TaxTMI 
TaxTMI 
1965 (12) TMI 12
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the other of Rs. 14,000 and odd made on January 13, 1954. The assessee's explanation for the credit entries was disbelieved and the amounts were held by the Income-tax Officer to be its income from an undisclosed source. It has selected the Diwali year as its previous year. If the previous year for the undisclosed source with gave rise to the income was the financial year, the income could be assessed in the assessment year 1954-55, whereas if it was the Diwali year (on the ground that the income was from the disclosed business), it could be assessed in the assessment year 1955-56. The income was included in the assessment for the assessment year 1955-56 by the Income-tax Officer and the Appellate Assistant Commissioner, but the Tribunal on second appeal of the assessee held that the previous year for the income, it being an income from an undisclosed source, was the financial year 1954-55 and that it could not be included in the assessment for the assessment year 1955-56 and reduced the assessed income accordingly. When the order of the Tribunal was received by the Income-tax Officer, he started proceedings under section 34 by issuing a notice on August 2, 1958. The notice is not....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sion or failure as mentioned in clause (a) " the Income-tax Officer has in consequence of information in his possession reason to believe that income, profits...... have escaped assessment for any year ". Action is to be taken under section 34 by serving on the assessee a notice " containing all or any of the requirements which may be included in a notice under sub-section (2) of section 22 " and the notice may be served at any time if it is under clause (a) and only within four years of the end of the year if it is under clause (b). Before issuing a notice under clause (a), the Income-tax Officer is required (vide proviso (iii)) to record his reasons for issuing it and to obtain the approval of the Central Board of Revenue in certain circumstances or the Commissioner in other circumstances. A notice issued under section 22(2) calls upon a person to furnish within a certain period (of not less than 30 days) a return in the prescribed form and verified in the prescribed manner setting forth his total income and total world income during the previous year along with such other particulars as may be provided for in the notice. An Appellate Assistant Commissioner, in disposing of an ap....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that a certain income has escaped assessment, and (3) the belief is based on the information. I take it that " having reason to believe " means that not only there is a reason for the belief but also that the belief is entertained or formed. Having reason to believe means that there is a reason coupled with the belief. In the instant case, the Income-tax Officer had formed the belief that certain income had escaped assessment for the assessment year 1954-55, but that fact alone would not justify his proceeding under clause (b). He could proceed under clause (b) only if he had certain information in his possession and that information furnished a reason for the belief. Even if he had certain information which could furnish a reason for the belief, it would not justify his proceeding under clause (b) unless he actually formed the belief on account of the information. If he formed the belief, but not on account of the information, the connection between the information and the formation of belief did not exist and without the connection he could not proceed under clause (b). The words " in consequence of " occurring in clause (b) are not redundant. Possessing an information, forming ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l. What has happened in this case is that the Income-tax Officer thought that the assessee failed to disclose fully and truly all material facts necessary for its assessment for 1954-55 ; he does not claim to have in his possession certain information nor does he claim that on account of that information he had reason to believe that income for the assessment year 1954-55 had escaped assessment. He certainly formed the belief that a certain income had escaped assessment for the assessment year 1954-55 and he certainly had reason for the belief but according to him the reason of the escape was the assessee's omission or failure to disclose fully or truly all material facts necessary for its assessment for 1954-55. It had filed the return but it concealed from it the fact that the amounts of Rs. 12,000 and odd and Rs. 14,000 and odd received by it on December 12, 1953, and January 13, 1954, were its income liable to be taxed by disguising the receipts as deposits. It did not give true and full particulars of the receipts with the result that when it was assessed for 1954-55, the Income-tax Officer did not know that they constituted taxable income and, therefore, did not include them....
X X X X Extracts X X X X
X X X X Extracts X X X X
....acts is not governed by clause (b) nor does information that a return believed to disclose fully and truly all material facts really did not disclose fully and truly all material facts which come within its scope. Since the assessee has disclosed fully and truly all material facts in respect of the escaped income, the information contemplated by clause (b) is normally in respect of the law applicable to the facts unless the Income-tax Officer made a mistake in disbelieving or ignoring some of the facts or of assuming some facts which did not exist at all. When an income is liable to be assessed, the facts relating to it are disclosed fully and truly and yet it is not assessed, it is obvisously a case of a mistake and the information required by clause (b) is about the mistake. In the instant case there is no question of any mistake ; when assessing the assessee for 1954-55, the Income-tax Officer did not erroneously disbelieve any statement made in the return, even though it was correct or did not assume any fact even though it did not exist and did not apply any law wrongly to the facts found by him ; yet the income escaped assessment. The escape was due to the fact that all the f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t is not governed by clause (a). Omission to file a return is governed by clause (a) as well as failure to disclose all material facts fully and truly ; therefore, clause (b) applies when there is neither the omission nor the failure. Thus the two clauses are mutually exclusive ; in a given set of circumstances, one or the other can apply but both can never apply. When an Income-tax Officer applies clause (a), it follows that the circumstances in which clause (b) can apply are non-existent and neither the Appellate Assistant Commissioner nor the Tribunal can apply it. If he states the facts found by him and they attract clause (b) and not clause (a), his saying that clause (a) is applicable will not make clause (b) not applicable by the Appellate Assistant Commissioner or the Tribunal because then it would be a simple case of applying a wrong law to the facts found. But if the facts expressly found by him are those referred to in clause (a), it is not open to the Appellate Assistant Commissioner or the Tribunal to find the facts to which clause (b) applies merely because they consider that from the material on the record they should have been found to be proved. They have no origin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....54-55 was information in the Income-tax Officer's possession. It was for the Income-tax Officer to treat it as information and to say that he was informed about the correct state of the law. He could not be said to have been informed if the Tribunal's finding did not register any impression in his mind. Every statement made to a person is not information to him ; it is not if he does not understand it or does not give any thought to it or does not believe it. The first proviso to section 34 was amended with effect from April 1, 1956, and now under clause (iii) of it reasons have to be recorded by the Income-tax Officer, and the Commissioner's approval for the issue of notice under section 34 is required, only if he proceeds under clause (a). It was contended by Sri R. L. Gulati that the proviso in force in the assessment year 1954-55 governs the case and not the proviso in force on August 2, 1958, the date of the issue of the notice. I reject this contention mainly because the amendment in the proviso is of a procedural nature. The amendment deals with the condition required for the issue of a notice and fulfilment of the condition is essentially a procedural matter. An Income-tax....
X X X X Extracts X X X X
X X X X Extracts X X X X
....red upon the Tribunal by section 33(4) is certainly very wide but not absolutely unlimited or arbitrary. The power to consider a certain order to be fit to be passed is controlled by the provisions of the Act ; it has not the power to consider any order as one fit to be passed. If in view of what the Income-tax Officer did and ordered the reassessment cannot be done under clause (b), the Tribunal should not consider it fit to alter the reassessment from one under clause (a) to one under clause (b) ; if it must not find such alteration fit, it has no jurisdiction to order it. Sri Das argued that the power to act under clause (b) is smaller than the power to act under clause (a) and, therefore, the Tribunal can alter the acting under clause (a) to acting under clause (b). The analogy of an appellate court's power to alter a conviction to one for a smaller offence does not apply. The powers of clauses (a) and (b) are different in nature and have no quantitative values so that one can be said to be " smaller " than the other. In the absence of one power being wholly included in the other power, it cannot be said that one power is smaller than the other. A comparison of mutually exclus....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ming jurisdiction but in the course of exercise of jurisdiction and all that the Income-tax Officer does in the process of assessment is subject to the Tribunal's appellate jurisdiction. The facts mentioned in clause (a) or clause (b) are, on the other hand, jurisdictional facts required for the very assumption of jurisdiction and while the assumption of jurisdiction is, the refusal or failure to assume jurisdiction is not, subject to the Tribunal's appellate jurisdiction. All that the Income-tax Officer does in the exercise of his jurisdiction is objective or justiciable and is subject to the Tribunal's appellate jurisdiction. All that he does after assuming jurisdiction can be done by the Appellate Assistant Commissioner or the Tribunal but an Appellate Assistant Commissioner or the Tribunal cannot assume jurisdiction under section 34 when he has refused to do it. In Commissioner of Income-tax v. Kanpur Coal Syndicate, the Supreme Court decided that the Appellate Assistant Commissioner is empowered by section 31(3)(b) and the Tribunal is empowered by section 33(4) to set aside an assessment on an association of persons and direct the Income-tax Officer to assess the members indiv....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... one under clause (b). The Tribunal has not drafted the statement correctly and formulated the questions, intelligently. Question No. 1 is on the face of it suggested by the Commissioner and not by the assessee. The assessee could not have suggested it because the Tribunal's decision was in its favour. It had contended in the appeal before the Tribunal that clause (b), and not clause (a), applied. The statement has been submitted at its instance and the question that was sought to be referred by it is the question about the Tribunal's power to alter the assessment from one under clause (a) to one under clause (b). Question No. 2 formulated by the Tribunal brings out this question but only if question No. 1 is in the negative. Even if the Tribunal could frame questions at the suggestion of the Commissioner, its duty was first to frame questions sought by the assessee to be referred and then frame questions which might arise out of the answers to the former questions and might be suggested by the Commissioner. The questions that could be suggested by the Commissioner depended for their existence on the answers to be given by this court to the questions suggested by the assessee and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t but the High Court is required to decide only such of them as are raised by the statement, i.e., as arise out of the Tribunal's order and are mentioned in the application under sub-section (1). The Tribunal is required to incorporate such questions in the statement so that the High Court is spared the trouble of ascertaining which questions are to be answered by it. Several questions of law may be raised before the Tribunal during the hearing of an appeal, some at the instance of the assessee and others at the instance of the Commissioner. Some questions of law may be answered by the Tribunal in the assessee's favour and others in the Commissioner's favour. One question may arise out of the answer given to another question and one of these questions may be answered in the assessee's favour and the other in the Commissioner's favour. If the order, i.e., the final decision in the appeal is in the assessee's favour, he is not aggrieved by any question being answered adversely to him. When some questions are decided in his favour and the appeal is decided on the basis of the answers, the adverse answers given to other questions cannot be said to arise out of the Tribunal's order. If ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 33(4). There can be no reference of any question, even if of law, arising out of any other order of the Tribunal. When a High Court answers the questions of law referred to it by the Tribunal and sends a copy of its judgment to the Tribunal the Tribunal is required by sub-section (5) to dispose of the case " conformably to such judgment " . Any order that the Tribunal passes under this provision is not an order under section 33(4) and, therefore, no question, even if of law, arising out of its order can be referred under section 66(1). In other words, there cannot be two references under sub-section (1) in one case ; all questions of law that arise must be referred in one instalment. When the Tribunal's order depends upon an answer given to one question which arises out of the answer given to another question, the latter question also must be referred if required by the party against whom it is answered, otherwise the party would be left without any remedy. It could not make an application under sub-section (1) because the order was in its favour though the question was answered against it (as the order was based on the answer given in its favour to the second question) and, if t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssioner could not apply under sub-section (1) (because the Tribunal's order was in his favour). If he still applied and the Tribunal referred the question (whether clause (a) applied or clause (b)), the High Court could refuse to answer it. Still, Sri Gulati argued, he should have as a precaution made an application under sub-section (1) for referring the question to the High Court so that if the assessee applied, the questions suggested by both could be referred by the Tribunal. He added that the Commissioner could withdraw the application if the assessee did not make any application within the prescribed period. The alternative suggestion was that when the assessee applied, the Commissioner also should have applied for reference of the question. The alternative suggestion cannot always be adopted because there is a period of limitation prescribed for an application and, by the time the Commissioner knows that the assessee has applied, the limitation for his applying might have expired. Section 5 of the Limitation Act does not apply to such an application though it applies to an application under sub-section (2). As regards the first suggestion, the question is not what the Commis....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Chetti & Co. Though the learned judges referred to an application by the other party, they had no occasion to decide, and did not decide, that without such an application no question could be framed at the suggestion of the opposite party. What we have to decide is whether the Tribunal could refer the question at the instance of the Commissioner without an application by him and this question never arose, and was not decided, in D. Arokiaswami Chetti & Co. Sri Gulati referred us to Commissioner of Income-tax v. Scindia Steam Navigation Co. Ltd which lays down that a High Court acting under sub-section (2) of section 66 cannot ask the Tribunal to refer to it a question not raised by the applicant in his application under sub-section (1). Even if an assessee and the Commissioner apply under sub-section (1) and the Tribunal rejects both the applications and only the assessee applies under sub-section (2), the High Court cannot call upon the Tribunal to refer to it any question mentioned in the Commissioner's application under sub-section (1) but not in the assessee's. Sri Gulati argued that if the Tribunal had rejected the assessee's application under sub-section (1) and it had come....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as to the power of the Tribunal to alter a more onerous and stringent sub-section under which assessment or reassessment proceedings are taken by the Income-tax Officer to a comparatively less severe and more advantageous sub-section for the assessee. In this particular case the assessee may gain some advantage by the question being answered in his favour but by and large if the Tribunal is held not to have any such power, the taxpayer will be the loser. I agree to the proposed answer to question No. 2 and this is in itself sufficient to dispose of the reference but as the matter may not be allowed to rest here I would express my views on both the questions for what they are worth. The material facts in respect of the two questions as reframed are these. The relevant year of assessment is the assessment year 1954-55. The status of the assessee was that of a Hindu undivided family. There were two credits, one of Rs. 12,744 on December 12, 1953, and of Rs. 14,332 on January 13, 1954, found entered in the capital account of the assessee Hindu undivided family in its account books relevant for the assessment year 1955-56. In the assessment year 1955-56, the assessee was called upon to....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... for 1955-56, on what after all was a technicality, the assesee now before the Tribunal for the first time challenged the validity of the notice under section 34, particularly if it was one issued under section 34(1)(a) as that would inevitably lead to penalty proceedings under section 28(1)(c) of the Act. The argument before the Income-tax Officer was that once a cash credit had been included in the assessment for a particular year and, if for any reason it was deleted, it could not be included under the provisions of section 34(1)(a) in any other year as the error would be one of law and not of fact and action under section 34 could only be taken if there was an error of fact and not of law. The Income-tax Officer rejected this contention observing, " while going through the facts of the case I find that the material facts which govern the application of the provisions of section 34(1)(a) are whether by omission or failure on the part of the assessee to disclose fully and truly...... the income has escaped assessment. " In this case the assessee did not disclose the huge deposits amounting to Rs. 27,707 at the time of the assessment proceedings for the year 1954-55 and this retur....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the assessment proceedings for 1954-55, the impugned credits, which appeared in the account books relating to the assessment proceedings for the year 1955-56. The Tribunal was impressed by this argument and held that " law does not expect the assessee to assume the cash credits were income receipts, that the financial year was the previous year in respect thereof, and, although they did not appear in the account books in that year, it was bound to disclose in the assessment year relevant to the financial year..... " They, however, went on to hold " we however find that the assessment should have been made under section 34(1)(b). The fact that the cash credits were deleted by the Tribunal in a later year does constitute information for taking action under section 34(1)(b). All the necessary facts are found on the record and no further investigation is necessary and we had put this question to the learned counsel for the assessee at the time he argued. The assessee's counsel is not taken by surprise for effectively meeting this case. It would be unjust in our opinion to annual the assessment when section 34(1)(b) applies to the facts of the case. We, therefore, alter the assessment ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....der section 34(1)(a) are more stringent than those under section 34(1)(b). Sub-section (1)(b) is the general provision for bringing to assessment escaped or under-assessed income. That does not require any act of commission or omission on the part of the assessee before it can be invoked. All that is necessary is that the Income- tax Officer in consequence of information in his possession should have reason to believe that some income has escaped assessment " for any year ". It is well settled that the information need not necessarily be one of fact but may even be information as to the correct state of the law. The position in law as to what was the previous year for income from an undisclosed source was not clear or settled at the time when the original assessment in the present case was made. That is why no such objection was taken by the assessee till the matter reached the stage of the Tribunal by way of appeal for the assessment year 1955-56. It was only at that time that a decision of the Patna High Court had been delivered holding that the previous year for income from an undisclosed source is the financial year and not the previous year which the assessee may have adopted ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ment under the more stringent and onerous provisions of section 34(1)(a), there is nothing to prevent the appellate court from invoking section 34(1)(b), provided the prerequisite conditions are satisfied and they are found on the record. In the present case the requisite conditions for invoking section 34(1)(b) were all present. There was information as to the correct state of law in the shape of the order of the Tribunal for the assessment year 1955-56 which led the Income-tax Officer to believe that the sum of Rs. 27,707 had escaped assessment for the assessment year 1954-55 and the notice was issued within the prescribed period of limitation. Apart from the principle that an appellate court has ordinarily the same powers as the original court, the provisions of section 33(4) of the Act give the Tribunal plenary powers " to pass such orders thereon as it thinks fit ". These words have come up for consideration before various courts. In Oriental Building and Furnishing Co. v. Commissioner of Income-tax it was observed by the Punjab High Court : " From the language used in section 33(4) of the Act it is plain that in an appeal under section 33 of the Act the Tribunal is compete....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to assess the members individually or to direct amendment of the assessment already made on the members. It was there observed : " The Appellate Assistant Commissioner has, therefore, plenary powers in disposing of an appeal. The scope of his power is conterminous with that of the Income-tax Officer. He can do what the Income-tax Officer can do and also direct him to do what he has failed to do. If the Income-tax Officer has the option to assess one or other of the entities in the alternative, the Appellate Assistant Commissioner can direct him to do what he should have done in the circumstances of a case... Under this section (section 33(4)) the Appellate Tribunal has ample power to set aside the assessment made on the association of persons and direct the Income-tax Officer to assess the individuals or to direct the amendment of the assessment already made on the members. The comprehensive phraseology used both in section 31 and section 33 of the Act does not countenance the attempt of the revenue to restrict the powers of the Appellate Assistant Commissioner or of the Appellate Tribunal ; both of them have power to direct the appropriate authority to assess the members individ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ficer when making the assessment for 1955-56. The assessee ultimately succeeded before the Tribunal only on the technical ground that the impugned credits were added as income from an undisclosed source and as such were assessable not in 1955-56 as they fell within the financial year 1953-54 relevant for the assessment year 1954-55. In these circumstances it would not be unreasonable to hold that it was equally open to the Income-tax Officer to take a technical stand that, as it was established that the credits were income from an undisclosed source (even if the assessee did not admit it to be so) and as the amount had found its way into its books of account, albeit the capital accounts, it was obliged to draw the attention of the Income-tax Officer to the existence of such an amount in its books of account, for the financial year 1953-54, during which the credits had actually found their way into its books of accounts. If the Income-tax Officer's attention had been drawn and yet he had chosen to assess it for the assessment year 1955-56, as income from an undisclosed source, the assessee would indubitably have been right in asserting that there was no failure to disclose all mater....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Tribunal the power, in the circumstances of this case, to maintain on appeal an assessment made by an Income-tax Officer under section 34(1)(a) of the Income-tax Act on its holding that though it could not be made under that provision it could be made under section 34(1)(b) ? " V. BHARGAVA J. (9-2-1966)--In this reference I have heard learned counsel for the assessee as well as learned counsel for the income-tax department. The question referred to me for opinion by the Division Bench is : " Had the Tribunal the power, in the circumstances of this case, to maintain on appeal an assessment made by an Income-tax Officer under section 34(1)(a) of the Income-tax Act on its holding that though it could not be made under that provision it could be made under section 34(1)(b) ? " When dealing with this reference, a question arose whether, in answering this question, " the circumstances of this case", which I have to take into account, will include the circumstance that, according to the concurrent decision of the Division Bench, the facts found in this case showed that the assessment of the income of the assessee should have been and was correctly made by the Income-tax Officer und....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the question should not be answered on this basis. It was suggested to me by learned counsel and it also seems to me that the question, which the Bench really wanted to be answered by me, was the abstract question of law, whether the Tribunal had jurisdiction to convert an assessment made under section 34(1)(a) by the Income-tax Officer into an assessment under section 34(1)(b) in appropriate cases where section 34(1)(a) does not apply and section 34(1)(b) would be applicable and could be validly applied by the Tribunal. If such an abstract question has to be answered by me, it is clear that I should not be called upon to take into account all the circumstances of this particular case, which include the circumstances that this court has already held that in this particular case the assessment was valid under section 34(1)(a) and should be made under section 34(1)(a). Consequently, as suggested by learned counsel, I direct that this reference be returned to the Bench concerned for clarification or reframing the question, so that the point to be answered by me may be quite plain. In this case, Mr. Gopal Behari, appearing on behalf of the department, further urged that I should decli....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f answering this reference will be. It seems to me that, in these circumstances, it would not be proper for me to hold that this reference is unnecessary and to decline to give any opinion on the point referred. It will, of course, be open to the referring Bench to reconsider whether the question is a necessary one and needs to be referred for my opinion. The papers may be laid before the Bench concerned at a very early date. BY THE COURT (22-2-1966) We have perused the judgment of the third learned judge to whom the point of law upon which we had differed, was referred. The question that we meant to refer was the question of jurisdiction of the Tribunal to alter the provision or section under which an assessment was made when the matter came up before it on appeal. We, therefore, now clarify the position and refer the following for opinion (in substitution of the order previously referred) : " If an Income-tax Officer assesses an income under section 34(1)(a) and the Tribunal, on appeal, comes to the conclusion that it should have been assessed under section 34(1)(b), has it jurisdiction to convert or alter the assessment into one under section 34(1)(b) and maintain it as suc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the learned counsel for the assessee also at the time of the argument. The assessee's counsel is not taken by surprise for effectively meeting this case. It would be unjust, in our opinion, to annul the assessment when section 34(1)(b) applies to the facts of the case. We, therefore, alter the assessment to one under section 34(1)(b). " At the instance of the assessee the Tribunal made a reference to this court. It framed the following questions : " 1. Whether on the facts and in the circumstances of the case was the department correct in making the assessment under section 34(1)(a) ? 2. If the answer to the first question is in the negative then was the Tribunal correct in altering an assessment made under section 23(3)/34(1)(a) into an assessment under section 23(3)/34(1)(b) when it was satisfied that the requisites of section 34(1)(b) were found on the record ? " The reference was heard by Desai C. J. and Manchanda J. Both the learned judges were of the view that the questions should be refrained as follows : " (1) Was the Tribunal legally correct in altering the assessment made under section 23(3)/34(1)(a) to an assessment under section 23(3)/34(1)(b) in the circumstances ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n under clause (a) to assess or reassess the income, profits or gains or recompute the loss or depreciation allowance can be invoked only when the Income-tax Officer has reason to believe that by reason of the omission or failure on the part of an assessee to make a return of his income under section 22 for any year or to disclose fully and truly all material facts necessary for his assessment for that year, income, profits or gains chargeable to income-tax have escaped assessment for that year, or have been under-assessed, or assessed at too low a rate, or have been made the subject of excessive relief under that Act, or excessive loss or depreciation allowance have been computed. The jurisdiction under clause (b) can be invoked when, although there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Income-tax Officer has in consequence of information in his possession reason to believe that income, profits or gains or the loss or depreciation allowance have been similarly affected. The provocation for invoking the jurisdiction is distinct in each case, and it is the Income-tax Officer in whose judgment the legislature has reposed confidenc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....use (b) of sub-section (1). From all these considerations, it is clear that clauses (a) and (b) of sub-section (1) of section 34 contemplate two distinct and mutually independent jurisdictions. Having analysed the nature of the two jurisdictions conferred upon the Income-tax Officer by sub-section (1) of section 34, I shall now turn to consider the question whether the Tribunal can convert an assessment made by the Income-tax Officer under clause (a) of that sub-section to an assessment under clause (b). The jurisdiction of the Tribunal is set out by section 33. The Tribunal has the power to hear appeals against an order passed by the Appellate Assistant Commissioner under section 28 or section 31. Upon such appeals the Tribunal has jurisdiction to " pass such orders thereon as it thinks fit ". There can be little doubt that the jurisdiction conferred upon the Tribunal by this provision is very wide. But when it is remembered that the jurisdiction is a creature of the statute, it is necessary for the courts to discern the limits within which that jurisdiction must be exercised. I find it impossible to accept the contention that the language which the legislature has used confers ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng has commenced, and during the course of that proceeding. It is applied for the purpose of determining the true income, profits or gains, and in the course of the exercise of jurisdiction already commenced. It is not applied for the purpose of determining whether or not the jurisdiction to assess can be invoked at all. The question whether the proviso to section 13 should be applied is a matter falling for objective consideration. To my mind, the law laid down in McMillan's case can have no relevancy to the question raised before me. Upon all these considerations it seems to me that the Tribunal, in an appeal before it, cannot exercise the functions of the Income-tax Officer and decide that an assessment can be sustained under clause (a) or clause (b) of sub-section (1) of section 34. If the Tribunal does not enjoy that jurisdiction, it does not have jurisdiction to convert an assessment made under clause (a) to one under clause (b). What was described as a preliminary objection has been raised by Mr. Gopal Behari on behalf of the Commissioner of Income-tax. He contends that the point referred for opinion is academic and should not be answered, and urges that when a point of la....