Exhaustive tax remedy scheme bars collateral reopening; completed assessments stand and Section 33 refusal was not prejudicial.

Completed assessments under the Income-tax Act, 1922 remained valid until set aside through the statute's exclusive machinery; a later favourable decision in another matter did not render earlier assessments a nullity. Section 33 was an administrative revision power for supervisory use and did not give the assessee an independent, enforceable right to reopen assessments or obtain refund on equitable grounds. A reference under Section 66(2) lay only where the Section 33 order was prejudicial, meaning it worsened the assessee's position; a refusal to reopen without enhancing liability was not prejudicial. The statutory scheme was treated as exhaustive, and the refund and reopening claim failed.

---

---

Issues: (i) whether assessments made after the decision in the earlier exemption case were a nullity; (ii) whether the Commissioner's refusal to reopen completed assessments under Section 33 was improper or conferred an enforceable right to refund; and (iii) whether a reference lay under Section 66(2) from an order under Section 33 that did not worsen the assessee's position.

Issue (i): whether assessments made after the decision in the earlier exemption case were a nullity.

Analysis: The assessments had been lawfully made under the Act and remained effective until set aside in the manner provided by the statute. The later success of the assessee in respect of one assessment did not convert earlier completed assessments into nullities. The Act prescribed the exclusive method for challenging assessments, and the statutory bar against collateral proceedings reinforced that conclusion.

Conclusion: The assessments were not a nullity, and they remained valid unless and until displaced by the statutory procedure.

Issue (ii): whether the Commissioner's refusal to reopen completed assessments under Section 33 was improper or conferred an enforceable right to refund.

Analysis: Section 33 was treated as a power of administrative revision vested in the Commissioner for supervisory purposes, not as a source of a taxpayer's independent right to relief. The scheme of the Act exhaustively defined the taxpayer's remedies, and no collateral right founded on equity and good conscience could be implied. The refusal to reopen the matters was therefore supported by the statutory scheme and the finality attaching to completed assessments.

Conclusion: Section 33 did not create an enforceable right in the assessee, and the refusal to grant the claimed relief was not improper.

Issue (iii): whether a reference lay under Section 66(2) from an order under Section 33 that did not worsen the assessee's position.

Analysis: A reference under Section 66(2) was available only where the order under Section 33 was prejudicial, meaning that it placed the assessee in a worse position than before. An order merely declining to reopen an assessment, without enhancing the assessment or otherwise altering the assessee's position for the worse, was not prejudicial in that sense. The statutory proviso also showed that the reference jurisdiction was confined to questions arising from the Section 33 order itself.

Conclusion: No reference lay because the Commissioner's order was not prejudicial to the assessee within Section 66(2).

Final Conclusion: The appeal succeeded, the High Court's decision was set aside, and the assessee's claim for reopening and refund failed under the statutory scheme of the Income-tax Act, 1922.

Ratio Decidendi: The Income-tax Act provides an exhaustive code of assessment, appeal, revision, refund, and reference, so completed assessments cannot be treated as nullities or reopened on a general equitable basis, and an order under Section 33 is referable only if it leaves the assessee in a worse position than before.

---