TMI Blog1942 (2) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... For the year 1933-34 he was again assessed under Section 23(1) of the Act on the 15th November, 1933, on the total income of the previous year, which amounted to ₹ 53,218. The details were as below : Rs. Salary ... ... 27,917 Professional earnings ... ... 21,940 Interest on securities ... ... 1,650 Other Interest ... ... 1,711 Total ... 53,218 The assessee did not appeal from either of these two assessments. On the 28th April, 1939, the assessee preferred an application for relief under Section 25(3) of the Act in respect to the assessment of 1932-33. Paragraph 3 of that application is in the following terms : That during the assessment year 1932-33 the petitioner practised the profession of law, as sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and gains of the period between the end of the previous year and the date of such discontinuance, and the assessee may further claim, that the income, profits and gains of the previous year shall be deemed to have been the income, profits and gains of the said period. Where any such claim is made, an assessment shall be made on the basis of the income, profits and gains of the said period, and if an amount of tax has already been paid in respect of the income, profits and gains of the previous year exceeding the amount payable on the basis of such assessment, a refund shall be given of the difference. By a letter dated the 7th June, 1939, the Commissioner of Income-tax, Central and United Provinces, referred the matter to the Central Board of Revenue. The Commissioner's view was that relief should not be granted. He says: The claim of the petitioner is extremely belated and he should have put in his claim for the benefits of Section 25(3) during the course of the proceedings for the assessment year 1933-34. In fact according to paragraph 96 of the Income-tax Manual (7th Edn.), a claim to be assessed under Section 25(3) could only be admitted, in this particular ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... although no statutory period for such applications has been laid down in the Act, they are expected to be made within a reasonable time from the date the orders complained against are passed and instructions have accordingly been issued by the Central Board of Revenue to the effect that if a Commissioner of Income-tax desires to exercise his powers of revision in any case where more than a year has elapsed since the passing of 1he last order by the subordinate authority, he should not do so without first consulting the Central Board of Revenue-page 268, paragraph 104, Income-tax Manual (7th Edn.). In view of the above provision, my predecessor consulted the Central Board of Revenue if the application under Section 33 could be entertained, but the Board has replied to the effect that it is unable to authorise the Commissioner to exercise his powers of revision in this case. I am, therefore, unable to exercise my powers of revision under Section 33 of the Income-tax Act. On the 18th September, 1939, the assessee prayed for a reference to the High Court under Section 66(2) of the Act. After that he apparently received a letter dated 12th January, 1940, from the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ef was made for the first time in April, 1939, and that upon this assumption his claim was time barred under the Amending Act of 1939-which came into force on the 1st April, 1939-and the assessee said : I am advised that that proposition is not legally correct and the amended Act, or to be more precise paragraphs 4 and 5 of Section 25, which have been added to the Income-tax Act for the first time in 1939, can only apply to assessments made after the passing of the Amending Act of 1939 and cannot apply to assessments made previously, even though claims for relief under Section 25(3) may be made in regard to such assessments after the passing of the said Amending Act. This aspect of the matter also should be clearly brought out in the statement of the case and a clear question formulated thereon for the consideration of the Hon'ble Court. On the 31st July, 1940, the Commissioner of Income-tax Mr. V.R. Wall made this reference to the High Court. Before considering the questions of law which have been referred to us we may mention a concession which has been made before us by the Advocate-General and which indeed was made by Mr. Ansari in his order of 29th August, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n accompanied by a fee of one hundred rupees or such lesser sum as may be prescribed, require the Commissioner to refer to the High Court any question of law arising out of such order or decision, and the Commissioner shall, within 60 days of the receipt of such application, draw up a statement of the case and refer it with his own opinion thereon to the High Court. There are two provisos to this sub-section, the first of which is that a reference shall lie from an order under Section 33 only on a question of law arising out of that order itself, and not on a question of law arising out of a previous order under Section 31 or Section 32, revised by the order under Section 33. In the present case the second part of this proviso has no application inasmuch as there is no question of law before us arising out of a previous order under Section 31 or Section 32, revised by the order under Section 33. What we have to decide is whether the order of the Commissioner dated 29th August, 1939, under Section 33 was or was not an order otherwise prejudicial to the assessee. In Central India Spinning. Weaving and Manufacturing Co., Ltd. v. Commissioner of Income-tax [1937] 5 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der must be more prejudicial than the order complained of before it can come within the purview of Section 66(2). The section does not say so. All that it contemplates is a prejudicial order. It seems to me that if an order of the Income-tax Officer is prejudicial, an order which confirms it or rejects an application asking that it be revised is also prejudicial. It could not be said that a decree of an appellate Court dismissing an appeal from a Court of first instance is not prejudicial to the appellant. It is just as prejudicial as the original decree. There is no difference in this respect between a dismissal of an appeal and the dismissal of an application for revision when the law permits such an application to be made. The learned Chief Justice then considers the first proviso to Section 66(2) and says:- Mr. Patanjali Sastri has suggested that the proviso only relates to orders under Sections 31 and 32 revised under Section 33. In other words, he asks the Court to read the second part of the proviso as governing the first part. I do not read it in this way. I consider the effect of the proviso to be this : A reference shall lie only when a question of law arises ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-General refers us to the case of Indarchand Kagriwal v. Commissioner ofIncome-tax, Bihar and Orissa [1939] 7 ITR 506, which appears to afford some support to the view taken by the Income-tax authorities; but the question of prejudice was dealt with in a few lines by the learned Judges of the Patna High Court and no authorities were referred to. In Nanhe Mal Janki Nath v. Commissioner of Income-tax, ( Lahore ) [1940] 8 ITR 437. Dalip Singh, J., was inclined to agree with the view taken by the Madras High Court in Voora Sreeramulu Chetty's case (supra) . An argument was addressed to the learned Judges of the High Court at Lahore with a view to show that the above mentioned decision was wrong, and at page 439 Dalip Singh, J., observes: It is unnecessary to decide this point in view of the decision to which we have come on the other point, but I may remark that the word 'prejudicial' in Section 33 need not have the same meaning as the word 'prejudicial' in Section 66(2). In Section 33 there is no application necessarily before the Commissioner at all. If he does act of his own motion, there is no necessity for him to pass any order at all and therefore w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revious year and the date of such discontinuance, and the assessee may further claim that the income, profits and gains of the previous year shall be deemed to have been the income, profits and gains of the said period. Where any such claim is made, an assessment shall be made on the basis of the income, profits and gains of the said period, and if an amount of tax has already been paid in respect of the income, profits and gains of the previous year exceeding the amount payable on the basis of such assessment, a refund shall be given of the difference. The words no tax shall be payable impose a duty on the Income-tax Officer, and this is conceded ; but it is contended that the Income-tax Officer was in no way responsible for the non-performance of this duty for the reason that he had no knowledge of the fact that the assessee had discontinued his profession. In his order of 29th August, 1939, Mr. Ansari has stated that the Income-tax Officer was bound to exclude this income from the assessment of 1933-34 if he only could be aware of the discontinuance of the profession, but it appears that he had no idea of the discontinuance. The appointment of the assessee as a Puisne J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Office, Central Circle, about Section 25(3) affair and I remember I had asked him to make a formal application if he liked. I cannot give any further details from memory. I might have made some note on the file. The Commissioner in his statement of the case says: It may.........be taken as established that an interview took place between the assessee and the Income-tax Officer on the subject of the former's claim in March, 1939, but a formal application for a refund under Section 25(3) was not made till the 28th April, 1939, when the assessee's application under Section 33 was presented to the Commissioner. Thus it is a matter of admission that the assessee did make a verbal claim in March, 1939. It is contended on behalf of the department that a claim for relief under Section 25(3) of the Act should be in writing; but there is nothing in the Act to justify this contention. The learned Advocate-General pleads that, having regard to the scheme of the Act as it appears from Chapter IV, which is headed Deductions and Assessments and which contains Sections 18 to 39, it must be held to have been contemplated by the Legislature that any such appli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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