judgement:
Appeal No. 975 of 1964.
Appeal by special leave from the judgment and order December 12, 1962, of the Mysore High Court in W.P. No. 531 of 1961.
Bishan Narain, Naunit Lal and B.R.G.K. Achar, for the appellant.
section K. Venkataranga Iyengar and R. Gopalakrishnan, for the respondent.
The judgment of the Court was delivered by Satyanarayana Raju, J.
This appeal, by special leave, raises a somewhat important question of all, which is whether the reversion of a Government servant from an officiating post to his substantive post, while his junior is officiating in the higher post, does not, by itself, constitute a reduction in rank within the meaning of article 311(2) of the Constitution.
For the purpose of deciding the point raised in the appeal, it would be necessary to state the material facts.
The Southern Railway has two grades of Train Examiners, one in the scale of Rs. 100 5 125 6 185 and the other in the scale of Rs. 150 225.
The respondent was employed in the lower scale as a Train Examiner.
By an order dated April 7, 1959, the respondent was promoted to officiate in the higher scale with a starting salary of Rs. 150 per month.
That order read as follows : "2.
Sri section Raghavendrachar, TXR YPR in scale Rs. 100 185 is promoted to officiate as TXR in scale Rs. 150 225 on Rs. 150 per month and retained YPR as TXR IC. 185 is promoted to officiate as TXR in scale Rs. 150 225 on Rs. 150 per month and transferred to SBC BG vide item above.
Sanction endorsed by D.S. for promotion of items 2 and 3.
" 108 There is a note appended to the order which is important "Note: 1.
The promotion of items 2 and 3 are purely provisional subject to revision when Divisional Seniority lists are drawn up.
" By an order dated November 27, 1959, the respondent was reverted. ]Mat order was as follows : "Sri section Raghavendrachar, TXR/YPR (officiating) in scale Rs. 150 225 is reverted to scale Rs. 100 185 on Rs. 130 per month and transferred to SBC/MG.
" On receipt of this order, the respondent made representations to the appellant.
The appellant sent to the respondent communication dated May 25, 1960 : "As per the existing instructions an officiating employee with less than 18 months of service in the higher grade may be reverted to lower scale without assigning any reason for such reversion by a competent authority.
Since the period of your officiating in scale Rs. 150225 was less than 18 months and since your reversion from scale Rs. 150 225 to Rs. 100 185 has been ordered by a competent authority, no reasons need be assigned as requested in your representation dated 8th/9th December 1959.
As regards the confirmation of TXRs in scale Rs. 150 225, who were your juniors while you were officiating in scale Rs. 150 225, 1 have to advise you that consequent on your reversion to scale Rs. 100 185, all your juniors, in scale Rs. 150 225, have become your seniors and their confirmations in preference to you are in order.
Regarding your re promotion to scale Rs. 150 225, it will be considered in the normal course according to your, seniority and suitability to hold the post in scale Rs. 150 225." The respondent made a further appeal to the Divisional Superintendent, Mysore, on July 2, 1960 and sent him two reminders.
Not having got any response, he filed an appeal on January 31, 1961, to the General Manager, Southern Railway.
The respondent sent a reminder to the latter on March 31, 1961.
In reply, 109 the Divisional Personnel Officer wrote to the respondent as follows by letter dated April 30, 1961 : Rs. 150 225 (PS) was not a penalty as presumed by you, in your above representations.
The vacancy thus released by you in scale Rs. 150 225 (PS) and the vacancies which existed on the date of your reversion were filled up on 14th February 1960.
You are therefore eligible to be considered for promotion against a vacancy which occurred after the date of your reversion and not against the vacancies which existed on the date of your reversion and also the vacancy caused by your reversion.
No regular vacancy (other than short term leave vacancy) in scale Rs. 150 225 has occurred from the date of your reversion till date.
You will therefore be considered for promotion against the next vacancy, subject to the condition of seniority cum suitability, on the basis of which only promotions to non selection posts are to be ordered.
As regards seniority, all those hitherto promoted to scale Rs. 150 225 (PS) will automatically rank seniors to you and your seniority if promoted will be reckoned only from the date of your promotion in future vacancy.
Your contention that, when you were promoted to officiate for 2 months against the leave vacancy of Shri Venkataraman, as per this office order No. M. 542/PI of 14th November 1960, you should have been continued even after the expiry of the leave vacancy, and that Shri Varghese should have been reverted, is not correct, for the reasons stated in paragraph 2 above.
Your representation of 30th January 1961 to GM(P) Madras is therefore withheld.
" Aggrieved by the order dated November 27, 1959, the res pondent moved the Mysore High Court, on the failure of his representations to the hierarchy of Departmental Heads, for a writ of certiorari to quash the impugned order made by the appellant.
By judgment dated December 12, 1962, a Division Bench of the High Court quashed the order of reversion.
The High Court observed that it was not necessary to express any opinion on the question whether the reversion of the respondent on the ground that his work was unsatisfactory amounted to a reduction 110 in rank within the meaning of that expression occurring in article 311(2) of the Constitution.
But the High Court held that the reversion of the respondent amounted to a reduction in rank because he was reverted from the higher post to the lower post notwithstanding the fact that his juniors were still retained in the higher posts.
In reaching this conclusion the High Court purported to follow the decision of this Court in Madhav Laxman Vaikunthe vs State of Mysore(.).
The Divisional Personnel Officer, Southern Railway, Mysore,obtained special leave from this Court against the order of the High Court.
It is contended by Mr. Bishan Narain, learned counsel for the appellant, that the High Court misunderstood the ratio of the judgment of this Court in Vaikunthe 's case(1), that there is no right in a Government servant to promotion as of right, that the mere reversion of a Government servant from an officiating post to his substantive post, notwithstanding that his juniors are retained in the higher posts, does not amount to a reduction in rank and the provisions of article 311(2) are not attracted.
On the other hand, it is contended by Mr. section K. Venkataranga lyengar, learned counsel for the respondent, that the circumstances of the case clearly indicated that the reversion of the respondent amounted to a reduction in rank and since the procedure prescribed by article 311(2) was not complied with, the order of reversion was bad in law.
It may be taken to be settled by the decisions of this Court that since article 311 makes no distinction between permanent and temporary posts, its protection must be held to extend to all government servants holding permanent or temporary posts or officiating in any of them, but that protection is limited to the imposition of three major penalties contemplated by the Service Rules, viz., dismissal or removal or reduction in rank.
The first of the cases which may be considered is the decision in Parshotam Lal Dhingra vs Union of India(2), Commonly known as Dhingra 's case.
In this case, Das C.J., who spoke for the majority, considered comprehensively the scope and effect of the relevant constitutional provisions, service rules and their impact on the question as to whether reversion of Dhingra offended against the provisions of article 311(2).
Dhingra was appointed as a Signaller in 1924 and promoted to the post of Chief Controller in 1950.
Both these posts were in Class III Service.
In (1) ; (2) ; 111 1951, he was appointed to officiate in Class II Service as Assistant Superintendent, Railway Telegraphs.
On certain adverse remarks having been made against him, he was reverted as a subordinate till he made good his 'short comings.
Then, Dhingra made a representation.
Subsequently, the General Manager gave him notice reverting him to Class III appointment.
It was this order which was challenged by Dhingra by a writ petition, in the High Court and, eventually, in this Court.
The question for decision was whether the order of the General Manager amounted to reduction in rank within the meaning of article 311(2) of the Constitution, and Dhingra was entitled to a reasonable opportunity to show cause against the order.
This Court held that the reversion of an officiating officer to his substantive post did not attract the provisions of article 311(2) and that Dhingra was not entitled to the protection of that article.
It is however true that even an officiating government servant may be reverted to his original rank by way of punishment.
It was therefore observed in Dhingra 's case(") at p. 863 : "Thus if the order entails or provides for the forfeiture of his pay or allowances or the loss of his seniority in his substantive rank or the stoppage or postponement of his future chances of promotion, then that circumstance may indicate that although in form the Gov ernment had purported to exercise its right to terminate the employment or to reduce the servant to a lower rank under the terms of the contract of employment or under the rules, in truth and reality the Government has terminated the employment as and by way of penalty.
" One test for determining whether the termination of service was by way of punishment or otherwise is to ascertain whether under the Service Rules, but for such termination, the servant has the right to hold the post.
It was held in Dhingrads case(1) that he was holding an officiating post and had no right under the rules of the Railway Code to continue in it, that under the general law such appointment was terminable at any time on reasonable notice and the reduction could not operate as a forfeiture of any right, that the order of the General Manager visited him with no evil consequences and that the order therefore did no", amount to a reduction in rank.
(1) (1958] S.C.R. 828.
112 Vaikunthe 's case(1) was relied upon by the High Court in support of its conclusion that the reversion of the respondent amounted to a reduction in rank.
It is therefore necessary to scrutinize the facts of that case.
The appellant Vaikunthe, who held the rank of a Mamlatdar in the first grade, and was officiating as District Deputy Collector, was alleged to have wrongly charged travelling allowance for 59 miles instead of 51 and was, as the result of a Departmental enquiry, reverted to his substantive rank for three years and directed to refund the excess he had charged.
He made a representation to the Government which was of no avail although the Accountant General was of the opinion that the appellant had not over charged and committed no fraud.
Ultimately, the appellant was promoted to the Selection Grade but the order of reversion remained effective and affected his position in the Selection Grade.
After retirement he brought a suit for a declaration that the order of reversion was void and for recovery of a certain sum as arrears of salary and allowances.
The trial Court held that there was no compliance with the provisions of section 240(3) of the Government of India Act, 1935, granted the declaration but refused the arrears claimed.
Vaikunthe filed an appeal and the State a cross objection.
The High Court dismissed the appeal and allowed the cross objection, holding that the order of reversion was not a punishment within the meaning of section 240(3) of the 1935 Act.
This Court held that the matter was covered by the observations in Dhingra 's case(1) and the tests of punishment laid down by this Court viz., (1) whether the servant had a right to the rank or (2) whether he had been visited with evil consequences of the kind specified therein, and that the second test certainly applied.
This Court concluded that Vaikunthe might or might not have the right to hold the higher post, but there could be no doubt that he was visited with evil consequences as a result of the order of reversion.
It was there held : "Mere deprivation of higher emoluments, however, in consequence of an order of, reversion could not by itself satisfy that test which must include such other consequences as forfeiture of substantive pay and loss of seniority." Since the requirement of section 240(3) of the 1935 Act, which corresponds to article 311(2) of the Constitution, had not been found to have been fully complied with, the order of reversion was held to be void.
(1) ; (2) ; 113 There was an important aspect of this decision which was lost sight of by the High Court.
The impugned order there ran as follows : "After careful consideration Government have decided to revert you to Mamlatdar for a period of three years. .
It was pointed out in Dhingra 's case( ) that if the order of reversion entailed or provided for the forfeiture of the pay or allowances of the Government servant or loss of his seniority in his substantive rank or the stoppage or postponement of his future chances of promotion, then that circumstance might 'Indicate that although in form the Government had purported to exercise its right to terminate the employment or to reduce the servant to a lower rank under the terms of the contract of employment or under the rules, in truth and reality the Government had terminated the employment as and by way of penalty.
At p. 891, Sinha, C.J., who spoke for the Court, pointed out: he would have continued as a Deputy Collector but for the Order of the Government, dated August 11, 1948, impugned in this case, as a result of the enquiry held against him, and that his reversion was not as a matter of course or for administrative convenience.
The Order, in terms, held him back for three years.
(Italics ours).
Thus his emoluments, present as well as future, were adversely affected by the Order aforesaid of the Government.
In the ordinary course, he would have continued as a Deputy Collector with all the emoluments of the post and would have been entitled to further promotion but for the set back in his service as a result of the adverse finding against him which finding was ultimately declared by the Accountant General to have been under a misapprehension of the true facts.
It is true that he was promoted as a result of the Government Order dated March 26, 1951, with effect from August 1, 1950.
But that promotion did not entirely cover the ground lost by him as a result of the Government Order impugned in this case.
" Again, at p. 893, the learned Chief Justice pointed out"If the loss of the emoluments attaching to the higher rank in which he was officiating was the only consequence of his reversion as a result of the enquiry against him, the appellant would have no cause of (1) 114 action.
But it is clear that as a result of the Order dated August 11, 1948 (exhibit 35), the appellant lost his seniority as a Mamlatdar, which was his substantive post.
That being so, it was not a simple case of reversion with no evil consequences; it had such consequences as would come within the test of punishment as laid down in Dhingra 's case.
" Finally, it was pointed out : "If the reversion had not been for a period of three years, it could not be Said that the appellant had been punished within the meaning of the rule laid down in Dhingra 's Case.
It cannot be asserted that his reversion to a substantive post for a period of three years was not by way of punishment.
From the facts of this case it is clear that the appellant was on the upward move in the cadre of his service and but for this aberration in his progress to a higher post, he would have, in ordinary course, been promoted as he actually was some time later when the authorities realised perhaps that he had not been justly treated.
The real ground on which Vaikunthe 's reversion to his original post of Mamlatdar was held to be a violation of his Constitutional grantee was that his chances of promotion were irrevocably barred for a period of three years.
If this aspect of Vaikunthe 's case(1) is borne in mind, it will be found that there is no basic inconsistency between the decisions which have a bearing on the question as to in what cases reversion would amount to a reduction in rank.
Even so, it is contended by learned counsel for the respon dent that the real reason which operated on the mind of the appellant was that the respondent 's work in his officiating capacity was unsatisfactory.
Assuming that to be so, the question is whether his reversion to his original post, because he was found unsuitable for the higher rank to which he had been given the officiating chance, is valid.
In State of Bombay vs F. A. Abraham(2) the respondent held the substantive post of Inspector of Police and had been officiating as Deputy Superintendent of Police.
He was reverted to his original rank without being given an opportunity of being heard in respect of the reversion.
His request to furnish him with reasons for his reversion was refused.
Later, a departmental (1)[1962]1 S.C.R.886.
(2) [1962] Supp. 2 S.C.R. 92. 115 enquiry was held behind his back in regard to certain allegations of misconduct made against him in a confidential communication from the District Superintendent of Police to the Deputy Inspector General of Police, but these allegations were not proved at the enquiry.
The Inspector General of Police, however, thereafter wrote to the Government that the respondent 's previous record was not satisfactory and that he had been promoted to officiate as Deputy Superintendent of Police in the expectation that he would turn a new leaf.
The High Court held, following its earlier decision in M. A. I. Waheed vs State of Madhya Pradesh(1) that if a person officiating in a higher post is reverted to his original post in the normal course, that is, on account of cessation of the vacancy or his failure to acquire the required qualification, the reversion did not amount to a reduction in rank but if he is reverted for unsatisfactory work, then the reversion would amount to a reduction in rank.
This Court did not agree with the ob servations in Waheed 's case(1) that when a person officiating in a post s reverted for unsatisfactory work, that reversion would amount to a reduction in rank.
This Court took the view that the Government had a right to consider the suitability of the respondent to hold the position to which he had been appointed to officiate and that it was entitled for that purpose to make inquiries about his suitability and that was all what the Government had done in that case.
Two more cases cited at the Bar now require to be consider ed.
In The High Court, Calcutta vs Amal Kumar Roy (2) this Court held that the word 'rank ' in article 311(2) referred to classification and not to a particular place in the same cadre in the hierarchy of service.
The facts of the case were as follows.
The respondent was a Munsif in the West Bengal Civil Service (Judicial).
When the cases of several Munsifs came up for consideration before the High Court for inclusion in the panel of officers to officiate as Subordinate Judges, the respondent 's name was excluded.
On a representation made by him, the respondent was told by the Registrar of the High Court that the Court had decided to consider his case after a year.
As a result of such exclu sion, the respondent, who was then the senior most in the list of Munsifs, lost eight places in the cadre of Subordinate Judges before he was actually appointed to act as an Additional Subordinate Judge.
His case mainly was that this exclusion by the High Court amounted in law to the penalty of 'withholding of promotion ' without giving him an opportunity to show cause.
He pray (1) (2) ; 116 ed that a declaration might be made that he occupied the same position in respect of seniority in the cadre of Subordinate Judges as he would have done if no supersession had taken place and claimed arrears of salary, in a suit filed by him.
The trial Court decreed the suit.
On behalf of the appellants a preliminary objection was taken in this Court that the controversy raised was not justiciable.
This Court held that there was no cause of action for the suit and the appeal must succeed.
It was there contended on behalf of the respondent that even though there, might not have been any disciplinary proceed ings taken against him, the effect of the High Court 's order was that he was reduced by eight places in the list of Subordinate Judges and that in law amounted to a reduction in rank within the meaning of article 311 (2) of the Constitution.
At p. 453 it was pointed out as follows : "In our opinion, there is no substance in this contention because losing places in the same cadre, namely, of Subordinate Judges does not amount to a reduction in rank within the meaning of article 311(2).
The plaintiff sought to argue that 'rank ', in accordance with dictionary meaning, signifies 'relative position or status or place, according to Oxford English Dictionary.
The word 'rank ' can be and has been used in different senses in different contexts.
The expression 'rank ' in article 3 1 1 (2) has reference to a person 's classification and not his particular place in the same cadre in the hierarchy of the service to which be belongs.
Hence, in the context of the Judicial Service of West Bengal, 'reduc tion in rank ' would imply that a person who is already holding the post of a Subordinate Judge has been reduced to the position of a Munsif, the rank of a Subordinate Judge being higher than that of a Munsif.
But Subordinate Judges in the same cadre hold the same rank though they have to be listed in order of seniority in the Civil List.
Therefore, losing some places in the seniority list is not tantamount to reduction in rank.
Hence, it must be held that the, provision , of article 311 (2) of the Constitution are not attracted to this case.
" This decision therefore is authority for the position that losing some places in the seniority list is not tantamount to reduction in rank 117 The respondent relied upon the decision of this Court in P. C. Wadhwa vs Union of India(1).
There, the appellant, a member of the Indian Police Service and holding the substantive rank of Assistant Superintendent of Police (a post in the junior time scale of pay) in the State of Punjab, was promoted to officiate as Superintendent of Police, which was a post carrying a higher salary in the senior time scale, and posted as Additional Superintendent of Police.
After he had earned one increment in that post, he was served with a charge sheet and before the enquiry, which had been ordered, had started, he was reverted to his substantive rank of Assistant Superintendent of Police, the ground suggested for reversion being unsatisfactory conduct.
No details of the unsatisfactory conduct were specified and the appellant was not asked for any explanation.
At the time when the appellant was reverted officers junior to him in the I.P.S. Cadre of the State were officiating in the senior scale.
The order entailed loss of pay as well as loss of seniority and postponement of future chances of promotion.
It was held that the order of reversion made against the appellant was in effect a 'reduction in rank ' within the meaning of article 311(2) of the Constitution and inasmuch as he was given no opportunity of showing cause against the said order of reversion, there was violation of article 311.
On a consideration of the circumstances of the case, this Court reached the conclusion that the action of the Government reverting the appellant was mala fide.
But that was not the sole ground on which the order of reversion was held to be bad.
After an examination of the legal position from the large body of rules to which reference was made, it was held that in so far as the Indian Police Service is concerned there was only one cadre, that appointment to posts borne on that cadre were to be made by direct recruitment except to the extent of 25 per cent of the senior posts which may be filled by promotion from the State Police Service.
A special feature of the All India Services like the Indian Police Service and the Indian Civil Service is that pro motion is a matter of right.
It was for this reason that this Court, by a majority pointed out at p. 622 that in the case of ' those services there was no rule which, specifically provided that an officer had to be freshly appointed to a post carrying a salary in the senior scale of pay.
(1) 118 At p. 627 it was said "In our opinion, the whole scheme of the rules indicates that a person borne on the junior scale of pay has a right to hold a post on the senior scale of pay depending upon the availability of, a post and his seniority in the junior scale of pay.
If a person hold ing a post in the senior scale, though in an officiating capacity, is found to be unfit to hold that post, action will have to be taken against him as required by r. 5 of Discipline and Appeal Rules because his reversion to a post in the lower scale would amount to reduction in rank within the meaning of article 311 of the Constitution.
" On a consideration of the circumstances of that case, it is clear that the decision itself proceeded on the basic fact that for members of All India Services like the Indian Police Service, promotion was a matter of right and special considerations would have to be applied to them.
Now, in the light of the principles established by the above decisions, we may consider the respondent 's case.
The Southern Railway has two grades of Train Examiners.
The respondent and one James Blazey were promoted from the lower grade to officiate in the higher grade.
The respondent was shown at item No. 2 and James Blazey at item No. 3 in the promotion list.
A note was appended to the order that the promotion of the respondent and Blazey were 'purely provisional subject to revision when seniority lists were drawn up for the Division '.
By reason of the order dated November 27, 1959, the respondent was reverted to the lower grade while Blazey was retained in the higher grade.
The case of the respondent is that Blazey was junior to him and that since he was reverted while Blazey was not, it would amount to a reduction in rank so far as he was concerned.
It is plain that what he complains of is that he lost his seniority by reason of the retention of Blazey in the officiating higher post.
The respondent 's rank in the substantive post i.e., in the lower grade, was in no way affected by this.
In the substantive grade, the respondent retained his rank.
It may also be added that he was visited with no penal consequences.
It is no doubt true that it is not the form but the substance that matters, but once it is accepted that the respondent has no right to the post to which he was provisionally promoted, there can be no doubt that his reversion does not amount to a reduction in rank.
119 None of the decisions considered above lends support to the contention for the respondent.
It was finally argued that the procedure prescribed by rr. 1609 to 1619 of the rules contained 'in the Indian Railway Establishment Code, Vol.
I., were contravened.
Rule 1609 reads "As a general rule, in no circumstances, should a gazetted railway servant be kept in ignorance for any length of time that his superiors, after sufficient experience of his work, are dissatisfied with him; where a warning might eradicate a particular fault, the advantages of prompt communication are obvious.
On the other hand, the communication of any adverse remarks removed from their context is likely to give a misleading impression to the gazetted railway servant concerned.
The procedure detailed in rule 1610 should therefore be followed.
" Rules 1609 to 1618 apply only to gazetted railway servants. 'Me respondent is not a gazetted railway servant and there is no question of his claiming that he is entitled to the right given under the above rules.
Rule 1619 refers to non gazetted railway servants.
That rule Provides that in general conformity with the principles laid down in the preceding rules applicable to Gazetted Railway Servants, a General Manager may frame detailed rules for the preparation, submission and disposal of confidential reports on non gazetted railway servants.
Learned counsel for the respondent could not place before us those rules, if any.
The contentions raised by the respondent having been nega tived, this appeal must succeed, and it is accordingly allowed, but, in the circumstances of the case, there will be no order as to costs.
Appeal allowed.

summary:
The respondent was employed in the Southern Railway as Train Examiner in the scale of Rs. 100 5 125 6 185.
He was promoted to officiate in the next higher scale of Rs. 150 225.
Subsequently he was reverted to the lower scale, and his departmental representations and appeals having failed, he filed a writ petition under article 226 of the Constitution.
The High Court held that the reversion of the respondent amounted to a reduction in rank because he was reverted from the higher post to the lower post notwithstanding the fact that his juniors were still retained in the higher posts.
As this reduction of rank was in violation of article 311(2) the High Court granted the writ prayed for.
The Divisional Personnel Officer, Southern Railway appealed to this Court by special leave.
It was contended on behalf of the appellant that the High Court had misunderstood the ratio of the judgment of this Court in Vaikunthe 's case and that the respondent had not suffered any reduction in rank within the meaning of article 311(2).
HELD : (i) The reversion of a Government servant from an officiating post to his substantive post, while his junior is officiating in higher post, does not, by itself, constitute a reduction in rank within the meaning of article 311(2) of the Constitution.
[110 D] (ii) An important aspect of the decision in Vaikunthe 's case was lost sight of by the High Court.
The real ground on which Vaikunthe 's reversion to his original post of mamlatdar was held to be a violation of his constitutional guarantee was that his chances of promotion were irrevocably barred for a period of three years.
There was no such bar on promotion in the present case.
[114 E] Madhav Laxman Vaikunthe vs State of Mysore, [1962] 1 S.C.R. 886, distinguished.
(iii) The respondent 's complaint was that he had lost his seniority by reason of the retention of his juniors in the officiating higher post.
But his rank in the substantive post i.e. in the lower grade, was in no way affected by this.
In the substantive grade the respondent retained his rank and was not visited with any penal consequences.
The respondent had no right to the post to which he was provisionally promoted.
His reversion in these circumstances did not amount to reduction in rank.
[118 G 119 A] 107 Parshotam Lal Dhingra vs Union of India, ; , State of Bombay vs F. A. Abraham, [1962] Supp. 2 S.C.R. 92 and The High Court, Calcutta vs Amal Kumar Roy, ; , 'relied on.
P. C. Wadhwa vs Union of India, , distinguished.
M. A. Waheed vs State of Madhya Pradesh, [1954] Nag.
L. J. 305, referred to.


judgement:
Appeal No. 123 of 1965.
Appeal by special leave from the judgment and order, dated November 28, 1963 of the Allahabad High Court in A.I.T. Reference No. 16 of 1960.
section T. Desai and O. P. Rana, for the appellant.
A. V. Viswanatha Sastri, M. V. Goswami and B. C. Misra, for the respondent.
The Judgment of the Court was delivered by Shah, J.
By order, dated May 14, 1949 the Sub Divisional Officer, Jaunpur, assessed Raja Yadvendra Dutt Dube hereinafter called 'the respondent ' under section 16(3) of the U. P. Agricultural Income tax Act, 1948 to pay agricultural income tax for the account period 1355 Fasli (July 1, 1947 to June 30, 1948) on a net income of Rs. 72,769/15/2.
Being of the view that a part 163 of the income of the respondent had escaped assessment, the Collector of Jaunpur by order, dated June 9, 1950, recomputed tax under section 25 read with section 16(4) of the Act for the said account period on a total net income of Rs. 80,859/13/6.
In appeal by the respondent the Agricultural Income tax Commissioner by order dated March 5, 1952, set aside the orders of the Collector and also of the Sub Divisional Officer and directed that the assessment be reopened by the Collector and fresh assessment of the income for 1355 Fasli be made after giving notice to the respondent.
In the view of the Commissioner, assessment made by the Sub Divisional Officer was without jurisdiction, and the order of reassessment by the Collector "being in review and substitution of the order of assessment", want of jurisdiction in the order of assessment attached to the order of reassessment as well.
The respondent then moved the Board of Revision against the order of the Commissioner.
The Board agreed with the Commissioner, that the assessment order made by the Sub Divisional Officer was "illegal and invalid", but in the view of the Board the Commissioner exceeded his authority in setting aside the order of the Sub Divisional Officer, which was not challenged in appeal before him.
However, the Board observed, the illegality and invalidity of the order of assessment having come to their notice, they would take up the matter suo motu in exercise of their revisional jurisdiction and declare the order passed by the Sub Divisional Officer as illegal and set it aside.
Accordingly, in setting aside the order of the Commissioner, they also set aside the order of assessment made by the Sub Divisional Officer, and directed that "Fresh assessment will be made according to law".
The Board then referred under section 24(4) of the Act the following question of law to the High Court of Allahabad for opinion : "Whether on the facts and having regard to the provisions of section 25 of the Act, the Board could on the 15th October, 1952, direct a fresh assessment to be made ?" The High Court, recorded an answer in the negative.
The State of Uttar Pradesh has appealed to this Court.
The relevant provisions of the Act are briefly these : "Assessing authority" under the Act means a person authorised by the State Government to assess agricultural income tax : section 2(6).
By section 3 charge of agricultural income tax and super tax at the rate or rates specified in the Schedule on the total agricultural income of the previous year of every person is imposed.
Section 14 sets 164 up Assessing authorities and prescribes their powers.
it provides : " (1) For the purposes of this Act, every Collector, and Assistant Collector in charge of a sub division shall be assessing authority and shall exercise and perform within his revenue jurisdiction such powers and duties as may be prescribed, provided that the State Government may appoint any officer as an assessing authority for such area as may be prescribed.
(2) In particular and without prejudice to the generality of the provisions of sub section (1), the following authorities shall be the assessing authorities in the cases mentioned against each namely : (a) Assistant Collector Incharge of sub division.
: Where the gross agricultural come does not exceed Rs. 1 lakh.
(b) Collector : In all cases.
(c) Officer appointed under proviso to sub section (1): In such cases as may be prescribed".
Section 15, insofar as it is material provides: "(1) The Collector shall give notice,by the publication in the Official Gazette and in such other manner as may be prescribed, requiring every person, whose total agricultural income during the previous year exceeded the maximum amount which is not chargeable to agricultural income tax to furnish to such assessing authority and within such period, not being less than thirty days, as may be specified in the notice, a return in the prescribed form and verified in the prescribed manner, setting forth his total agricultural income during the previous year (2) (3) In the case of any person whose total agricultural income is, in the opinion of the assessing authority, such amount as to render such person liable to payment of agricultural income tax in any year, he may serve in that year a notice in the prescribed form requiring such person to furnish within such period, not being less than thirty days as may be specified in the notice, a return in the prescribed form and verified in the prescribed manner setting forth his total agricultural income during the previous year 165 Section 16 sets out the procedure of assessment by the assessing authority, and against the order of assessment by the assessing authority, an appeal lies under section 21 to the Commissioner.
By section 22 power is conferred upon the Board of Revision either on their own motion or on an application to call for the record of any proceeding under the Act pending before or decided by any authority subordinate to the Board, and after such inquiry as they deem necessary, may pass such orders as they think fit.
Section 24 provides for reference of questions of law to the High Court for opinion.
Sub section (2), insofar as it is material, provides : "Within sixty days of the communication of an order under section 21 or section 22 the assessee may, by application apply to the Board to refer to the High Court any question of law arising out of such order or decision, and the Board shall, within sixty days of the receipt of such application, draw up a statement of the case, and refer it, with their opinion to.
the High Court:" Under sub section
(4) of section 24 the High Court is authorised, where the Board has rejected the application under sub section
(2) or refused to state the case on such application, if the High Court is not satisfied about the correctness of the decision of the Board, to require the Board to state the case and refer it to the High Court.
Section 25 authorises the assessing authority to assess or reassess income which has escaped assessment in any year or has been assessed at too low a rate, after serving a notice on the person liable to pay agricultural income tax within one year of the end of the year in which the income has escaped assessment.
Section 44 confers power upon the State Government to make rules for carrying out the purposes of the Act.
Under the scheme of the Act, the Collector of the District is the assessing authority generally in respect of the entire District over which he has revenue jurisdiction, and he is invested with the power to issue a general notice calling upon every person whose income is chargeable to tax, to make a return of his income.
The Assistant Collector (who is also called the Sub Divisional Officer) in charge of a sub division is invested with power as assessing authority within his revenue jurisdiction, where the gross agricultural income of an assessee does not exceed Rs. 1 lakh.
Power of the assessing authority under section 15(3) to issue a special notice calling for a return may be exercised within the year of assessment, and not thereafter.
Power to reassess under section 25 166 is also restricted and the assessing authority may not issue a notice of "escaped assessment" after one year from the end of the year of assessment.
It is necessary to remember that these proceedings come before us in appeal against the order passed by the High Court on a reference made under section 24.
Jurisdiction of the High Court under section 24 is advisory : the High Court must answer the question referred to it and cannot travel outside the terms of the reference.
This caution is necessary because learned counsel appearing for the parties have sought to canvass many questions which were never raised before the Board and even before the High Court.
The question whether the order passed by the Board setting aside the orders of a assessment of the Sub Divisional Officer and of the Collector and even of the Commissioner is justifiable in law is not referred to us.
We are only concerned to deal with the limited question whether the Board had authority on the view expressed by it to make the order directing re assessment, and that question must be decided in the light of the provisions of section 15(3) and section 25 of the Act.
It may be assumed that a notice under section 15(1) was issued by the Collector (though there is no reference to such a notice in the record) requiring every person whose income exceeds the maximum amount exempt from tax to submit a return in the Form No. 1 (a) prescribed by the Rules.
It is common ground however that the respondent filed the return in pursuance of a notice under section 15(3), and that the Sub Divisional Officer found in the course of the assessment proceeding that the gross agricultural income of the respondent exceeded Rs. 1 lakh.
The order of assessment passed by the Sub Divisional Officer was set aside by the Board because the Sub Divisional Officer had no jurisdiction to assess to tax income of a person whose gross agricultural income exceeded Rs. 1 lakh, and the Board agreed with the Commissioner that the order of the Collector being in "review or substitution" of the order of the Sub Divisional Officer was also liable to be set aside.
Counsel for the State raised three contentions in support of the plea that the Board had power to direct the Collector to make a fresh assessment : (1) The Sub Divisional Officer was invested with authority to issue a notice under section 15(3) calling for a return, and since this notice was not set aside by the Commissioner or by the Board of Revision, in making the order of assessment pursuant to the order of the 167 Board, the Collector will not be transgressing any statutory restrictions imposed by section 15(3) or section 25 of the Act.
(2) Without a fresh notice under section 15(3), the Collector has the power, by virtue of the notice under section 15(1), to assess the income of the respondent on the return made pursuant to the notice issued by the Sub Divisional Officer.
(3) Since notice under section 25 of the Act for reassessment of the escaped income was issued within the period prescribed by section 25(3), and the notice was otherwise valid, assessment proceedings directed by the Board may be founded by the Collector on that notice.
In proceedings for assessment the Sub Divisional Officer found that the total gross income of the respondent exceeded Rs. 1 lakh, and under section 14(2) the Collector alone was the assessing authority in respect of the income of the respondent.
The contention raised by counsel for the State that by the expression "without prejudice to the generality of the provisions of sub section (1)" in sub section
(2) of section 14 power is intended to be conferred upon the Assistant Collector in charge of a sub division to assess income of an assessee whose gross agricultural income exceeds Rs. 1 lakh cannot be accepted.
The first sub section of section 14 declares the Collector and the Assistant Collector in charge of a sub division as assessing authorities within the limits of their respective revenue jurisdictions.
By sub section
(2) it is directed that the authorities mentioned in sub section
(2) shall be the assessing authorities in the cases "mentioned against each".
Reading sub sections
(1) and (2) together there can be no doubt that the Collector is the assessing authority within his revenue jurisdiction with unlimited jurisdiction, and the Assistant Collector in charge of a sub division is the assessing authority within his revenue jurisdiction with power only in cases in which the gross agricultural income of the assessee does not exceed Rs. 1 lakh.
There is in the Act no procedure prescribed about ascertain ment of the gross agricultural income of an assessee which is determinative of the jurisdiction of the Sub Divisional Officer, but as in other taxing statutes where the taxing authority is constituted a tribunal of exclusive jurisdiction the authority has the power, subject to rectification by a superior Court, to decide facts on the proof of which his jurisdiction depends.
The Sub Divisional Officer had therefore power to decide whether the gross agricul 168 tural income of the respondent did or did not exceed Rs. 1 lakh The notice under section 15(3) was issued to the respondent by the Sub Divisional Officer, presumably on the assumption that the gross agricultural income of the respondent did not exceed Rs. 1 lakh but when the Sub Divisional Officer found on scrutiny of the return that the gross agricultural income of the respondent exceeded Rs. 1 lakh, he could not exercise the powers of the assessing authority.
There is no provision in the Act or the Rules for transfer of proceeding from the Sub Divisional Officer to the Collector, when the Sub Divisional Officer in dealing with a return finds that he has no jurisdiction.
When he arrived at the conclusion that the gross income of the respondent exceeded Rs. 1 lakh, the proceeding initiated by the Sub Divisional Officer including the issue of notice must, unless that conclusion is set aside by a superior authority, be held unauthorised, for the power to issue a notice under section 15 (3) is only conferred upon the assessing authority, and the assessing authority within the meaning of section 2(6) is a person authorised to assess agricultural income tax.
The Sub Divisional Officer had no power to assess agricultural income of the respondent, because his gross income exceeded Rs. 1 lakh, and he had on that account no power to issue the notice.
It is true that the Board of Revision did not expressly Set aside the notice issued by the Sub Divisional Officer under section 15 (3), but the Board agreed with the Commissioner that the original order of assessment passed by the Sub Divisional Officer "was absolutely without jurisdiction", and directed that the entire case be reopened by the Collector and fresh assessment of the income for Fasli year 1355 be made by the Collector after giving notice to the respondent.
The Board thereafter passed the same order which the Commissioner claimed without authority to make.
It must, therefore, be held that the notice issued by the Sub Divisional Officer was not only unauthorised, but was also quashed by the Board.
The second contention that when notice under section 15(1) is issued, the Collector may without a notice under section 15(3) commence fresh assessment proceeding on the return made to the Sub Divisional Officer has no substance.
This question does not appear to have been raised or argued at any stage before the Board.
Again, if the proceedings for assessment were commenced on a return made pursuant to an invalid notice, and the proceedings for assessment were set aside on the ground of want of jurisdiction of the authority making the assessment, the entire proceedings must, be deemed to be vacated, and relying upon the 169 return made to the authority who had assessed the income, another authority cannot proceed to assess the income of the assessee.
Mere issue of a notice under section 15(1) cannot come to the aid of the Collector in commencing fresh assessment proceedings many years after the date on which that notice was issued, on a return which was not made to him.
When after a general notice a special notice was issued unauthorisedly and proceedings were taken pursuant to that special notice, the general notice cannot be relied upon to start fresh proceeding for assessment on the assumption that the return must be deemed to be made to him pursuant to the general notice.
The Collector must, before proceeding to assess, issue under section 15(3) a notice when no return was filed pursuant to the notice under section 15 ( 1 ), and a notice under s, 15(3) cannot issue after expiry of the year of assessment to which the notice relates.
The third contention also has,no substance.
The Collector issued a notice under section 25 for reassessing income which had escaped assessment and assessed the income of the respondent, but the proceeding of the Collector was set aside as unauthorised, and the Collector was directed to start a fresh proceeding for assessment.
The notice issued by the Collector must also be deemed to be quashed.
The Collector has, therefore, under the direction given by the Board, to issue a fresh notice before a proceeding for assessment may be started, and the earlier notice issued under section 25 cannot be relied upon by the Collector.
The High Court was therefore right in the answer which it recorded.
It is somewhat unfortunate that on account of the diverse orders passed by the authorities from time to time without a correct appreciation of the scheme.
of the Act, the respondent escapes liability to pay tax which was lawfully due,by him, but that cannot justify the commencement of a fresh proceeding for assessment contrary to the provisions of the statute.
The appeal fails and is dismissed.
There will, however, be no order as to costs in this Court and in the High Court.
Appeal dismissed.

dataset_name: IN-Abs

summary:
The respondent assessee had a gross agricultural income of more than Rs. 1 lakh in 1355 Fasli (July 1, 1947 to June 30, 1948).
In response to a notice issued by the Assistant Collector under section 15(3) of the U.P. Agricultural Income tax Act, 1948, the assessee filled a return of his income and the said officer made an assessment though under section 14(2) of the Act Jurisdiction to assess in cases when the gross income exceeded Rs. 1 lakh lay within the Collector.
The, Collector thereafter made a reassessment under section 25 read with section 16(4) within the period of limitation prescribed under the former section i.e. "within one year of the end of the year in which the income had escaped assessment".
In appeal by the respondent the Agricultural Income tax Commissioner set aside the orders of the Collector and also of the Assistant Collector and directed the Collector to make a fresh assessment after giving notice to the res pondent.
The Board of Revision held that the Commissioner had rightly decided that the orders in question were invalid but that the Commissioner was not empowered to set aside the order of the Assistant Collector which was not challenged before him.
However the Board suo motu set aside the order of the Assistant Collector and directed that fresh assess ment be made "according to law".
The High Court in reference under section 24(4) held that having regard to the limitation provided in section 25 the Board could not in 1952 direct the Collector to make a fresh assessment for the period in question.
The State of Uttar Pradesh appealed to this Court.
It was contended on behalf of the State that: (1) The Assistant Collector could make assessment even in cases when the gross income exceeded Rs. 1 lakh.
(2) The notice under section 15(3) issued by the Assistant Collector not having been set aside by the higher authorities, the Collector could, as directed by the Board, make an assessment without transgressing any restrictions in section 15(3) or section 25.
(3) without a fresh notice under section 15(3) the Collector had the power by virtue of the notice under section 15(1), to assess the income of the respondent on the return made pursuant to the notice issued by the Assistant Collector.
(4) Since notice under 9. 25 for reassessment of the escaped income had been issued by the Collector within the period prescribed by section 25(3) and the notice was otherwise valid, assessment proceedings directed by the Board could be founded by the Collector on that notice.
HELD : (i) Reading sub section
(1) & (2) together there can be no doubt that the Collector is the assessing authority within his revenue jurisdiction with unlimited jurisdiction and the Assistant Collector in charge of a sub division is the assessing authority within his revenue jurisdiction with power only in cases in which the gross agricultural income of the assessee 162 does not exceed Rs. 1 lakh.
The Assistant Collector is not entitled to make assessment in such a case relying on the generality of the provisions of section 14(1).
[167 F G] (ii) When the Assistant Collector arrived at the conclusion that the gross income of the respondent exceeded Rs. 1 lakh the proceedings initiated by him including the issue of the notice must, unless that conclusion is set aside by a superior authority, be treated as unauthorised, for the power to issue a notice under section 15(3) is only conferred upon the assessing authority and the assessing authority within the meaning of section 2(6) s a person authorised to assess agricultural income tax.
There is no provision in the Act or the Rules for transfer of proceedings from the Assistant Collector to the Collector when the Assistant Collector in dealing with a return finds that he has no jurisdiction.
The Collector therefore could not in the present case make reassessment on the basis of the return filed under section 15(3).
In fact having regard to the terms of the order passed by the Board it was clear that the notice under section 15(3) issued by the Assistant Collector had been quashed by the Board.
[168 B F] (iii) If the proceedings for assessment were commenced on a 'return made pursuant to an invalid notice, and the proceedings for assessment were set aside on the ground of want of jurisdiction of the authority making the assessment the entire proceeding must be deemed to be vacated and relying upon the return made to the authority who had assessed the income another authority cannot proceed to assess the income of the assessee.
Mere issue of a notice under section 15(1) could not come to the aid of the Collector in commencing fresh assessment proceedings many years after the date on which that notice was issued on a return which was not made; to him.
[168 H 169 B] (iv) The notice under section 25 issued by the Collector must also be deemed to have been quashed by the Board.
The Collector had therefore, under the direction given by !he Board, to issue a fresh notice before a proceeding for assessment could be started and a fresh assessment could not be based on the earlier notice.
[169 E]


judgement:
ppeal No. 223 of 1965.
Appeal from the judgment and order dated February 23, 1962 of the Madhya Pradesh High Court in Misc.
Civil Case No. 165 of 1961.
194 N. A. Palkhivala, section T. Desai, T.A. Ramachandran, J. B. Dadachanji, for the appellant.
A. V. Viswanatha Sastri, R. H. Dhebar, N. D. Karkhanis and R. N. Sachthey, for the respondent.
The judgment of the Court was delivered by Subba Rao, J.
This appeal, on a certificate granted by the Madhya Pradesh High Court, raises the question whether an appeal lies under section 30(1) of the Indian Income tax Act, 1922, hereinafter called the Act, to the Appellate Assistant Commissioner against the order of an Income tax Officer cancelling an order granting registration of a firm under section 26 A of the Act.
The facts material for the said question may be briefly stated.
The appellant is a firm constituted under a deed of partnership dated July 16, 1948.
The Income tax Officer registered the said firm under section 26 A of the Act for the year 1950 51.
The registration was renewed for the years 1951 52 and 1952 53.
On November 30, 1957, the Income tax Officer renewed the registration for the assessment year 1953 54.
On March 6, 1959, on the ground that the firm was not a genuine one, the said officer cancelled the registration under Rule 6 B of the Income tax Rules.
The appellant preferred an appeal against that order to the Appellate Assistant Commissioner, Indore.
On July 15, 1959, the said Assistant Commissioner rejected the appeal for the reason that no appeal lay against the order of the Income tax Officer cancelling the registration.
The appeal filed by the appellant against that order to the Income tax Appellate Tribunal, Bombay, was dismissed.
At the instance of the appellant, the following question was referred to the High Court under section 66(1) of the Act : "Whether on the facts and circumstances of the case, the order passed by the Income tax Officer under Rule 6 B of the Indian Income tax Rules cancelling the certificate of renewal of registration granted to the assessee is appealable under section 30 of the Income tax Act.
,, A Division Bench of the High Court of Madhya Pradesh answer ed the reference against the appellant.
It held that no appeal lay under section 30 of the Act against the order of the Income tax Officer cancelling registration to the Appellate Assistant Commissioner.
Hence the appeal.
195 The only question in this appeal is, whether an order cancelling the certificate of renewal of registration made under section 26 A of the Act by an Income tax Officer is subject to an appeal under section 30(1) to the Appellate Assistant Commissioner.
At the outset, the relevant provisions may be usefully read Section 26 A. (1) 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.
(2) The application shall be made by such person or persons, and at such times and shall contain such particulars and shall be in such form, and be verified in such manner, as may be prescribed and it shall be dealt with by the Income tax Officer in such manner as may be prescribed.
Rule 6.
Any firm to, whom a certificate of registration has been granted under Rule 4 may apply to the Income tax Officer to have the certificate of registration renewed for a subsequent year Rule 6 A.
On receipt of an application under Rule 6 the Income tax Officer may, if he is satisfied that the application is in order and that there, is or was a firm in existence constituted as shown in the Instrument of Partnership, grant to the assessee a certificate signed and dated by him in the following form: Rule 6 B.
In the event of the Income tax Officer being satisfied that the certificate granted under Rule 4, or under Rule 6 A, has been obtained without there being a genuine firm in existence, he may cancel the Section 30.
(1) Any assessee objecting to the cancellation by an Income tax Officer of the registration of a firm under sub section (4) of section 23 or to a refusal to register a firm under sub section (4) of section 23 or section 26 A may appeal to the Appellate Assistant Commissioner against the assessment or against such refusal or order.
" 196 The gist of the said provisions relevant to the present enquiry may be stated thus : Under section 26 A of the Act an application may be made to the Income tax Officer on behalf of a firm for registration for the purposes of the Act.
Such an application has to be filed and disposed of in the manner prescribed in the Act.
Under the Rules, an application for the renewal of registration of a firm which has already been registered in the previous years has to be filed before the Income tax Officer.
That application will be disposed of in the manner prescribed by Rules 6 A and 6 B. Under those rules, the Income tax Officer is authorized to make three kinds of orders, viz., (i) he can refuse to renew the registration of the firm; (ii) he can register the firm; and (iii) he can cancel the renewal of registration if he is satisfied that the renewal has been obtained without there being a genuine firm in existence.
The crucial point to be noticed is that the said three kinds of orders, having regard to the circumstances of each case, will be made only in the application for renewal of registration.
The Rules do not provide for independent proceedings for the cancel lation of the renewed certificate.
In effect, the Income tax Officer, after setting aside his earlier wrong order made under a misapprehension, refuses renewal of the certificate of registration.
If so, it follows that the order cancelling registration is nothing more than refusing to renew the certificate of registration.
If that be the construction of an order made cancelling the certificate re newed, such an order directly attracts the appellate jurisdiction conferred on the Appellate Assistant Commissioner under section 30 of the Act.
But Mr. Viswanatha Sastry for the Revenue contended that there was internal evidence in section 30 of the Act itself to show that such a construction was not possible.
He further argued that under the Income tax law there was no scope for equitable considerations, and under the express provisions of section 30 no appeal Jay against the order of the Income tax Officer cancelling the certificate of registration.
In support of his contention he relied upon that part of section 30 of the Act which we have extracted earlier and contended that when the Legislature in the context of the orders made under section 23 (4) spoke separately of the order of can cellation of registration of a firm and an order refusing to register a firm and in the same section, in the context of section 26 A, it mentioned only refusal to register a firm, it clearly expressed its mind that in the former case an appeal would lie against both the orders, whereas in the latter case an appeal would lie only against one of the orders.
There is some force in this argument.
But a 197 careful reading of the provisions of section 23 (4) and section 26 A brings out the difference in the phraseology used in section 30 in the matter of appeals against orders made under the said two sections.
The relevant parts of section 23 (4) and section 26 A (2) may be placed in juxtaposition : Section 23(4) Section 26 A(2) be. dealt the case of a firm, may refuse to with by the Income tax Officer in register it or may cancel its registration such manner as may be prescribed.
ration if it is already registered.
A comparative study of the relevant parts of these two provisions at once shows the distinction between the two.
Under section 23(4) while the Income tax Officer can make an order refusing to register a firm or may cancel the registration if it is already registered, under section 26 A(2) he can only make an order in such manner as may be prescribed.
The manner prescribed, as we have already indicated earlier, provides for three different kinds of orders to be made in the same application with the result that an order of refusal to renew a certificate and the order cancelling the certificate renewed are given the same effect, namely, refusal of the application to register.
That apart, when section 30 provides for an appeal against the orders under section 23(4) and also against orders under section 26 A, it has incorporated the two forms of orders embodied in section 23(4) and used a general word in providing an appeal against an order under section 26 A, for the nature of order is not described but left to be prescribed under the Rules.
If so, it follows that the words "refusal to register a firm! ' in section 30 of the Act are wide enough to take in the orders made under rr.
6 A and 6 B refusing to renew the registration and also cancelling the certificate so renewed.
By so holding we are not unaware that equity has no place, in construing the provisions of the Income tax Act.
Indeed, we have not introduced any equitable consideration in the matter of construction.
We have come to the conclusion on a fair reading of the relevant provisions of the Act and the Rules made thereunder.
In the result, we answer the question propounded for the High Court 's decision in the affirmative.
The order of the High Court is set aside and the appeal is allowed with costs.
Appeal allowed.

summary:
The Income, tax Officer cancelled the certificate of renewal of registration of the appellant firm, under r. 6B of the Income tax Rules, on the ground that the firm was not a genuine one.
The Appellate Assistant Commissioner, the Tribunal and the High Court on reference, held that no appeal lay against the order of the Income tax Officer to the Appellate Assistant Commissioner under section 30(1) of the Income tax Act, 1922.
In appeal to this Court, HELD :The words "refusal to register a firm" in section 30 are wide enough to take in the orders made under rr.
6A and 6B refusing to renew registration and also cancelling the certificate so renewed, and such an order directly attracts the appellate jurisdiction conferred on the Appellate Assistant Commissioner under the section.
[196 E; 197 F] The fact that section 30 provides for an appeal separately against the orders under section 23 (4) either refusing to register a firm or cancelling the registration of a firm, but provides in the context of section 26A, for an appeal only against an order refusing to register the firm, does not affect this construction of section 30, because, when section 30 provides for an appeal against the orders under section 23(4), it has merely incorporated the two forms of orders embodied in section 23(4), and, when it provides for an appeal against the order under section 26A, it has used a general word, for the nature of the order under section 26A is not described but is left to be prescribed under the Rules.
The application under section 26A made to the Income tax Officer on behalf of a firm for registration for the purposes of the Act, will be disposed of in the manner prescribed by rr.
6A and 6B. Under these Rules, the Income tax Officer is authorised to make three kinds of orders, namely, (i) he can refuse to renew the registration; (ii) he can register; and (iii) he can cancel the renewal if he is satisfied that a renewal was obtained without there being a genuine firm in existence.
But the three kinds of orders, having regard to the circumstances of each case, will be made only on an application for renewal of registration, because, the Rules do not provide for independent proceedings to the cancellation of the renewed certificate.
When the Income tax Officer cancels a renewed certificate, he sets aside his earlier order and refuses a renewal, with the result that, an order of refusal to renew a certificate and the order cancelling the renewed certificate are given the same effect, namely, refusal of the application to register.
It follows that the order cancelling registration is nothing more than refusing to renew the certificate of registration.
[196 A E: 197 C E]