# 304 SJRPUR PAPER MILL LTD v. THE COMMISSIONER OF WEALTH TAX, HYDERABAD

- **Citation:** [1971] 1 S.C.R. 304
- **Court:** Supreme Court of India
- **Decided:** 1970-04-20
- **Case number:** Civil Appeals Nos. 2269 and: 2270 of 1966
- **Bench:** J.C. Shah, K. S. Hegde, A. N. Grover
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/304-sjrpur-paper-mill-ltd-v-the-commissioner-of-wealth-tax-hyderabad-5026
- **Pages:** 4

## Headnote

Wealth Tax Act, 1951, s. 25-Scope of-Commissioner disposing of
·revision application according to direction of Board of Revenue-If proper
exercise of his power in Revision.
A
B
The Appellate Assistant Commissioner of Wealth Tax confirmed
an
C
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 Commissioner under s. 25 of the Wealth Tax Act and the Commissioner re·
iected these applications on the basis of certain directions issued by the
lloard 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 accorciing to law
and uninfluenced by any instructions or directions given by the Board of
~evenue. [307 G-HJ
It was clear, on the facts, that from the inception of the proceedings,
1he Commissioner put himself in communication with the Board of Central
Revenue and sought instruction.-; from that authority as to how the: revision
applications filed before him should be decided.
He had exercised
no
independent judgment.
The Commissioner appea.red to have misapprehended the true character of the jurisdiction with which he is by the Act
entrusted and surrendered his )udgmen.t to the directions of the Board of
~evenue. [306 F-G; 307 E-G]
The power conferred by s. 25 is not administrative : it is quasi-judicial.
Jn exercise of this power the Commissioner must brin.Q: to bear an un·
biased mind. consider impartially the objections raised by the aggrieved
Jlarty. and decide the dispute according to proce<.lure consistent with the
principles of .1atural justice; he cannot permit his judgement to be in-
'fluenced by matters not disclosed to the assessee., nor by dictation of an-
·other authority.
Any orders or instructions given by the Board and required to be followed under s. 13 by officers employed in the execution
·of the Act may control the exercise of their power in matters administrative but not Quasi-iudicia1.
Although the proviso to s. 13, which is
som'!what obscure in its import, enacts that no orders shall be J?:iven by
the Board so as to in.terfere with the discretion of the Appellate Assistant
Commissioner in the exercise of his app~llate functions, it does not thereby
·imply that the Board may give .,.1ch orders to the Wealth Tax Officer or
to the Commissioner in exercise '1f his quasi-judicial function.
Such
an
interpretation would be plainly contrary to the scheme of the Act and th•
nature of the power conferrecI upon the aL horities invested with quasi ..
iudicial power. [306 B-FJ
0
E
F
G
H
B
.SIRPUR MILL. V. C.W.T., HYDERABAD (Shah,/.)
30$

## Text

.304
SJRPUR PAPER MILL LTD.
v.
THE COMMISSIONER OF WEALTH TAX, HYDERABAD
April 20, 1970
[J.C. SHAH, K. S. HEGDE AND A. N. GROVER, JJ.J
Wealth Tax Act, 1951, s. 25-Scope of-Commissioner disposing of
·revision application according to direction of Board of Revenue-If proper
exercise of his power in Revision.
A
B
The Appellate Assistant Commissioner of Wealth Tax confirmed
an
C
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 Commissioner under s. 25 of the Wealth Tax Act and the Commissioner re·
iected these applications on the basis of certain directions issued by the
lloard 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 accorciing to law
and uninfluenced by any instructions or directions given by the Board of
~evenue. [307 G-HJ
It was clear, on the facts, that from the inception of the proceedings,
1he Commissioner put himself in communication with the Board of Central
Revenue and sought instruction.-; from that authority as to how the: revision
applications filed before him should be decided.
He had exercised
no
independent judgment.
The Commissioner appea.red to have misapprehended the true character of the jurisdiction with which he is by the Act
entrusted and surrendered his )udgmen.t to the directions of the Board of
~evenue. [306 F-G; 307 E-G]
The power conferred by s. 25 is not administrative : it is quasi-judicial.
Jn exercise of this power the Commissioner must brin.Q: to bear an un·
biased mind. consider impartially the objections raised by the aggrieved
Jlarty. and decide the dispute according to proce<.lure consistent with the
principles of .1atural justice; he cannot permit his judgement to be in-
'fluenced by matters not disclosed to the assessee., nor by dictation of an-
·other authority.
Any orders or instructions given by the Board and required to be followed under s. 13 by officers employed in the execution
·of the Act may control the exercise of their power in matters administrative but not Quasi-iudicia1.
Although the proviso to s. 13, which is
som'!what obscure in its import, enacts that no orders shall be J?:iven by
the Board so as to in.terfere with the discretion of the Appellate Assistant
Commissioner in the exercise of his app~llate functions, it does not thereby
·imply that the Board may give .,.1ch orders to the Wealth Tax Officer or
to the Commissioner in exercise '1f his quasi-judicial function.
Such
an
interpretation would be plainly contrary to the scheme of the Act and th•
nature of the power conferrecI upon the aL horities invested with quasi ..
iudicial power. [306 B-FJ
0
E
F
G
H
B
.SIRPUR MILL. V. C.W.T., HYDERABAD (Shah,/.)
30$
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).
C
The Judgement of the Court was delivered by
D
E
'
G
H
Shah, J. In proceedings for determination of wealth tax
for the assesment years 1957-58 and 1958-59 the appellant Company 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 '.>rder 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 appeiil
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 ha• e entertained these appeals
becau5e in our judgment the Commissioner of Wealth Tax hassurrendered 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-.
m~tt>rial :
" ( 1) The Commissioner may, either of his own
"lotion or on application made by an assessee in this
;3()6
SUPREME COURT REPORTS
(1971] l S.C.R.
A
1ehalt, 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-
'ions of this Act, pass such order thereon, not being
order prejudicial to the assessee, as the Commissioner
thinks fit :
B
The power conferred by s. 25 is not administrative it
is quasijudicial.
The expression "may make such inquiry and pass such
ord"r thereon'' does not confer any absolute discretion on the
r·,m~missioner. In exercise of tihe power the Commissioner must
ring 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 au:hority.
Section 13 of the Wealth Tax Act provides that all officers and
other persons employed in the execution of th.is 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 m1tters administrative but not quasijudicial.
The proviso to s. 13 is somewhat obscure in its import.
It enacts that no orders, in>tructions 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 d 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 anahas surrendered his judgment to
c
D
E
F
the directions of the Board of Revenue.
The order sheet of the
Commissioner (at pp. 10-36 of the printed Paper Book)
bears
G
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, 19.59 received on November 30, 1959.
H
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
A
c
D
E
F
G
SIRPUR MILL v. C.W.T., HYDERABAD (Shah, /.)
30. 7
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 i;letermiqing the total
wealth of an assessee on the basis of 'global' valuation".
Under entry dated August 7, 1963, recorded by the Inspector,
1t 1s stated that "upon reference to the Board for .instrucllons, 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 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
indepenent 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
t!Je 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
ru d disposed of
according to Jaw and uninfluenced by any instructions or directions given by the Board of Revenue.
The Company will get its
costs in this Court.
0.ne hearing fee.
H
R.K.P.S.
Appeal allowed.