1930 (5) TMI 12 - HC - Income Tax

Court clarifies limits on income reassessment under Section 34, emphasizes Commissioner's discretion.

In Re: Kashi Nath Bagla

In Re: Kashi Nath Bagla - AIR 1932 All 1 Issues:1. Whether the Assistant Commissioner was precluded from granting relief to the assessee against the original assessment under Section 23(4)Rs.2. Whether Section 34 confers on the authorities a power of revision of a previous assessment, and if the revision results in showing that the assessment under Section 23(4) was too much, can relief be granted to the assesseeRs.3. Whether the Commissioner could exercise his discretion in favor of the assessee under Section 33 of the ActRs.Analysis:1. The case involved a reference by the Commissioner of Income Tax regarding an assessment made on a minor of unsound mind under the guardianship of his mother. Initially, an assessment was made under Section 23(4) of the Income Tax Act based on an estimated income for a specific year. Subsequently, the Income Tax officer found that some income had escaped assessment and issued a notice under Sections 22(2) and 34 for the same year's income. The Assistant Commissioner, upon appeal, determined that the actual income was less than the original assessment. The main issue was whether the Assistant Commissioner was precluded from granting relief against the original assessment. The court held that under Section 34, the authorities could only assess or reassess income that had escaped assessment, limiting their jurisdiction to the additional income not previously taxed. The court's opinion aligned with a Full Bench decision of the Madras High Court (P.L.M.P.L. Palaniappa Chettiar v. Commissioner of Income Tax A.I.R. 1930 Mad. 126).2. The second question raised was whether Section 34 allowed for a revision of a previous assessment and if relief could be granted to the assessee if the original assessment was deemed excessive. The court answered this question in the negative, indicating that Section 34 did not provide for such a revision resulting in relief for the assessee.3. Lastly, the assessee inquired about the Commissioner's discretion under Section 33 of the Act. The court clarified that the exercise of discretion by the Commissioner was solely within the Commissioner's purview and not a matter for the court to consider in a reference. As no further questions arose in the reference, the court directed the return of the reference with the provided answers. The applicant, having not succeeded in the application, was ordered to bear his own costs along with the costs of the Government, including the Government Advocate's fees.