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PETITIONER: SIRPUR PAPER MILL LTD.

       Vs.

RESPONDENT: THE COMMISSIONER OF WEALTH TAX, HYDERARAD

DATE OF JUDGMENT: 20/04/1970

BENCH: SHAH, J.C. BENCH: SHAH, J.C. HEGDE, K.S. GROVER, A.N.

CITATION:  1970 AIR 1520            1971 SCR  (1) 304  1970 SCC  (3) 795

ACT: Wealth Tax Act, 1957, s’ 25-Scope of-commissioner  disposing of  revision application according to direction of Board  of Revenue-If proper ,exercise of his power in Revision.

HEADNOTE: The Appellate Assistant Commissioner of Wealth Tax confirmed an  orde-  Passed by the Wealth Tax Officer as  regards  the method  adopted  by the latter in dealing with a  claim  for depreciation allowance made by the appellant company in  the course  of  its assessment to wealth  tax.   The   appellant company  thereafter moved revision applications  before  the Com, missioner under s. 25 of the Wealth Tax Act  and  the Commissioner  rejected  these applications on the  basis  of certain directions issued by the Board of Revenue. On appeal to this Court by special Leave, HELD  :  The order passed by the Commissioner must  be,  set aside  and  ’the  revision applications must  be  heard  and disposed  of  according  to  law  and  uninfluenced  by  any instructions  or directions given by the Board  of  Revenue. [307 G-H] It Was clear, on the facts, that from the inception of  the proceedings, the Commissioner put himself in  communication with  the Board of Central Revenue and  sought  instructions from  that authority ’as to bow the,  revision  applications filed  before  him should be decided.  He had  exercised  no independent  judgment.   The Commissioner appeared  to  have misapprehended  the true character of the jurisdiction  with which  he  is  by the Act entrusted and  surrendered  his judgment to the directions of the Board of Revenue. [306  F- G; 307 E-G] The  power conferred by s. 25 is not administrative : it  is quasi-judicial.  In exercise of this power the  Commissioner must  bring to bear an unbiased mind.  consider  impartially the  objections raised by the aggrieved party.  and  decide the  dispute  according  to procedure  consistent  with  the principles   of  natural  justice;  he  cannot  permit   his judgement- to be influenced by matters not disclosed to  the assesseee,  nor  by  dictation of  another  authority.   Any orders or instructions given by the Board and required to be

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followed under s. 13 by officers employed in the,  execution of  the  Act  may control the exercise  of  their  power  in matters administralive but not quasi-judicial.  Although the proviso to s. 13, which. is somewhat obscure in its  import, enacts  that no orders shall be given by the Board so as  to interfere  with  the discretion of the  Appellate  Assistant Commissioner in the exercise of his appellate functions,  it does  not thereby imply that the Board may give such  orders to the Wealth Tax Officer or to the Commissioner in exercise of his quasi-judicial function, Such an interpretation would be plainly contrary to the scheme of the Act and the  nature of  the power conferred upon the authorities  invested  with quasijudicial power. [306 B-F] 305

JUDGMENT: CIVIL  APPELLATE JURISDICTION: Civil Appeals Nos.  2269  and 2270 of 1966. Appeals by special leave from the judgment and order  dated’ May  17,  1966 of the Commissioner of  Wealth  Tax,  Andhra. Pradesh in J. No. Wt. 3(4) and 3(5) of 1959-60. A.   K.  Sen,  B. P. Maheshwari and N. R.  Kaitan,  for  the appellant (in both the appeals). S.   Mitra, G. Das, R. N. Sachthey and B. D. Sharma, for the respondent (in both the appeals). The Judgement of the Court was delivered by Shah, J. In proceedings for determination of wealth tax  for the  assesment years 1957-58 and 1958-59 the appellant  Com- pany  claimed depreciation allowance on plant, building  and machinery  at the rates prescribed under the Income Tax  Act and  the  Rules framed thereunder.  The Wealth  Tax  Officer adopted  the  method prescribed by s. 7 sub-s.  (2)  of  the Wealth  Tax  Act and’ admitted the value of  the  assets  as shown  in  the certified balance sheets  on  the  respective valuation   dates.   In  appeal,  the  Appellate   Assistant Commissioner of Wealth Tax confirmed the order passed by the Wealth  Tax  Officer.   The,  Company  then  moved  revision applications before the Commissioner of Wealth Tax under  S. 25  of the Wealth Tax Act.  Against the order passed by  the Commissioner of Wealth Tax rejecting the applications,- the. Company  has  filed  these appeals under  Art.  136  of  the Constitution. Against  the orders of the Appellate Assistant  Commissioner appeals  lay to the Income-tax Appellate Tribunal,  but  the Company   preferred   revision   applications   before   the Commissioner. We do not ordinarily encourage an aggrieved party to  appeal directly  to  this-Court  against the order  of  a  Tribunal exercising  judicial functions under a taxing  statute,  and thereby  to  bypass  the normal  procedure  of  appeal and reference  to  the High Court, but in the present  case,  it appears  to  us  that  a  question  of  principle  of  great importance  arises.   We  have  entertained  these   appeals because in our judgment the, Commissioner of Wealth Tax  has surrendered  his  authority  and judgment to  the  Board  of Revenue  in deciding the questions which were sought  to  be raised by the Company in its revision applications. Section 25 of the Wealth Tax Act provides insofar as it  is, material               "(1)  The Commissioner may, either of his  own               ,notion or on application made by an  assessee               in this               306

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             behalf, call for the record of any  proceeding               under  this  Act in which an  order  has  been               passed  by any authority subordinate  to  him,               and  may  make such inquiry,  or cause  such               inquiry to be made, and, subject to the provi-               sions  of this Act, pass such  order  thereon,               not  being order prejudicial to the  assessee,               as the Commissioner thinks fit  The  power conferred by S. 25 is not administrative  it  is quasi_judicial.   The expression "may make such inquiry  and pass  such  order  thereon" does  not  confer  any  absolute discretion  on the Commissioner.  In exercise of  the  power the  Commissioner  must  bring to  bear  an  unbiased  mind, consider impartially the objections raised by the  aggrieved party,  and  decide  the  dispute  according  to   procedure consistent  with  the  principles of natural  justice  :  he cannot  permit his judgment to be influenced by matters  not disclosed  to  the  assessee, nor by  dictation  of  another authority.   Section 13 of the Wealth Tax Act provides  that all officers and other persons employed in the execution  of this  Act shall observe and follow the orders,  instructions and directions of the Board.  These instructions may control the exercise of the power of the officers of the  Department in  matters  administrative  but  not  quasi-judicial.   The proviso  to  s. 13 is somewhat obscure in  its  import.   It enacts  that no orders, instructions or directions shall  be given by the Board so as to interfere with the  discretion of the Appellate Assistant Commissioner of Wealth Tax in the exercise of his appellate functions.  It does not,  however, imply that the Board may give any directions or instructions to  the  Wealth  Tax  Officer or  to the  Commissioner  in exercise   of   his  quasi-judicial   function.    Such   an interpretation  would be plainly contrary to the  scheme  of the  Act  and  the nature of the power  conferred  upon  the authorities ’invested with quasi-judicial power. The  Commissioner appears, in our judgment,’ to have  wholly misapprehended  the true character of the jurisdiction  with which  he  is by the Act entrusted and has  surrendered  his judgment  to  the directions of the Board of  Revenue.   The order sheet of the Commissioner (at pp. 10-36 of the printed Paper Book) bears,eloquent testimony to the manner in  which the  Commissioner has merely carried out the  directions  of the Board of Revenue, instead of deciding the case according to his own judgment. In  entry dated December 31, 1959, there is a  reference  to the  instructions contained in the Board’s Circular No.  7-D (WT) of 59 dated November 12, 1959 received on November  30, 1959. Under entry dated April 28, 1960 there is again a  reference to  the  Board’s  Circular No. 7-D of  1959  suggesting  the manner in 307 which  depreciation has to be worked out for the purpose  of determining wealth-tax. Again  in the entry dated June 17, 1960 under item No. 4  it is  stated that the Board’s instructions were, "specific  on the point that no adjustment to depreciation relating to the period  prior  to  March  31,  1957  should  be  made  while determining the total wealth of an assessee on the basis  of global valuation’. Under entry dated August 7, 1963, recorded by the Inspector, it  is  stated  that  "upon  reference  to  the  Board   for instructions, it was recommended that the petitions be  kept pending  decision of the matter till" it was decided by  the High  Court in which the same question was raised.  When  on

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January   27,   1966,  the  Company   requested   that   the applications  be  kept  pending till  the  disposal  of  the reference  application by the High Court for the  assessment year  1959-60  in which a similar point  was  involved,  the Commissioner was of the view that’ the application need  not be kept pending, but still directed "write to the Board’.  A letter  was written to the Board and the Commissioner  acted according to the directions of the Board, There is another entry dated March 14, 1966 which refers  to the   letter  of  the  Board  agreeing  that  the   revision applications for the two years may be rejected, It  is unnecessary to refer to any more entries made in  the case  sheet  maintained by the Commissioner of  Wealth  Tax. From  the inception of the proceedings the  Commissioner  of Wealth  Tax put himself in communication with the  Board  of Central Revenue and sought instructions from that  authority as to how the revision applications filed before him  should be  decided.   He exercised no  independent  judgment.   The Commissioner  also recorded that the case did not require  a personal  hearing but since the Director of the Company  had made  a  personal request for an interview it  was  "thought desirable"  from "the point of view of public  relations  to give an interview." Here also the Commissioner  misconceived the nature and extent of his jurisdiction. Counsel  appearing on behalf of the Commissioner  of  Wealth Tax in these appeals has not attempted to support the  order under  appeal.   We  set  aside  the  order  passed  by  the Commissioner  and direct that the revision  applications  be heard  and disposed of according to law and uninfluenced  by any  instructions  or  directions  given  by  the  Board  of Revenue.  The Company will get its costs in this Court.  One hearing fee. R.K.P.S.                          Appeal allowed. 308