1956 (8) TMI 58 - HC - Income Tax

High Court: Original assessment matters can't be re-agitated in appeal against re-assessment. Appeal deemed valid.

Commissioner of Income-tax Versus A.D. Shroff,

Commissioner of Income-tax Versus A.D. Shroff, - [1957] 31 ITR 284 (Bombay) Issues:1. Interpretation of the right of appeal in an assessment under section 34.2. Competency of an appeal against re-assessment in relation to the original assessment.Analysis:The judgment by the High Court of Bombay, delivered by Chagla and Tendolkar, JJ., involves a case where the assessee, a dealer in shares, was assessed for the year 1947-48. The assessee contended that his income should be reduced based on earlier Tribunal directions regarding the valuation of shares. The Income-tax Officer accepted this contention, subject to adjustment, in the final assessment order. Subsequently, a notice was issued under section 34 for notional dividends, leading to a re-assessment where the income was taken as initially assessed. The assessee appealed to the Appellate Assistant Commissioner, who directed a de novo assessment to give effect to the Tribunal's directions. The Income-tax Officer appealed to the Tribunal, which held that the appeal to the Appellate Assistant Commissioner was not competent, leading to this reference before the High Court.The main issue before the High Court was whether an assessee has the right of appeal against any item included in the original assessment in a re-assessment under section 34. The Court emphasized that once an assessment order becomes final and conclusive, all matters that could have been raised in appeal are concluded thereby. Therefore, in an appeal against an order made under section 34, these matters cannot be re-agitated. However, the Court examined the specific facts of this case and concluded that the appeal to the Appellate Assistant Commissioner was competent. The assessee was not challenging the finality of the original assessment but was contesting the Income-tax Officer's departure from the original assessment order in the re-assessment under section 34. The Court highlighted the distinction between the assessed income of Rs. 1,11,271 and the income subject to adjustment, emphasizing the need for the Income-tax Officer to adhere to the original assessment directions.In summary, the High Court clarified that while generally, matters concluded by the original assessment cannot be re-agitated in an appeal against a re-assessment under section 34, in this specific case, the appeal to the Appellate Assistant Commissioner was valid. The Court highlighted the importance of maintaining the sanctity of the original assessment order and ensuring that subsequent re-assessments adhere to the original directions.