TaxTMI 
TaxTMI 
1957 (2) TMI 58
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....unt of the assessee for his business at Bombay is the Samvat year, whereas the year of account for his business at Rajkot is the financial year although this is not so clear in the return filed by the assessee at Bombay for the assessment year 1950-51. The Income-tax Officer at Jamnagar assessed the assessee on the basis of the year of account being the financial year. According to the assessee, the profit at Rajkot from 2nd November, 1948, to 31st March, 1949, amounted to Rs. 2,41,486. From 1st April, 1949, to 21st October, 1949, again, according to the assessee there was a loss of Rs. 61,071. The sum of Rs. 2,41,586 was assessed by the Income-tax Officer, Jamnagar, under the Saurashtra Income-tax Ordinance. The assessee therefore claimed before the Income-tax Officer that for making the assessment at Bombay for the assessment year 1950-51, year of account being S. Y. 2005 (2nd November, 1948, to 21st October, 1949) he should be allowed the loss of Rs. 61,071. The Income-tax Officer rejected the claim stating as follows : " Accounts of the branch at Rajkot were produced and seen. There is profit there. It ....
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....ollowing terms : " Heard appellant. He contends that the profits of Rs. 2,41,586 prior to 1st April, 1949, had already been included by the Income-tax Officer, Saurashtra, while making assessment on an income of Rs. 6,32,666 for the financial year ending 31st March, 1949. A copy of this order (which may be returned along with the report) is forwarded to the Income-tax Officer who will verify and report by 30th May, 1954, if the contention is correct. This point was left undecided in his report dated 25th February, 1953" 8. Thereupon the Income-tax Officer ascertained that the said sum of Rs. 2,41,586 being profits for the period 2nd November, 1948, to 31st March, 1949, were included in the income of Rs. 6,32,666 assessed by the Income-tax Officer, Jamnagar, for the accounting year 1st April, 1948, to 31st March, 1949. A copy of the said Income-tax Officer's second remand report dated 21st July, 1954, is annexure ' E ' and forms part of the case. 9. The assessee received a notice dated the 21st May, 1954, from the Commissioner of Income-tax issued by him under section 33B of the....
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....esent Income-tax Officer has raised an important point that was overlooked, according to him, by his predecessor making the assessment. There was a remittance, in the year of account, of a sum of Rs. 4 lakhs from Rajkot which was originally exempted from assessment in view of the concessions allowed in Part B States Tax Concession Order. The present Income-tax Officer says this was wrong and the amount is includible in assessment. 3. In order that the appellant may have the opportunity of having his say in an important matter life the above, it is only desirable that the assessment be remanded to the Income-tax Officer for re-assessment. Incidentally, this will also furnish both the Income-tax Officer and the appellant the opportunity to reconsider the other points and effect corrections, if need be, in consultation with each other. " 12. The assessee thereupon appealed to the Appellate Tribunal against the order of the Appellate Assistant Commissioner setting aside the assessment and directing a re-assessment by the Income-tax Officer. The grounds of appeal before the Appellate Tribunal were as follows :  ....
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.... aside the order of the Income-tax Officer directing re-assessment. 7. The order of the Appellate Assistant Commissioner is illegal and bad in law. " 13. The Tribunal dismissed the appeal, saying that the Appellate Assistant Commissioner in setting aside the assessment and directing a fresh assessment had not exceeded his powers. A copy of the Tribunal's order is annexure ' H ' and forms part of the case. 14. The assessee has suggested a number of questions for being referred to the High Court. In our opinion, the following questions of law are sufficient to cover the issues raised by the assessee. We, therefore, refer the following questions to the High Court : " (1) Whether in the circumstances of the case, the Appellate Assistant Commissioner was competent to enhance the assessment by the sum of Rs. 4 lakhs said to have been remitted by the assessee from Rajkot to Bombay in the year of account even though the question of remittance did not form part of the grounds of appeal before him ? (2) Whether i....
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....ay, 1954, Apparently, the Commissioner thought that the Income-tax Officer was wrong in saving that the remittance was not liable to tax, in view of the concession allowed in Part B States Concession Order. A reply to this notice was sent by the assessee to the Commissioner on 1st June, 1954. Mr. Kolah says that the Commissioner has dropped the proceedings initiated by the issue of the notice on 21st May, 1954. The Departmental Representative informs us that the Commissioner has kept the matter pending. As nothing turns on the decision of the Commissioner we have not verified what action the Commissioner proposes to take. In our opinion, the power of the Appellate Assistant Commissioner to enhance the assessment under appeal is not fettered by any provisions contained in section 34 of the Indian Income-tax Act. If we had been placed in the position of the Appellate Assistant Commissioner we ourselves would have issued a notice to the assessee calling upon it to show cause why the assessment should not be enhanced. There is only one assessment which is indivisible and the powers of the Appellate Assistant Commissioner to enhance the assessment are not circumscribed at all. ....
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.... ascertain the actual profit for the relevant period earned by the business at Rajkot and he remanded the matter to the Income-tax Officer. On this order of remand a report was made by the Income-tax Officer on the 25th February, 1953, which accepted the figure given by the assessee that the loss at Rajkot was Rs. 61,071, but reduced the amount, owing to certain consideration with which we are not concerned, to Rs. 35,988. The Income-tax Officer pointed out that no assessment order from the Income-tax Officer pointed out that no assessment order from the income-tax Officer at Rajkot in respect of the earlier income was produced before him. He made a second renamed report on the 21st July, 1954, and in this report he stated that the order for assessment of the Rajkot income had been produced before him. He further pointed out that since the assessment had come up before the Appellate Assistant Commissioner in appeal and since the appeal was still pending, he would like to point out to the Appellate Assistant Commissioner that there was some error on the part of the Income-tax Officer in the interpretation of the Part B States (Taxation Concession) Order, 1950, and the assessment for....
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....to examining those aspects of the assessment which are complained of by the assessee; his competence ranges over the whole assessment and it is open to him to correct the Income-tax Officer not only with regard to a matter raised by the assessee but also with regard to a matter which has been considered by the Income-tax Officer and determined in the course of the assessment. Now, the section we are concerned with in section 31 (3) and that sub-section provided : "In disposing of an appeal the Appellate Assistant Commissioner May, in the case of an order of assessment, (a) confirm, reduce, enhance or annual the assessment, or (b) set aside the assessment and direct the Income-tax Officer to make a fresh assessment after making such further inquiry as the Income-tax Officer thinks fir or the Appellate Assistant Commissioner May direct, and the Income-tax Officer shall thereupon proceed to make such fresh assessment, and determine where necessary the amount of tax payable on....
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....the Income-tax Officer has come to the conclusion that a particular receipt is not liable to tax, the Appellate Assistant Commissioner cannot go behind the decision of the Income-tax Officer because the assessee was only complaining against the receipt which has been brought to tax. Such an interpretation of section 31 (3) would not only completely clip the powers of the Appellate Assistant Commissioner but would fail to give effect to the object that the Legislature had in conferring this rather extraordinary power upon the Appellate Assistant Commissioner. It is clear that the Appellate Assistant Commissioner has been constituted a revising authority against the decisions of the Income-tax Officer; a revising authority not in the narrow sense of revision what is the subjectmatter of the appeal, not in the sense of revising those matter about which the assessee makes a grievance, but a revising authority in the sense that once the appeal is before him he can revise not only the ultimate computation arrived at by the Income-tax Officer but he can revise every process which led to the ultimate computation or assessment. In other words, what he can revise is not merely the ultimate a....
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.... steps to assess the income in Jalpaiguri and Calcutta, and the Appellate Assistant Commissioner in the appeal assessed the appellant on his total income in Calcutta, Purnea and Jalpaiguri, and the question that arose before the Patna High Court was whether the Appellate Assistant Commissioner was competent to enhance his assessment in respect of business at Calcutta and Jalpaiguri, and the Court held that the Appellate Assistant Commissioner was not competent to do so, and the reason why the Patna High Court came to that conclusion is stated in the judgment at page 8 : "Now this section [section 31 (3)] relating to appeals is enacted for the benefit of the subject and also, to the limited extent there in stated, for the benefit of the Crown. But the subject-matter of the appeal is the assessment and the scope of the appeal must in my opinion be limited by the subject-matter. The appellate authority has no power to travel beyond the subject-matter of the assessment, and, for all the reasons advanced by the appellant, it is in my opinion not entitled to assess new sources of income." The principle w....
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....the enhancement by the Appellate Assistant Commissioner was confined to the same head in respect of which the appeal was preferred. The facts briefly were that the question in issue before the Income-tax Officer was whether two case receipts of Rs. 18,730 and Rs. 64,000 should be brought to tax. The Income-tax Officer held that Rs. 18,730 was liable to tax and accepted the contention of the assessee in regard to Rs. 64,000, and on appeal the Appellate Assistant Commissioner set aside the order of the Income-tax Officer and came to the conclusion that the other receipt should also be brought to tax and remanded the case to the Income-tax Office for re-assessment, and it is at page 758 that we find the Patna High Court and the passage contains the important words to which we have already drawn attention, viz., "Of course, it would not be open to the Appellate Assistant Commissioner to introduce into the assessment new sources, as his power of enhancement should be restricted only to the income which was the subject-matter of consideration for purposes of assessment by the Income-tax Officer." Therefore, th....
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....by the assessee, it was open to the commissioner to raise before the Appellate Assistant Commissioner any matter dealing with the assessment of the assessee and it appears that we held, giving effect to this concession, that an order by the Income-tax Officer registering a firm could be challenged by the Commissioner before the Appellate Assistant Commissioner if the assessee has preferred an appeal. Mr. Kolah drew our attention to the fact that this decision May have to be reconsidered because it does not appear that there is any power conferred upon the Appellate Assistant Commissioner to reverse an order passed by the Income-tax Officer registering a firm. But whether the decision is correct with regard to this actual decision, it we might say so, the ration of the decision still holds good, and the ratio is this that to the extent that the Commissioner can agitate a matter before the ordinary tribunal set up by the Income-tax Act, viz., the Appellate Assistant Commissioner, it is not open to him to exercise his extraordinary powers under section 33B. But neither of these two decisions really help us to decide the question before us, because the question is not what are the powe....