MESSRS SEHGAL BROTHERS Vs. RE

JUDGEMENT

(1.) This judgment will dispose of two cases which arise from orders made under Section 43 of the Indian Income-tax Act declaring the petitioners in each case agents in British India of certain firms doing business in State territory. In both cases appeals were lodged against these orders and were dismissed by the appellate authorities concerned as being premature, as no assessment of income- tax at that stage had been made. Applications were then made in each instance for a case to be stated in Court. In the case of Messrs. Narang Brothers, the application was refused and this Court is now being asked to order that such a statement of the case should be made. In the second case, that of Messrs. Sehgal Brothers, the Income-tax Tribunal has stated the case to this Court and we are asked to adjudicate upon the following questions : Does an appeal lie under Section 30, Income-tax Act, 1922, against the order of an Income-tax Officer appointing a person an agent of a non- resident Company under Section 43 of the Income-tax Act, where neither the non-resident Company nor the person appointed agent has been assessed in respect of profits accruing to the company in British India from its connection with the person appointed as agent ?

(2.) On behalf of the petitioner it has been argued by Mr. Mehr Chand Mahajan that Section 30 of the Act gives a right of appeal to anyone denying his liability to be assessed under the Act. He points out that an order under Section 43 of the Act can, in accordance with the proviso, only be made after an opportunity has been given to the person affected thereby of being hard : therefore, an order Under Section 43 declaring such person to be an agent is an order passed after the parties concerned have been heard and the question has been adjudicated upon. He further points out that the effect of an order under Section 43 is automatically to make such an agent liable to assessment under Section 42 which provides that he shall be deemed to be for the purposes of this Act the assessee. He relies on a judgment of the Nagpur High Court, Gokul Das Chunilal V/s. Commissioner of Income-tax, in which it was held that the scope of the words denying his liability to be assessed in Section 30, sub-section (1), is wide enough to cover the case of an assessee who denies his liability to be declared an agent under Section 43; therefore an appeal against the order of an Income-tax Officer under that section is not barred, though the appeal is not against the assessment itself.

(3.) It should, however, be noticed that the distinction between that case and the one now before us is that in the former, proceedings had advanced to the stage of assessment before the appeal was lodged, whereas in the present case there has not yet been any assessment at all. The Nagpur judgment is, therefore, only an authority providing that once an assessment has been made the assessee can appeal against the order under Section 43 appointing him as agent, even though he does not actually appeal against the assessment. In the present case we are asked to go further and decide that an agent appointed under Section 43 can at once lodge an appeal against his appointment as such, before anything else is done to render him liable to payment of any income-tax. In our view it has been rightly decided that an appeal at this stage is premature.