Law:

Section:

Section 246, read with sections 154 and 250 of the Income-tax Act, 1961 [Corresponding to section 30, read with sections 35 and 31 of Indian Income-tax Act, 1922] - Commissioner (Appeals) - Appealable orders - Assessment year 1946-47 - ITO after overruling assessee's objections as to inapplicability of section 36, held that application of additional super-tax having escaped ITO's notice at time of making assessment, section 35 was attracted and that super-tax was leviable - AAC refused to entertain appeal on ground that no appeal lay against a section 35 order - Tribunal held that assessee's appeal against AAC's order was incompetent, for reason that AAC having refused to exercise jurisdiction and entertain an appeal, his order was not an order under section 31 against which only an appeal lay to it - Whether an appeal is no less an appeal because it is irregular or incompetent and an order refusing to admit or reject appeal on a preliminary ground is likewise in all cases an order passed in appeal and must be regarded as one passed under section 31 - Held, yes - Whether therefore, Tribunal was not legally right in taking aforesaid view - Held, yes FACTS The ITO having found that additional super-tax, though leviable, had not been levied, issued notice to the assessee under section 36. The assessee raised two objections, one, that the provisions of section 35 were not applicable and the other on the merits that the company was not one which could be deemed to be a company in which the public are substantially interested within the meaning of the explanation to sub-section (1) of section 23A, and as such no additional super-tax under the Finance Act, 1946, was leviable. These objections were repelled and it was held by the ITO that, (1) as the additional income-tax was inadvertently not levied by his predecessor, the provisions of section 35 were attracted, and (2) on the merits, even though no share had in fact been transferred during the relevant year, they were nevertheless freely transferable by the holders to other members of the public and as such it was a company in which the public were substantially interested and therefore additional super-tax was…

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