TMI Blog1988 (12) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... es, 1962, but, subsequently, the assessment was reopened under section 147(b) of the Act on the ground that in other non-resident shipping companies, the proviso to section 145 was applied and 1/6th of the freight earnings in India was treated as Indian income and on that basis excess relief was given. The application of the proviso to section 145(1) was upheld by the Commissioner of Income-tax (Appeals) but the total income was reduced from 1/9th to 1/8th of the gross freight earnings. Therefore, the Assessing Officer (in this case, the Inspecting Assistant Commissioner, performing the duties of an Income-tax Officer) was of the view that the income of, the assessee was underassessed. He, consequently, determined the income at 1/8th of the Indian freight earnings and completed the assessment. On appeal, the Commissioner of Income-tax (Appeals) cancelled the reassessment, agreeing with the view expressed by his counterpart at Madras that the change of basis of assessment did not constitute information and there was, in fact, no information at all but only a fresh opinion on the same facts. He, accordingly, cancelled the reassessment. The matter was taken up in further appeal be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arising bear to the total receipts of the business, or (iii) in such other manner as the Income-tax Officer may deem suitable." The reasons recorded by the Assessing Officer are as follows: "Over a period of years prior to 1975-76 assessment, the income of non-resident shipping companies including the assessee was being assessed by the application of rule 10(ii) of the Income-tax Rules. In the course of the assessment for 1975-76, the Assessing Officer found that, as a result of the assessments framed on the above basis, excess relief was given to the assessee for the earlier years. He, therefore, applied the provision of section 145 (1) of the Act in framing the assessment for 1975-76. He was also of the view that it would be reasonable to hold that 16th of the gross earnings should be treated as the income embedded in the earnings. The Commissioner of Income-tax (Appeals) has also upheld the action of the Officer invoking the provisions of section 145(1) of the Act. Consequently, the income for this year has been underassessed. I have, therefore, reason to believe that income chargeable to tax for this year has escaped assessment. Start proceedings under section 147(b) b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comes to light on the basis of the decision of the Appellate Authority, the Assessing Officer has the jurisdiction to intiate proceedings under section 147(b) of the Act but that is not the case here. He has, not said that, in the application of rule 10(ii) of the said Rules, there has been a mistake He wants to change only the basis from rule 10(ii) to some other method which is not permissible. It is not a mistake in the application of rule 10(ii), but the mistake is that this method in rule 10(i) should not have been applied at all. Reference may be made in this connection to the judgment of the Supreme Court in the case of CIT v. Simon Carves Ltd. [1976] 105 ITR 212. In that case, the original assessment of the respondent, a non-resident company carrying on business as construction engineers, for the assessment year 1959-60 was made by the Income-tax Officer and the total income was computed by invoking rule 33 of the Indian Income-tax, Rules, 1922, corresponding to rule 10 of the Income-tax Rules, 1962. He applied one of the three methods permitted therein and computed the income through or from certain contracts (business connection) in India. Subsequently, the Income-tax Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and the same was to be exercised in a proper and judicious manner. There is nothing before us to show that the discretion was not exercised by the said officer in a proper or judicious manner. It is also not suggested that the Income-tax Officer was actuated by some oblique motive. From the mere fact that the method selected by him was such as resulted in lower tax liability to the assessee compared to the liability which would have resulted from the adoption of the other method, it would not follow that the discretion was not exercised in a proper and judicious manner. The taxing authorities exercise quasi-judicial powers and in doing so they must act in a fair and not a partisan manner. Although it is part of their duty to ensure that no tax which is legitimately due from an assessee should remain unrecovered, they must also at the same time not act in manner as might indicate that the scales are weighted against the assessee. We are wholly unable to subscribe to the view that unless those authorities exercise the power in, a manner most beneficial to the Revenue and consequently most adverse to the assessee, they should be deemed not to have Exercised it in a proper and judici ..... X X X X Extracts X X X X X X X X Extracts X X X X
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