissioner  on 19-11-1945 as incompetent.  No  appeal  was filed  against this order, and it became final.  But  acting on  a  suggestion made in the order  dated  19-11-1945,  the assessee filed an original miscellaneous application  before the  Appellate Tribunal for relief, and by its  order  dated 20-2-1946 the Tribunal set aside the findings of the Income- tax  Officer, and directed him to make a fresh  computation. Then, on the application of the Commissioner of  Income-tax, the Tribunal referred to the High Court under section  66(1) of the Income-tax Act the following question:   "Whether in the facts and circumstances of the case, the order of the Bench dated 20th February, (1) [1950] 18 I.T.R. 204, 212.  (2 ) [1955] 27 I.T.R. 268. (3)  [1953] S.C.R. 463: 474-475, 178 1946  in  the miscellaneous application  is  an  approoriate order   and   is  legally  valid  and  passed   within   the jurisdiction and binding on the Income-tax Officer".   The  High Court declined to answer this reference  on  the ground that the order of the Tribunal was not one passed  in an appeal under section 33(1), and that In consequence,  the

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reference  under section 66(1) was itself incompetent.   The correctness  of  this decision was challenged on  appeal  to this Court, and in affirm ing it, this Court observed:   ........  when  on  19th  November  1945,  the   Appellate Assistant  Commissioner  declined to admit the  appeal,  the assessee  did  not  prefer  any  appeal  but  only  made   a miscellaneous  application  before the  Appellate  Tribunal. There  is  no  provision  in  the  Act  permitting  such  an application.   Indeed,  in  the statement of  the  case  the Appellate   Tribunal  states  that  in   entertaining   that application  and  correcting  the error  of  the  Income-tax Officer  it  acted in exercise of what it  regarded  as  its inherent powers.  There being no appeal under section  33(1) and  the order having been made in exercise of its  supposed inherent jurisdiction, the order cannot possibly be regarded as  one under section 33(4) and there being no  order  under section  33(4)  there could be no  reference  under  section 66(1) or (2), and the appellate Court properly refused to entertain it".   There is, of course, nothing in the decision itself  which bears  on  the  point now  under  discussion.   But  certain observations occurring at pages 474 and 475 were referred to by  the learned Judges as leading to the conclusion that  an order  dismissing  an appeal as barred by  time  would  fall undersection 3O(2).  Now, those observations came to be made by  way  of answer to a new contention put  forward  by  the learned,  Attorney-General in support of the  appeal.   That contention was that the miscellaneous application  presented to  the Tribunal might be treated as an appeal  against  the order  dated  19-11-1945,  in which case  the  order  passed thereon on 20-2-1946 would fall under section 33(4) and  the reference would be com- 179 petent.   ’In disagreeing with this contention,  this  Court observed   that  the  appeal  to  the  Appellate   Assistant Commissioner was incompetent under section 30(1), that  even if it was competent, the order dated 19-11-1945 was not  one contemplated  by  section 31, and there could be  no  appeal against  such an order under section 33(1).  Now, it  should be noticed that the question actually referred under section 66(1)  was the correctness and legality of the order  passed in a miscellaneous application and not of any order made  in an  appeal preferred under section 33(1).  In this  context, the  point  sought to be raised by  the  learned,  Attorney- General  did  not  arise  at  all  for  decision,  and   the observations   in  answer  thereto  cannot  be  read  as   a pronouncement on the question of the maintainability of  the appeal, much less as a decision that an order dismissing  an appeal  as barred by limitation is one under section  30(2). Accordingly,  the  question whether an order  dismissing  an appeal as barred by limitation falls under section 30(2)  or section 31 remains unaffected by the observations in Commis- sioner  of Income-tax, Madras v. Mtt.  Ar.  S.  Ar.   Aruna- chalam Chettiar(1).   Then again, under the provisions of the Act, limitation is not the only preliminary ground on which an appeal could  be disposed of without a consideration of the merits.   Section 30(3)  provides that an "appeal shall be in  the  prescribed form  and shall be verified in the prescribed  manner".   If the  Appellate Assistant Commissioner holds that the  appeal does not comply with the requirements of this enactment  and rejects it on that ground, the order must be one made  under section 31, since section 30(3) makes no provision for  such an  order, as does section 30(2) in the case of  limitation. All  the  orders  under section 31  being  appealable  under

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section  33, the order of dismissal for  noncompliance  with section 30(3) must also be appealable, and it was so decided in  Maharani Gyan Manjari Kuari v. Commissioner  of  Income- tax(2)  .  How  is  this view  to  be  reconciled  with  the contention that section 31 contemplates only orders on the (1) [1953] S.C.R. 463. (2) (1944) 12 I.T.R. 59. 180 merits  of  the assessment and not  on  preliminary  issues? Vide also the decision in Kunwarji Ananda v. Commissioner of Income-tax(1),  which was followed in Maharani Gyan  Manjari Kuari  v. Commissioner of Income-tax(2), and in  Ramnarayana Das Mandal v. Commissioner of Income-tax(3).  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.   The  learned  Solicitor-General sought to get  over  these decisions  by taking up the position that section 31(3)  (a) construed  in  its  literal and  ordinary  sense,  conferred jurisdiction on the Appellate Assistant Commissioner only to pass orders on the merits of the assessment, that it was not therefore  open to him to entertain any question  which  did not directly relate to such merits, and that accordingly  he could  not hear or decide any issue of a preliminary  nature such as limitation, and dispose of the appeal on the  ,basis of  the  finding  on  that issue.   He  conceded  that  this contention  would run counter to numerous  authorities,  but argued   that  they  were  all  wrong.   Having  given   due consideration to this contention, we are of opinion that  it is not well-founded.   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 partehe  has  a right to challenge its  correctness  at  the bearing  of  the  appeal.  That is the  position  under  the general  law  (vide  Krishnasami .  Panikondar  v.  Ramasami Chettiar(4),  and there is nothing in the provisions of  the Income Tax Act, which enacts a different principle. (1)  I  L.R. 11 Patna 187; A.I.R. 1931 Patna 306;  5  I.T.C. 417. (2) [1944]12 I.T.R. 59.        (3) (1950) 18 I.T.R. 660. (4) [1918] I.L.R. 41 Mad. 412; 45 I.A. 25.   181 Therefore,  if  an appeal is admitted without  the  fact  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.  Similar considerations would  apply  to other  objections  of a preliminary character, such  as  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 bearing of the appeal on the merits  of  the assessment only.  In this view, the orders of the  Appellate

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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. The  question referred must accordingly be answered  in  the affirmative.  This appeal will therefore be allowed, and the order of the court below set aside.  The appellant will have his costs here and in the court below. 24 182