Provisional tax assessment cannot resolve disputed legal or factual issues or override binding precedent; writ jurisdiction remains available.

A provisional assessment under the Companies (Profits) Surtax Act, 1964 is a summary exercise and cannot be used to decide disputed questions of law or fact or to ignore binding judicial authority; the Income-tax Officer must proceed on the returned figures unless the statute permits otherwise. The existence of discretionary revisional power under section 17 does not provide an efficacious alternate remedy barring writ jurisdiction under Article 226. On that basis, exclusions from capital and deductions that required resolution of controversy were held unjustified at the provisional stage, and the assessment was struck down. The costs order was modified so each party bore its own costs.

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Issues: (i) Whether a writ petition under Article 226 of the Constitution of India was maintainable against a provisional assessment under section 7 of the Companies (Profits) Surtax Act, 1964 in view of the revisional power under section 17; (ii) Whether, while making a provisional assessment under section 7 of the Companies (Profits) Surtax Act, 1964, the Income-tax Officer could decide disputed questions of law and fact or ignore the return and binding legal position; (iii) Whether the Income-tax Officer was justified in excluding the disputed items from the computation of capital and deductions for provisional assessment purposes; and (iv) Whether the order as to costs required interference.

Issue (i): Whether a writ petition under Article 226 of the Constitution of India was maintainable against a provisional assessment under section 7 of the Companies (Profits) Surtax Act, 1964 in view of the revisional power under section 17.

Analysis: The revisional power of the Commissioner under section 17 was discretionary and did not confer a statutory right of challenge equivalent to an appeal. The absence of an appeal against provisional assessment did not make revision an alternate efficacious remedy. The objection was also not raised before the single judge and was not part of the appeal grounds.

Conclusion: The writ petition was maintainable and the objection of alternate remedy failed.

Issue (ii): Whether, while making a provisional assessment under section 7 of the Companies (Profits) Surtax Act, 1964, the Income-tax Officer could decide disputed questions of law and fact or ignore the return and binding legal position.

Analysis: Section 7 was a summary provision intended to accelerate collection of surtax pending regular assessment. Its object was analogous to the provisional assessment scheme under section 141 of the Income-tax Act, 1961. On that basis, the officer could not undertake an enquiry into disputed legal or factual questions at the provisional stage. The officer was also bound by the law declared by courts and could not disregard binding decisions while acting summarily.

Conclusion: The Income-tax Officer could not decide disputed questions of law or fact in provisional assessment, and the single judge was correct on this issue.

Issue (iii): Whether the Income-tax Officer was justified in excluding the disputed items from the computation of capital and deductions for provisional assessment purposes.

Analysis: The exclusions relating to doubtful debts reserve, provision for doubtful debts, excess provision for taxation, provision for dividend, and deductions under Chapter VI-A of the Income-tax Act, 1961 involved questions already covered by favourable judicial or tribunal views or at least debatable issues requiring adjudication beyond the scope of section 7. The officer could not reject the assessee's treatment by resolving such controversies at the provisional stage, particularly when binding or prevailing authority supported the assessee.

Conclusion: The exclusions were not justified at the provisional stage, and the assessment order was rightly struck down.

Issue (iv): Whether the order as to costs required interference.

Analysis: The question involved was not free from doubt, and the proper course was for each party to bear its own costs.

Conclusion: The costs awarded by the single judge were set aside and each party was directed to bear its own costs.

Final Conclusion: The appeal did not succeed; the provisional assessment was invalidated, and the costs order was modified so that each party bore its own costs.

Ratio Decidendi: A provisional tax assessment made under a summary statutory scheme cannot be used to resolve disputed questions of law or fact or to disregard binding legal authority, and revisionary power does not constitute an alternate efficacious remedy barring writ jurisdiction.

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