AI Drafter 
TaxTMI 
TaxTMI 
2004 (2) TMI 53
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....ection 154 of the Act for the three assessment years, viz., 1986-87, 1987-88 and 1988-89, and the assessee-company treated as a trading company. Being aggrieved, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals) which was allowed and the Assessing Officer was directed to tax the assessee at the rate that was applied in the original assessment. The Department preferred an appeal against the said order which was allowed by the Tribunal. The statement of the case shows that the following questions were referred to this court under section 256(2) of the Act for opinion: "1. Whether, in the facts and circumstances of the case, the Tribunal was right in holding that the assessee was a trading company as defined in the Finance Acts, 1986, 1987 and 1988 and was chargeable to tax at the higher rate of 60 per cent.? 2. Whether, in the facts and circumstances of the case, the Tribunal was right in holding that the question whether the company which worked as tea brokers and auctioneers was or was not a trading company gave no scope for any debate and as such action for rectification of the assessment under section 154 of the Act was justified?" ....
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....t matter of this proceeding, the assessee did not at any stage disclose itself as a trading company except for the year 1986-87 though initially at the time of filing the return it described itself as a trading company but the same was corrected by filing a revised return and accepting the revised return assessment order was passed finally. Therefore, there was no question of estoppel in the case of the assessee for claiming itself to be not a trading company. It is contended that a separate Finance Act enforced each year provides for charging section separately, and, therefore, each year has to be considered separately. The contention has been made with regard to the said question No.2 that as there was no error apparent from the records, the requirements of section 154 were not satisfied and so the power under the said section 154 could not have been exercised and the order passed in the said proceeding under section 154 is bad. In support of such contention, reliance was placed on the judgment in the case of T.S. Balaram, ITO v. Volkart Bros. [1971] 82 ITR 50 (SC); CIT v. Calcutta Steel Co. Ltd. [1985] 153 I1R 488 (Cal); CIT v. Simplex Concrete Piles (India) Pvt. Ltd. [1978] ....
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....the assessee from describing itself as not a trading company. In the above facts, it is apparent that the assessee was not precluded from so describing itself in the same manner as it has done in the revised return for the year 1986-87 on which the assessment order has since been passed. Therefore, the principle of res judicata does not affect the assessee any more as it merely continues to describe itself as not a trading company following the said assessment year 1986-87 for which alteration was made in the revised return and the same has since been accepted. With regard to the nature of the business of the assessee, the Assessing Officer has recorded his finding as follows: "The assessee-company derived income from the brokerage, commission, interest, dividend and house property. On scrutiny of the assessment records revealed that the assessee-company was a tea broker, auctioneer, financier and major portion of its income (over 70 per cent.) comprised of brokerage from tea auctioneering, business and the residual income derived from interest, dividend, house property, etc. It was noticed that the assessee-company in doing the tea auctioneering business used to collect 'tea....
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...., an auctioneer, an agent for handling or transporting of goods or handling al documents of title to goods or any other mercantile agent, by whatever name called. Therefore, it is apparent that by legal fiction as an auctioneer, the assessee is a dealer within the meaning of the Bengal Finance (Sales Tax) Act, 1941. But the assessee does not appear to be a trading company within the meaning of the Income-tax Act in view of the nature of business admittedly carried on by it. When on the facts it is found that the assessee is not a trading company, merely being dealt with as a dealer under the sales tax law, cannot have an implication making the assessee a trading company within the meaning of the income-tax law. In view of the above findings, question No.1 is answered in the negative in favour of the assessee. With regard to the power under section 154 of the Act, the law appears to have been stated that the error apparent from the records, has been explained in different cases. The Division Bench of this court in the year 1978 in the case of Simplex Concrete Piles (India) Pvt. Ltd. [1978] 112 ITR 812 held as follows: "From the records before us, as appearing in the paper b....