1952 (12) TMI 4 - SC - Income Tax

Supreme Court upholds dismissal of appeal due to invalid references under Income-tax Act

The Supreme Court dismissed the appeal, affirming the High Court's decision that the references were incompetent under Section 66 of the Indian Income-tax ... Appeal To Supreme Court, Appellate Assistant Commissioner, Foreign Income, High Court, Income Tax, Tribunal's Order Issues Involved:1. Competency of the references under Section 66 of the Indian Income-tax Act.2. Jurisdiction of the Appellate Tribunal to entertain a miscellaneous application.3. Validity of the recomputation made by the Income-tax Officer.4. Appealability of the High Court's refusal to hear the case.Detailed Analysis:1. Competency of the References under Section 66 of the Indian Income-tax Act:The core issue revolved around whether the references made to the High Court under Section 66(1) and (2) of the Indian Income-tax Act were competent. The High Court had earlier held that the references were incompetent based on its decision in Commissioner of Income-tax, Madras v. R. Rm. M. Sm. Sevugan alias Manickavasagam Chettiar, and accordingly refused to answer the questions raised.2. Jurisdiction of the Appellate Tribunal to Entertain a Miscellaneous Application:The Appellate Tribunal had entertained a miscellaneous application from the assessee and passed an order correcting the Income-tax Officer's computation. The Tribunal justified its action by claiming inherent powers, even though no specific provision in the Act permitted such an application. The Supreme Court noted that the Tribunal's order made in the exercise of supposed inherent jurisdiction could not be regarded as one under Section 33(4) of the Act. Consequently, there was no valid order under Section 33(4) from which a question of law could arise, rendering the references under Section 66(1) and (2) invalid.3. Validity of the Recomputation Made by the Income-tax Officer:The recomputation by the Income-tax Officer on 26th September, 1945, was scrutinized. The Officer had carried out the Tribunal's directions by allowing deductions for replantation expenses and bad debt, and recalculated the income. However, the Supreme Court held that the Income-tax Officer's actions in carrying out the Tribunal's directions did not amount to an assessment under Section 23 or Section 27 of the Act. Therefore, no appeal lay from this order under Section 30(1), and the subsequent proceedings before the Appellate Assistant Commissioner and the Tribunal were not valid under the Act.4. Appealability of the High Court's Refusal to Hear the Case:The Supreme Court examined whether the High Court's refusal to hear the case on the grounds of incompetency constituted a decision and judgment under Section 66(5) of the Act, which would allow an appeal to the Supreme Court. The learned Attorney-General argued that the High Court's refusal was a decision within the meaning of Section 66(5). However, for greater safety, the appeal was treated as one on special leave granted under Article 136 of the Constitution. The Supreme Court decided not to express an opinion on the appealability under Section 66-A, as the appeal was considered under Article 136.Conclusion:The Supreme Court concluded that the references made to the High Court were incompetent due to the lack of a valid order under Section 33(4) of the Act. The Tribunal's order correcting the Income-tax Officer's computation could not be regarded as an order under Section 33(4), and thus no valid reference to the High Court could be made under Section 66(1) or (2). The appeal was dismissed with costs.Judgment:The appeal was dismissed, affirming the High Court's decision that the references were incompetent and refusing to answer the questions raised. The Supreme Court upheld the High Court's refusal to entertain the references due to the lack of jurisdiction under the relevant sections of the Indian Income-tax Act.