1945 (3) TMI 21 - HC - Income Tax

Ruling on Stock-Broker Tax Assessment Dispute Clarifies Procedural Steps

N.V. Khandvala Versus Commissioner of Income-tax

The Court ruled in a case involving the assessment of stock-brokers for the Samvat year 1993, where the initial tax assessment was reduced on appeal. The ... - Issues:1. Assessment of stock-brokers for the Samvat year 1993.2. Dispute regarding the reliability of the books of account and accounting method.3. Tribunal's refusal to state a case for the opinion of the Court.4. Petitioners' request for the Tribunal to state additional questions of law.Analysis:1. The case involves the assessment of stock-brokers for the Samvat year 1993, where they were initially ordered to pay a significant amount under the Indian Income-tax Act. However, the amount was later reduced on appeal to the Tribunal by about four lakhs. The issue arose when it was argued that the books of account maintained by the assessees were not reliable, and the method of accounting adopted did not accurately reflect their profits and income as per the proviso to Section 13 of the Income-tax Act.2. The controversy centered around the contention that the Income-tax Officer was not entitled to adopt any unjust or arbitrary method in computing the income. The assessees sought to have the Tribunal state a case for the opinion of the Court, but their initial application was rejected. Subsequently, a notice of motion was filed, leading to a direction by the Court for the Tribunal to state a case. However, the Tribunal's preparation of the case and submission of one question of law left the assessees dissatisfied, prompting them to file a petition requesting the Tribunal to state four additional questions of law.3. A preliminary objection was raised by the Commissioner regarding the timing of requesting further facts or questions of law before the Court. It was argued that such requests should only be made after the case stated by the Tribunal is before the Court for disposal. The objection emphasized the need for the Court to have the opportunity to consider the case actually submitted by the Tribunal before entertaining requests for additional information or questions.4. Upon a detailed examination of Section 66 of the Indian Income-tax Act, the Court found merit in the Commissioner's objection. It was deemed inappropriate for parties to rush to Court seeking further statements of facts or questions of law before the Court had the chance to review the case as presented by the Tribunal. The Court outlined a proper procedure for addressing such situations, suggesting that aggrieved parties should make applications for additional facts or questions of law when the case stated by the Tribunal is filed in Court for disposal. In this case, the Court directed that the rule stand over to the hearing of the case stated by the Tribunal, allowing for a comprehensive consideration of the matter.This judgment clarifies the procedural aspects of seeking further facts or questions of law in income tax matters, emphasizing the importance of allowing the Court to review the case as presented by the Tribunal before entertaining such requests.