MESSRS WALAYAT FLOUR MILLS, LYALLPUR Versus THE COMMISSIONER OF INCOME-TAX, RAWALPINDI

MDHAMMAD AFZAL CHEEMA, J.‑ These three cases registered as T. R. 262, T. R. 263 and T. R. 264 of 1971, are connected matters, having been filed by Messrs Walayat Flour Mills, Lyallpur, against two orders of Income‑tax Appellate Tribunal, dated 21‑12‑1970 and 2b‑5‑1971, the former pertaining to the dismissal of the applicant's appeal in default of appearance and the latter pertaining to refusal of its restoration.

2. The short background of these three cases is that the petitioner‑firm was constituted by a written partnership deed executed on 3‑4‑1961, for running flour mills under the name and style of Messrs Walayat Flour Mills, Labour Colony, Lyailpur. On 15‑5‑1961, the firm submitted an application under section 26‑A of the Income‑tax Act, seeking registration on the basis of the aforesaid instrument of partnership deed. The Income‑tax Officer took the view that the partnership deed was merely an aide memoire of the terms which were orally settled between the parties on 1‑4‑1961 and as such, it did not create the firm in terms of the provision contained in section 26‑A. Reliance was placed by him in this regard on Commissioner of Income‑tax v. Muhammad Qudratullah ((1966).13 Taxation 161). It would be advantageous to refer in this context to the amendment intro duced by section 11 of Act I of 1957. The unamended provision contained in subsection (1) was as follows :‑

"Application may be made to the Income‑tax Officer on behalf of any firm, constituted under an instrument of partnership specifying the individual shares of the partners, for registration for the purposes of this Act and of any other enactment for the time being in force relating to Income tax or super tax:"

By means of section 11 of the Act I of 1957, expression "constituted under" was substituted by "constituted by" and the alteration was made effective retrospectively with effect from 1‑4‑1955. By means of the same amending section 11 of the Act I of 1957, a new subsection (3) was added which reads as under :‑

"Where the Income‑tax Officer is satisfied that the application is complete and that there is, or was as the case may be, a genuine firm in existence constituted as shown in the instrument, or measurements of partnership executed in writing and in force in the relevant previous year, he may register the firm for the purposes of the Act, or where the firm has already been registered for the immediately preceding year, renew the registration."

It would also be pertinent to refer in this context to yet another amendment introduced in subsection (1) by means of section 6 of Act V of 1965 whereby subsection (1) was made to read as follows :-----

"Application may be made to the Income‑tax Officer on behalf of any firm constituted by an instrument of partnership (exe cuted in writing before the end of the previous year for which the assessment is to be made) and specifying individual shares of partner, for registration for the purposes of this Act and for any other enactment for the time being in for relating to income‑tax or super tax."

The lines in parenthesis were inserted by means of this amend ment. This provision came in for examination before the Dacca High Court in Commissioner of Income‑tax v. Muhammad Qudrutallah, Saidpur. The facts of that case were that assessee made an application for registration of the firm for the charge Sear 1957‑58 relating to the accounting year ending 31st of March 1957. The application was based on the partnership deed executed on 25‑4‑1956 wherein it was stated that the firm had been verbally constituted on 1‑4‑1956. Registration was refused by the Income‑tax Officer on the ground that section 26‑A did not recognise a partnership for the purpose of registration which was not constituted by an instrument of partnership deed. Their Lordships observed in reference to the deed of partnership as follows :-----

"The firm has not been constituted by this deed. It has merely recorded the terms by which the partnership was verbally constituted at an earlier date. This is not the deed which is contemplated under section 26‑A to enable the assessee to claim registration under the law."

In this judgment, their Lordships of the Dacca High Court had also referred to Commissioner of Income‑tax v. Noor Hussain (P L D 1964 S C 657) equivalent to (1964) 10 Taxation 206. The precise observation relied upon was as follows :

"The above provisions of sections 26, 26‑A and the Rules clearly indicate that the firm to be registered must be in existence during the accounting year. Further the expression "constituted as shown in the instrument of partnership" in the section as well as in the rules contemplates an instrument by which parties thereto are agreeing in the present as to a course of business to be followed by them in future."

3. Feeling aggrieved by the order of the Income‑tax Officer dated 24‑6‑1967, whereby registration was refused on the basis of Qudratullah's case, the assessee filed an appeal before the learned Appellate Assistant Commissioner who took the view that the later authority proceeded on distinguishable facts and as such was inapplicable to the facts of the case. Accordingly, he allowed the appeal and directed registration of the firm vide his order dated 27‑9‑1967. Feeling aggrieved the Depart ment preferred an appeal to the learned income‑tax Appellate Tribunal before which it was a common ground between the parties that the facts of Qudratullah's .case being almost identical with those of the instant case that authority was fully attracted. The assesses, however, tried to rely on the Supreme Court authority in Noor Hussain's case to which reference has also been made in Dacca authority in Qudratullah's case.

4. Having considered the position, the learned Tribunal affirmed the view taken by the Income‑tax Officer that the Partnership Deed dated 3‑4‑1961 was merely an aide memoire of the terms on which the previously constituted partnership had to function. Accordingly, the Department's appeal was allowed vide order dated 29‑11‑1968. The learned Tribunal also observed that it was bound by the interpretation placed by the superior Courts on section 26‑A of the Income‑tax Act.

5. Feeling aggrieved, the assessee moved a reference applica tion under section 66(1) of the Income‑tax Act for referring the following question of law :

"Whether on the facts and circumstances of the case the Tribunal was justified in refusing to grant registration to the firm under section 26‑A of the income‑tax Act, 1922 from the date of execution of the Partnership Deed viz., 3rd April 1961;"

The application was opposed by the Department on the ground that the question as framed did not arise out of the Tribunal's order. The learned Tribunal, however, reframed the question vide its order dated 15‑4‑1969 and referred the same for deter mination to the High Court of West Pakistan, which is as under :‑

"Whether on the facts and in the circumstances of the case the Tribunal was justified in refusing registration to the assessee under section 26‑A for the Assessment Year 1962‑63:"

6. This brings us to the Assessment Year 1963‑64, when a fresh application was moved for renewal of registration on 8‑7‑1963 by which time, the Department's appeal against the order of Assistant Appellate Commissioner was pending disposal before the Tribunal, and on that score alone, the Income‑tax Officer rejected this application vide order dated 7‑2‑1968 (Annex. 'F'). A similar application was made for the renewal of registration on 25‑6‑1964 pertaining to the year 1964‑65 which, too, was dismissed on the sane ground vide order dated 6‑6‑1968 (Annex. 'G'). The last application In the series dated 30‑8‑1965 filed for renewal of registration in respect of Assessment Year 1965‑66, was also dismissed by a stereotyped order dated 6‑6‑1968 (Annex. 'H'). Feeling aggrieved, the assessee moved three appeals before the Appellate Assistant Commissioner which were dismissed vide order dated 8‑5‑1969 (Annex. 'J'), on the ground that the dismissal of the applications was based on the refusal of the original claim for the year 1962‑63 which did not call for interference. It may be observed in this context that by that time the Earned Tribunal had allowed the Departments' appeal finally upholding the first order of the Income‑tax Officer refusing registration In respect of the Assessment Year 1962‑63. Feeling aggrieved by this order the assessee moved three appeals i.e. I. T. A. No. 2752 of 1968, I. T. A. No. 2753 of 1968‑69 and I. T. A. No. 2754 of 1968‑69, giving rise to P. T. R. 216, 217 and 218 of 1971. What transpired in between, however, was that the three appeals were fixed for 21‑12‑1970 after notices were served on the assessee and his counsel none of whom appeared. An application for adjournment was, however, received by the Registrar of the Tribunal on behalf of Ghani Dad Khan, counsel for the assesses‑appellant that he was suffering from cold and fever and as such unable to attend. This application Is Annex. 'J'. Not being satisfied with the sufficiency of the cause for the grant of adjournment and having regard to the fact that the assesses‑appellant had sufficient time to arrange for alternative representation, the adjournment was refused and the three appeals were dismissed in default under rule 24 of the Appellate Tribunal Rules, 1948, vide order dated 21‑12‑1970 (Annex. 'K') Feeling aggrieved, the assessee moved an application dater 26‑3‑1971 (Annexure 2'), for the restoration of the appeals under rule 24 which too, was finally dismissed vide order dated 28‑5‑1971 (Annexure 'O'). It appears that in the course of arguments, the assessee shifted the entire responsibility on his counsel and emphasized the irreparable loss suffered by him on that account. Having regard to the fact that the assessee as well as his counsel had received notice of the date of hearing, the Tribunal was not satisfied that this constituted sufficient cause for restoration and accordingly, dismissed the application vide order dated 28‑5‑1971.

6‑A. In these circumstances the petitioner filed three separate applications before the High Court under section 66(1) of the Income‑lax Apt and referred the following common questions of law said to arise out of the appellate orders passed by the Tribunal :‑

"Whether or not on the facts and in the circumstances of the case‑

(a) the Appellate Tribunal of Income‑tax was lawful and justified In dismissing the appeal in question in default of non‑appearance : and

(b) whether the Appellate Tribunal was justified in refusing the restoration of the appeal in question."

7. A preliminary objection was taken by Mr. M. A. Lone on behalf of the Department that the reference app3catlons were barred by limitation and that the question sought to be raised did not arise out of the Tribunal's order. On the other hand it was contended on behalf of the applicant that the time consumed in prosecuting the application for restora tion could be legitimately excluded and once that was done the applications were well in time. Reliance was placed In this regard on the statutory provisions contained in sec tion 66(7‑A) and applicability of section 5 of the Limitation Act to applications under tae Income‑tax Act, as also on an unreported judgment by a Division Bench of this Court dated 31‑10‑1962 passed in Civil miscellaneous 'No. 1416 of 1959.

7‑A. On merits it was contended before us on behalf of the applicant (i) that rule 24 was ultra vires of section 33 of the Income‑tax Act of which subsection (34) clearly provides that the Appellate Tribunal shall give both parties to the appeal an opportunity of being heard. Reliance was placed on S. Channiappa Mudaliar v. Commissioner of Income‑tax ((1964) 10 Taxation 220), Shri Bhagwan Radha Kishen v: Commissioner of Income‑tax, U. P. ((1952) I T R 104) and Ravula Subba Rao and others v. Commissioner of Income‑tax, Madras ((1955) 27 I T R 164), In support of the contrary view that rule 24 was ultra vires of section 33(4) of the Income‑tax Act. It may be observed in this context that all these three cases are from across the border and proceed en the provision of section 23(4) of the Indian Income‑tax Act which was substituted for a new provision vide section 17 of Act IV of 1948. Indian provision reads as follows :‑--

"Tribunal may after giving both parties to appeal an opportunity of being heard pass such order as it thinks fit and shall communicate any such orders to the assessee and to the Commissioner."

8. On the other hand section 33(4) reads as follows :‑

"33 (4)‑(a) The Appellate Tribunal shall give both parties to the appeal an opportunity of being heard.

(b) If the Appellate Tribunal is not satisfied that the assessment or order which is the subject of appeal ought to be interfered with, It shall reject the appeal and the assessment or order shall stand good.

(c) If the Appellate Tribunal is satisfied that an assessment which is the subject of appeal ought to be reduced or annulled, it shall reduce or annul the assessment accordingly.

(d) If the Appellate Tribunal is satisfied that an assessment which is the subject of appeal is insufficient, it shall increase the assessment accordingly.

(e) If the Appellate Tribunal is satisfied that an assessment which is the subject of appeal ought to be set aside, it shall set aside the assessment and direct the Income‑tax Officer to make a fresh assessment.

(f) As respects any other matter, if the Appellate Tribunal is satisfied that an order which is the subject of appeal ought to be interfered with, it shall cancel or vary the order accordingly and shall issue such consequential directions as the case may require. In the case of an order imposing a penalty the power to vary the order shall include the power to enhance the penalty.

(g) The Appellate Tribunal shall communicate its order on the appeal to the assessee and to the Commissioner."

It was contended that the above provision which was obviously more elaborate than the Indian provision did not provide for the dismissal of an appeal in default nor was any reference to such dismissal made in section 31 of the Income tax Act which contained a very elaborate and collateral provision on the procedure of hearing of an appeal by the Appellate Assistant Commissioner. It was argued that sec tions 31 and 33(4) of the Income‑tax Act were pari materia and that the Tribunal had arrogated to itself a jurisdiction which did not lawfully vest in it. It was further contended on the basis of Manufacturers' Life Insurance Co. of Canada v. The Commissioner of Income‑tax, Bombay ((1938) 6 I T R 321) that an appeal once filed ought to be disposed of on merits and could not even se withdrawn. Reference was also made in this regard to Kanga, page 678. The relevant portion reads as under :‑

"Appeal cannot be withdrawn. It is not open to an assessee who has preferred an appeal to withdraw it so as to prevent the Appellate Assistant Commissioner from enhancing the assessment. Once a tax‑payer has served a notice of appeal and so set in motion the machinery designed for the purpose of completing the assessment, he cannot stop the further working of that machinery either by withdrawing the appeal or by refusing to be" present at the hearing of the appeal . . . . . ."

9. It was next contended that the question sought to be raised did arise out of the order of the Appellate Tribunal on the facts found and determined by it and as such could be legitimately raised for determination. Reliance was placed in this regard on Commissioner of Income‑tax, Bombay v. Scindia Steam Navigation Co. Ltd. ((1961) 42 I T R 589), Messrs Muhammad 1drees Barry & Company v. The Commissioner of Income‑tax, Punjab (P L D 1959 S C (Pak.) 202), In re: Ram Ditta Sita Ram of Basil ((1947) I T R 61), Messrs Sutlej Cotton Mills Ltd., Okara v. The Commissioner of Income‑tax, North Zone (West Pakistan), Lahore (PLD 1965 S C 443). Lastly, it was contended that the question of jurisdiction could be raised at any time. Reliance was placed in this regard on The Scindia Steam Navigation Co. Ltd. v. The Commissioner of Income‑tax (P L D 1959 Kar. 527).

10. On the other hand, apart from the question of limitation referred to earlier Mr. Lone contended that the question as sought to be agitated did not arise out of the Tribunal's order. Relying on (1961) 42 I T R 589, he contended that the question was neither raised before nor discussed by the Tribunal, and as such could not be deemed to have arisen out of its order. He also pressed into service the following authorities :‑---

R. S. Munshi Gulab Singh & Sons v. Commissioner of Income‑tax, Punjab P L D 1950 Lah. 476, Bachu Bai F. E. Dinshaw v. Commissioner of Income‑tax P L D 1967 Kar. 372, Messrs Odeon Cinema, Lahore v. The Commissioner of Income tax, Lahore P L D 1971 Lah. 632, Abdul Ghani & Co. v. Commissioner of Income‑tax P L D 1962 Kar. 635 and Pakistan Medical Stores v. Commissioner of Income‑tax 1967 PTD 339.

11. On the point whether the question of jurisdiction could be raised at any stage Mr. Lone tried to distinguish Messrs Sutlej Cotton Mills Ltd., Okara v. The Commissioner of Income tax, North Zone (West Pakistan), Lahore. It was, however, contended that the impugned order did not relate to question of jurisdiction. In support of his contention that in order to qualify for being agitated in any reference application before the High Court, the question should have been raised before the learned Tribunal, Mr. Lone relied on Commissioner of Income‑tax (Central), Karachi v. Messrs Habib Insurance Company, Ltd.. Karachi (P L D 1969 Kar. 278) and Lakhmir Singh v. Commissioner of Income‑tax, B. & O. (A I R 1957 Pat. 538). Lastly, it was contended that in any case, the question of sufficiency or insufficiency of cause justifying the restoration or otherwise of an appeal dismissed in default was one of fact and as such could not be agitated.

12. Having considered the contentions raised by the learned counsel for the parties, we are inclined to think that the first and the most important question determinative of the fate of these applications is whether rule 24 of the Appellate Tribunal Rules, 1948, is ultra vires of section 33(4) of the Income‑tax Act. However, before coming to this question, two preliminary objections raised on behalf of the Department have to be disposed of in the first instance.

13. As regards the question of limitation, it may bf observed firstly, that section 66(7‑A) has been made applicable to an application under Income‑tax Act and, secondly once the time taken by the applicant in seeking restoration of the appeals dismissed in default, is excluded, the application would be well within limitation. This view could be fully justified on the basis of the unreported judgment of M. Yaqoob Ali and S. Anwarul Haq, JJ., now Judges of the Supreme Court, delivered in C. M. No. 1416/1959 on 31‑10‑1962. In the case before their Lordships instead of approaching the Tribunal under the unamended section 66(1) of the Income‑tax Act, for making reference to this Court in the first Instance, the assessee filed a writ petition which was ultimately dismissed. Subsequently, the Tribunal declined to make a reference to the High Court on the ground of limitation. Feeling aggrieved, the assessee approached the High Court which directed the Tribunal to treat the application under section 66(1) as one within time. We are not, therefore, inclined to hold that these applications are barred by limitation.

14. Coming to the next preliminary objection that the question sought to be raised, did not arise out of the order of the Tribunal for the reason that the same was neither raised before nor discussed by it we are clearly of the view that the contentions have to be overruled on two grounds firstly, that in our humble opinion the criteria laid down in Commissioner of Income‑tax, Bombay v. Scindia Steam Navigation Co. Ltd., in the form of four. tests for determining the point as to whether the question arises out of the Tribunal's order are by no means exhaustive and, secondly that the question of jurisdiction could be raised at any time notwithstanding the fact that it has not been raised earlier. We are conscious of the fact that the jurisdiction of the High Court under sec tion 66 of the Income‑tax Act is merely advisory in nature and confined to considering and answering the actual question referred to it, as held in Raja Bahadur Sir Rajendra Narayan Bhanj Deo v. Commissioner of Income‑tax, Bihar & Orissa (AIR 1940 P C 158). Likewise, a decision based on arguments raised for the first time before the High Court, was considered by the Supreme Court of India in National Mutual Life Association of Australasia Ltd. v. Commissioner of Income‑tax, Bombay Presidency & Aden ((1935) 13 I A 99), to be irrelevant and outside the scope of the question as referred, more or less the same view was expressed by the Supreme Court of India in the majority judgment in Commis sioner of Income‑tax, Bombay v. Sandia Steam Navigation Co. Ltd., wherein questions arising out of the Tribunal's Order were summed up as follows :‑

(1) When a question is raised before the Tribunal and is dealt with by it, it is clearly one arising out of its order.

(2) When a question of law is raised before the Tribunal but the Tribunal fails to deal with it, it must be deemed to have been dealt with by it, and is, therefore, one arising out of its order.

(3) When a question is not raised before the Tribunal but the Tribunal deals with it, that will also be a question arising out of its order.

(4) When a question of law is neither raised before the Tribunal nor considered by it, it will not be a question arising out of its order notwithstanding that it may arise on the findings given by it."

It may also be observed with utmost respect that this exposition of law is not binding on us and furthermore we see a lot of force in the minority view expressed by Justice J. C. Shah who observed as follows :‑

"There is no warrant for the view that the question which the Tribunal may refer or which the High Court on the refusal of the Tribunal may call upon the Tribunal to refer, must be a question which was raised and argued before the Tribunal at the hearing under section 33(4). The Statute does not specifically impose such a restriction nor is it implied. To import in the meaning of the expression "any question of law arising out of such order" the concept that the question must have been argued before and dealt with by the Tribunal in its judgment deciding the appeal, is to impose a fetter upon the jurisdiction of the High Court not warranted by the plain intendment of the statute.

A concrete question of law having a direct beating on the rights and obligations of the parties which may be founded on the decision of the Tribunal is one which arises out of the order of the Tribunal even if it is not raised or argued before the Tribunal at the bearing of the appeal. It Is the duty of the Tribunal to draw up a statement of case and to frame questions that duty can only be performed adequately if specific questions relating directly to the dispute between the parties are raised. If the import of the question is unduly large, the High Court has, and is indeed bound in dealing with it to restrict it to its true content in the light of the findings recorded by the Tribunal. But in dealing with the question, the High Court may not only entertain those aspects of the case which were argued before the Tribunal, but all such aspects as have fairly a direct bearing on the dispute. The jurisdiction of the High Court is by statute not expressly circumscribed in recording its opinion on arguments advanced before the Tribunal, and the nature of the jurisdiction exercised by the High Court does not demand that such a limitation should be implied. The Court has jurisdiction to decide questions which arise out of the order of the Tribunal, and not merely those which were raised and argued before the Tribunal."

15. Be that as it may, however, the question involved In the instant case is preliminary one of jurisdiction in our humble opinion was legitimately raised before the High Court regardless of the advisory nature of its function. Reliance may be placed in this regard on an authority of our own Supreme Court In Messrs Sutlej Cotton Mills Ltd., Okara v. The Commissioner of Income‑tax North Zone (West Pakistan), Lahore it was observed by their Lordships as follows:------

"It is open to a Court before which a point of jurisdiction is raised, to deal with it at a very last stage, even if the point was not raised at any earlier stage, provided that all the evidence necessary for the determination of the point is available on the record so that no further evidence is required for reaching a satisfactory conclusion."

In this view of the matter, we overrule the preliminary objections.

16. This brings us to the real point involved in the case which is the crux of the matter namely; as to whether a reference application could be dismissed on the technical ground of default without determination on merits. The answer to this question will depend, in turn, on the determination of the question as to whether rule 24 of the Appellate Tribunal Rules, 1948 which enables the Tribunal to dismiss an appeal in default for non‑appearance of the appellant, is ultra vires. We now proceed to examine this aspect of the matter.

17. Subsection (8) of section 5‑A of the Income‑tax Act. empowers the Appellate Tribunal to regulate its own procedure in the matters arising out of the discharge of its function. A rider, has, however, been placed ort these powers of the Tribunal making them subject to the provisions of the Act as would be clear from the provision reproduced below :‑

"5‑A(8). Subject to the provisions of this Act, the Appellate Tribunal shall have power to regulate its own procedure, and the procedure of Benches of the Tribunal in all matters arising out of the discharge of its functions. including the (Places) at which the Benches shall bold their sittings."

18. It is abundantly char that the rules framed under this section must be in conformity with the provisions of the Act. In purporting exercise of its rowers under this section, the Appellate Tribunal first framed rules in 1941 of which rule 36 provided that the Tribunal shall determine an appeal on merits notwithstanding the fact that the appellant did not chose to appear. Power was also vested in the Tribunal to restore an appeal dismissed in default. These rules were, however, substituted by Appellate Tribunal to dismiss an appeal In default. It reads as follows : ‑‑

"Rule 24.‑Where on the day fixed for nearing or any other day to which the hearing may be adjourned, the appellant does not appear when the appeal is called on for hearing, the Tribunal may, in its discretion, either dismiss the appeal for default or may hear it ex parte."

19. Section 33 (4) as amended by Act IV of 1948 reads as follows :‑

"33(4).‑‑(a) The Appellate Tribunal shall give both parties to the appeal an opportunity of being heard.

(b) If the Appellate Tribunal is not satisfied that the assessment or order which is the subject of appeal ought to be Interfered with, it shall reject the appeal and the assessment or order shall stand good.

(c) If the Appellate Tribunal is satisfied that an assessment which is the subject of appeal ought to be reduced or annulled, it shall reduce or annul the assessment accordingly.

(d) If the Appellate Tribunal is satisfied that an assessment which is the subject of appeal ought to be set aside, it shall set aside the assessment and direct the income‑tax Officer to make a fresh assessment.

(f) As respects any other matter If the Appellate Tribunal is satisfied that an order which is the subject of appeal ought to be interfered with, ft shall cancel or vary the order accordingly and shall issue such consequential directions as the case may require. In the case of an order imposing a penalty the power to vary the order shall include the power to enhance the penalty.

(g) The Appellate Tribunal shall communicate its order on the appeal to the assesssee and to the Commissioner."

20. The question whether rule 24 was ultra vires of section 33(4) cane up for consideration before the Special Bench of the Madras High Court consisting of the Chief Justice and two other learned Judges in S. Chenniappa Mudaliar v. Commissioner of Income‑tax. The provision contained in section 33(4) as it then stood was slightly different and read as follows:----

"The Appellate Tribunal may, after giving both parties to the appeal an opportunity of being heard pass such orders thereon as it thinks fit, and shall communicate any such orders to the assessee and to the Commissioner."

21. In the provision to be interpreted by us reproduced earlier, the orders to be passed by the Appellate Tribunal have been specified and elaborated. Having examined considerable case‑law and authorities for and against the proposition, their Lordships of the Madras High Court canoe to the conclusion that rule 24 of the Appellate Tribunal Rules in so far as it enabled the dismissal of an appeal in default for non‑appearance of the appellant, was ultra vines. The relevant observation is as follows :

"To sum up the position, the Appellate Tribunal. is the appointed machinery under the Act for finally deciding question is of fact in relation to assessment of Income‑tax. Its composi tion, consisting as it does of qualified persons in law and accountancy, makes it peculiarly qualified to deal with all questions raised in a case, whether there be assistance from the party or his counsel or not. Section 33(4) obliges it to decide an appeal, after giving an opportunity to the parties to put forward their case. The giving of the opportunity only emphasises the character of the quasi‑judicial function, performed by the Appellate Tribunal. The fact that that opportunity is not availed of in a particular case, will not entitle the Tribunal not to decide the case. There can be no decision of the case on its merits if the matter is to be disposed ass of for default of appearance of the parties. Further an adjudication on the merits of the case is essential to enable the High Court to perform its statutory duty and for Supreme Court to hear an appeal filed under section 33(4) itself indicates by the use of the word "thereon" that the decision should relate to the subject‑matter of the appeal. Rule 24, therefore, to be consistent with section 33(4), could only empower the Tribunal to dispose of the appeal on its merits whether there be an appearance of the party before it or not. This was Indeed the rule when it was first promulgated in the year 1941. The rule in its present form, as amended in the year, 1948, in so far as it enables the dismissal of an appeal before the Income‑tax Appellate Tribunal for default of appearance of the appellant, will, therefore, be ultra vines, as being in conflict with the pro visions of section 33(4) of the Act.

We may also point out that if the Appellate Tribunal should have a power of dismissing an appeal for default of appearance of a party, such power can be given by the Legislature itself, it cannot be done by a mere rule promulgated under section 5‑A (8) as any rule made in that behalf wall be contrary to the existing provision in section 33(4) of the Act. We therefore, answer the question set out at the beginning in the affirmative."

22. It may also be observed in this context that in an earlier authority of the Madras High Court reported as Ravela Subba Rao and others v. Commissioner of Income‑tax, Madras and others ((1955) 27 I T R 164). although a contrary view was taken by the Division Bench which held that the Appellate Tribunal dismissing an appeal for default was not without jurisdiction, yet it was clearly held that this question did arise out of the order of the Tribunal and the assessee could have legitimately approached the Tribunal for reference to the High Court. It is hardly necessary to add that this Division Bench authority as also Shri Bhagwan Radha Kishan v. Commissioner of Income‑tax ((1952) 22 I T R 104), were overruled by the Full Bench.

23. Notwithstanding the minor differences in the phraseology employed in the Indian and the Pakistani provisions of section 33(4) we are clearly of the view that the ratio decidendi of the Madras authority is fully attracted to the case before us.

24. Admittedly the appeals of the petitioner were dismissed on the technical ground of default in appearance and were not disposed of on the merits. Therefore, the impugned orders cannot be sustained. In our opinion, in the circumstances and on the facts in these cases, the Appellate Tribunal of Income‑tax was not justified is law in dismissing the appeal of the petitioner in default of non‑appearance. We must therefore return our answer to question (a) reproduced above, in the negative. In view of this answer question (b) does not arise.

25. These references are answered accordingly, leaving the parties to bear their own costs.

Reference answered