N. Sundareswaran vs Commr. of Income Tax

Vithayathil, J.—This is a reference u/s 113(1), Travancore Income Tax Act 33 of 1121 corresponding to Section 66(1) Indian Income Tax Act, by the Income Tax Appellate Tribunal, Madras Bench ''A''. The question of law which is referred is as follows:

Whether the Income Tax Officer was justified in making the assessment recomputing the total income in pursuance of the orders of the Commissioner u/s 46, Travancore Income Tax Act.

The facts necessary for appreciating the question involved are as follows: The Assessee is a dealer in cashew nuts and tins. For the year of assessment 1124 M.E. (17-8-1948 to 16-8-49) the Income Tax Officer, Quilon, made an assessment on 16-12-1124 on a total income of Rs. 20191. The Assessee took the matter in revision u/s 46, Travancore Income Tax Act before the Commissioner of Income Tax, Bangalore. The Assessee raised five contentions before the Commissioner. Of these the Commissioner disposed of Nos. 2 and 5 on the merits and as regards the rest Viz. 1, 3 and 4, he found

that the Income Tax Officer has not discussed the evidence on these points and the assessment therefore requires to be set aside with the direction that the Income Tax Officer should re-examine the accounts of these points and determine the quantum of profits and quantum of allowable expenditure after giving the Assessee suitable opportunities to prove his case.

The order wound up by saying

The question of carry forward of loss if any of the previous years should also be correctly arrived at and adjusted. There is also no bar for a general examination of accounts and re-computation of correct profits or loss for the year.

This order of the Commissioner is dated 9-8-1951.

Purporting to act on the basis of the direction contained in the Commissioner''s order of remand as aforesaid the Income Tax Officer re-examined the whole accounts not only with reference to the contentions 1, 3 and 4 raised before the Commissioner and left undecided by him but also in regard to every other item of the Assessee''s business and ultimately arrived by his order of reassessment dated 31-7-1953, at an estimate of the total income as Rs. 63,037/-, as against the figure Rs. 20,191/- originally determined.

On appeal before the Appellate Commissioner the Assessee raised the Question but unsuccessfully" that the Income Tax Officer had exceeded his jurisdiction in bringing under assessment items of income not covered by the original assessment and generally going beyond the particular items covered by the contentions 1, 3 and 4 raised before the Commissioner.

The result was that the order of the Income Tax Officer was substantially confirmed subject only to a minor adjustment in regard to depreciation. Further appeal before the appellate Tribunal by the Assessee met with the same result. Indeed the Tribunal had dealt with the same question in the assessment for the previous year 1123 and had taken the same view, and that had led to a similar reference as here in.

The question that is referred therefore relates to the interpretation of the order of the Commissioner when he remitted the matter for further investigation to the Income Tax Officer on already mentioned. We may say at once that that order meant only the cancellation of the assessment so far as it related to the contentions 1, 3 and 4 which he left over for further investigation and disposal by the Income Tax Officer.

It is not possible to urge nor has it been argued before us that the contentions 2 and 5 which were raised before the Commissioner and which had been disposed of by him were intended to be reopened by the Commissioner. The findings of the Commissioner as regards these are without doubt binding on the Income Tax Officer. If that be so, there is no reason to consider that any other question, except the particular points covered by contentions 1, 3 and 4 were intended to be reopened.

It should be remembered that the Commissioner''s order was u/s 46, Travancore Income Tax Act corresponding to Section 33(A) of the Indian Act whereby the Commissioner in revision could in no case pass an order prejudicial to the Assessee. There is no scope at all under the Travancore Income Tax Act for an order in Revision as u/s 33(B) of the Indian Act. As observed by this Court while disposing of similar reference on Earlier occasion the Commissioner may grant relief or may withhold it but he cannot do anything which might either directly or indirectly prejudicially affect the Assessee, e.g. cancel an assessment, and directing a fresh assessment.

Interpreting the order of the Commissioner, conformably to this limitation, we have only to hold that the order was not intended to allow and fresh assessment of the whole of the income of the Assessee but directed only a reconsideration on limited aspects, as mentioned above. The result is, the assessment stands to be finalised only on the basis of the first assessment subject to recomputation in the light of the findings of the Commissioner in his revision order dated 9-8-1951 in regard to the contentions Nos. 2 and 5 and of the Income Tax Officer in his assessment order dated 31-7-1953 as regards contentions Nos. 1, 3 and 4.

We therefore answer the question of law referred to us in the negative, that is to say that the Income Tax Officer was not justified in re-computing the income as if the assessment had been entirely reopened. The reference is answered accordingly. The Respondent will pay the costal of the Assessees on this reference. Advocate''s fee Rs. 200/-.