TMI Blog1947 (10) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... hat it was exempt from taxation by virtue of Section 4(3)(i) of the Income-tax Act already mentioned, which provides:― This Act shall not apply to the following classes of income:(i) any income derived from property held under trust or other legal obligation wholly for religious or charitable purposes.... This claim led to a reference to the High Court of Judicature at Lahore under Section 66 of the Act. That Court, on the 4th June, 1935, held, contrary to the contention of the respondent, that its income was not exempt from tax. The respondent appealed to His Majesty in Council, and this Board, after referring the matter back to the Commissioner for further findings of fact, on the 13th June, 1939, reversed the judgment of the High Court and held that the income, in respect of which the respondent had been assessed for the year in question, was exempt from tax. Their Lordships' decision is reported in The Trustees of Tribune Press v. Commissioner of Income-tax, Punjab, Lahore*. The assessments of the respondent's income for the years subsequent to 1932-33 were held in abeyance pending the judgment of the High Court in the matter of the assessment for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12-38 -- 1937-38 26-1-38 26-3-38 -- 1938-39 26-10-38 7-1-38 -- It is not disputed that all these assessments had been made and had become final and conclusive before this Board gave its decision in respect of the assessment for the year 1932-33. On the 30th August, 1939, the respondent wrote to the Commissioner of Income-tax, the present appellant, submitting that in view of this decision of the Board all the assessments above mentioned should be cancelled. The material part of his letter is as follows:― In this connection I have further to submit that in view of the same order our assessment for the years referred above should also stand cancelled. You will, therefore, very kindly review those orders and grant us the refund due to us. All these assessments with the exception of supplementary one made under Section 34 for the year 1931- 32, relate to the years subsequent to the year for which our appeal has been accepted by the Privy Council. The supplementary assessment for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The respondent then moved the High Court by seven separate applications (one in respect of each assessment) praying that the Commissioner might be required under Section 66(3) of the Act to state a case on certain questions which were alleged to arise out of his said order of the 23rd November, 1939. On the 3rd April, 1941, the High Court acceded to these applications and directed the Commissioner to state a case for reference under Section 66 upon the following questions which it thus reformulated:― (A) Whether there were any remedies open to the assessee by which he could have kept the assessments alive for the purposes of demanding a refund under Section 33? (B) Whether the matter of the assessability of the assessee was not res judicata by reason of the Privy Council decision...? (C) Whether, in view of the matter between the parties being assessability of the assessee, assessments made subsequent to the year 1932-33 are not ultra vires and therefore no assessment in the eye of the law at all? Pursuant to this direction the Commissioner on the 1st April, 1943, stated a case and in effect gave his opinion upon the several questions as follows:―(A) Yes; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act shall apply to all income, profits or gains as therein defined, by sub-section (3) makes the provision for exemption which has already been set out earlier in this judgment. The exemptions are numerous and include agricultural income which is elaborately defined in Section 1. Chapter III consisting of Sections 6 to 17 inclusive is headed Taxable Income and defines the heads of income, profits and gains which are chargeable to tax and by whom the tax shall be paid. The respondent attached some importance to the fact that in contradistinction to the language of Section 4(3), Section 14 and 15, which also confer exemption, open with the words The tax shall not be payable. In their Lordships' opinion the difference in language does not create a different legal result. Chapter IV, headed Deductions and Assessments and consisting of Sections 18 to 39 inclusive, deals elaborately with these two subjects. It prescribes in detail the duties of the Income-tax authorities and the obligations and rights of the assessee and in particular by Section 30 defines the right of appeal to the Assistant Commissioner against an assessment and the limit of time within which an app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in Section 48 to 50A with that subject. There has been considerable amendment of these sections but there has been no amendment which affects the matter under appeal. Upon the assumption [which appears to be justified by the concluding words of Section 48(4) of the amending Act of 1939] that the operative provisions are contained in the Act before its amendment in 1939, the position in regard to refund is that, if the Assistant Commissioner or the Commissioner in exercise of their respective appellate powers is satisfied that the amount of tax paid by an assessee for any year exceeds the amount with which he is properly chargeable for that year, he shall cause a refund to be made by the Income- tax Officer of any amount found to have been wrongly paid or in excess. But there is an important proviso, viz., Section 48A(3) [which in the amending Act was replaced by Section 48(4)], that nothing in the section shall operate to validate any objection or appeal which is otherwise invalid or to authorise the revision of any assessment or other matter which has become final and conclusive or the review by any officer of a decision of his own which is subject to appeal or revision or where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich the respondent was in fact assessed to income-tax and paid it, their Lordships return to the questions in the case stated. The first, and perhaps the most important, question, is whether the assessments were a nullity. This is the word ultimately chosen to express the legal concept upon which the respondent founds its claim to relief. Their Lordships find some difficulty in understanding what is meant by the word in its present context. The assessments were duly made, as they were bound to be made, by the Income-tax Officer in the proper exercise of his duty. If this Board had otherwise decided the appeal which came before it in 1939, they would have stood unquestionable and unquestioned. It does not appear to their Lordships that they were a nullity in any other sense than that if they had been challenged in due time they might have been set aside. But the same thing is true of every assessment which is open to successful challenge and it is just because convenience of administration demands that the validity of an assessment shall be tested in a particular way, that the Income-tax Act provides that way and at the same time enacts by Section 67 that it shall be tested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n paid. It was not very clear how far this argument was based on the premise, now held by their Lordships to be fallacious, that the assessments were a nullity, but it can presumably be placed on a broad ethical basis whatever may be the true view of the assessments. Upon this footing then the argument must be that the assessee has a right enforceable against the Commissioner to require refund of tax paid by him upon grounds of equity and good conscience, though the assessment has been made and the tax received in good faith. Their Lordships cannot accept this argument. They have reviewed the Code of Income-tax law for the purpose of showing that it exhaustively defines the obligations and remedies of the taxpayer. It would be wholly incompatible with this that he should have a collateral right, necessarily vague and ill-defined, founded on the principles of equity and good conscience. Their Lordships are of opinion that the only remedies open to the taxpayer, whether in regard to appeal against assessment or to claim for refund, are to be found within the four corners of the Act. This view of his rights harmonises with the provision of Section 67, to which reference has alrea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee and is itself, as its language clearly indicates, intended to provide administrative machinery by which a higher executive officer may review the acts of his subordinates and take the necessary action upon such review. It appears that as a matter of convenience a practice has grown up under which the Commissioner has been invited to act of his own motion under the section and where this occurs a certain degree of formality has been adopted. But the language of the section does not support the contention, which lies at the root of the third question and is vital to the respondent's case, that it affords a claim to relief. As has been already pointed out, appropriate relief is specifically given by other sections: it is not possible to interpret Section 33 as conferring general relief. Their Lordships, therefore, can only answer the third question by saying that it is wholly misconceived and that, if the respondent claimed relief under Section 33, his claim was rightly rejected. Their Lordships have felt much doubt whether they should refer to the procedural point which arises under Section 33 and 66(2), i.e., whether, where the Commissioner acting under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner does make an order which worsens the position of theassessee, the latter should have a right of appeal, since against that order he has no other right. It is further confirmed by the proviso to Section 66(2) which limits a reference from an order under Section 33 to cases where the question of law arises out of that order itself and excludes it where the question of law arises out of a previous order under Section 31 or Section 32 which is revised under Section 33. In the case in which a reference is permitted, there is a new point of law which could not be otherwise the subject of appeal; in the case in which it is excluded, the point of law was one that could already have been appealed under the appropriate section. For these reasons their Lordships are of opinion that a reference does not lie from an order under Section 33 unless that order is prejudicial to the assessee in the sense that he is in a worse position than before the order was made. Applying that principle to the present case their Lordships are of opinion that, as the Commissioner did not enhance the assessments made upon the respondent or otherwise alter his position for the worse, the reference was f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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