TMI Blog2004 (2) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... as within "in any other case" mentioned in Part III, Paragraph E, of the respective Finance Acts. Subsequently, by proceeding under section 154 of the Act the assessee was subjected to tax at 60 per cent. of the total income by treating it as a trading company mentioned in Part III, Paragraph E of the Finance Acts. The contention of the assessee is that it is not a trading company and therefore, not to be taxed at 60 per cent. as its business was of tea brokers and auctioneers which involved wide range of services like sampling, testing, valuing and cataloguing. The order of rectification was passed by the Assessing Officer under section 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly on introduction of the distinction between the trading company and other companies in the Finance Act, 1985, the assessee declared itself as not a trading company in view of its nature of business. Learned counsel for the appellant-assessee contended that in income-tax matters the assessment for every year is to be treated as a separate case and the principle of res judicata does not apply. Reliance was placed on the judgment in the case of M.M. Ipoh v. CIT [1968] 67 ITR 106 (SC). The next contention of learned counsel for the assessee is that out of the three assessment years which are the subject 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meantime by the Finance Act, 1985, when categories have been introduced differentiating between the cases of trading company and other cases. Therefore, the assessee though it described itself as a trading company in its return for the assessment year 1986-87, filed a revised return describing itself no more as a trading company. Assessment order has been passed on such revised return and the position became final. Therefore, when for the subsequent years, the assessee continued to describe itself as not a trading company, the authorities could not take a different stand nor could they prohibit 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was prevalent at the relevant point of time as the assessee does not deal in the said goods nor manufacture or produce or process the same. With regard to the assessee being treated as a "dealer" so fat as the sale tax law is concerned, it appears that clause (c) of section 2 of the Bengal, Finance (Sales Tax) Act, 1941, read with Explanation II thereto, has an implication that a dealer is a person who carries on business of selling goods in West Bengal or purchasing goods in West Bengal in specified circumstance and it includes a factor, a broker, a commission agent, a del credere agent, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly be two opinions. As seen earlier, the High Court of Bombay opined that the original assessments were in accordance with law though in our opinion the High Court was not justified in going into that question." In the present case, while exercising the power under section 154, the authority proceeded on the basis that the assessee-company is a trading company and was liable to pay income-tax at the rate of 60 per cent. and it has got the benefit of payment of income-tax at the rate of 55 per cent. by describing itself wrongly as a trading company. In such circumstances of the case, it is apparent to us that when the assessment order was passed in respect of the disputed three years treating the assessee-company as not a trading company, there was no material on record to hold that a rectification is required under section 154 as there was a mistake apparent from the records. For holding the assessee-company as a trading company after the assessment order was passed, the records were not apparent showing that the assessee carried on business bringing it within the definition of a trading company. For so holding the assessee-company as a trading company, enquiries were required. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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