TMI Blog1985 (5) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... sment year 1947-48. A copy of the assessment order has been annexed and marked as annexure "A" forming part of the statement of the case in Taxation Case No. 17 of 1972, which shows that the assessee was assessed in the status of an individual. Being aggrieved by the order of the Income-tax Officer, the assessee preferred an appeal before the Appellate Assistant Commissioner but the latter, relying on the findings of the Investigation Commission, confirmed the order. The assessee then filed second appeal being ITA No. 4976 of 1957-58 before the Calcutta Bench and the Tribunal relying on a decision of the Supreme Court in Basheshar Nath v. CIT[1959] 35 ITR 190, held that the order of the Appellate Assistant Commissioner based on the findings of the Investigation Commission was not proper and the matter was referred back to the Appellate Assistant Commissioner for disposal on merits. During the pendency of the appeal before the Appellate Assistant Commissioner, after the matter was referred back to him by the Tribunal, the assessee along with nine others entered into a settlement under section 34(l B) of the Indian Income-tax Act, 1922 (hereinafter referred to as "the 1922 Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess Profits Tax Act, 1947. In view of the provisions under section 12(1) of the Excess Profits Tax Act, 1940, and section 10 of the Business Profits Tax Act, 1947, the excess profits tax and business profits tax payable was deducted in computing the total income assessable under the 1922 Act. This will be evident from the statement of facts at page 11 of the paper book in Taxation Case No. 44 of 1975. The original assessment order of the Income-tax Officer which is annexure A in Taxation Case No. 17 of 1972 shows that he included various other incomes in the total income of the assessee including secreted profit of Rs. 2,98,000 and thus the total income was assessed at Rs. 3,13,759. Thus, it is evident that in the original assessment order dated December 30, 1949, the amounts of Rs. 43,666 and Rs. 24,750 relating to the excess profits tax and business profits tax were not allowed deduction at the time of the original assessment. Unfortunately, there are no materials in this case to show as to on what date the amount of Rs. 43,666 and Rs. 24,750 were allowed as deductions. The assessee filed an appeal being Appeal No. 56 of 1964-65 before the Appellate Assistant Commissioner o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s effect. The Tribunal held that a careful perusal of the settlement order suggests that there was full and final settlement of all tax liability and the tax liability was confined to income-tax alone and that such being the tenor of the settlement order, the Tribunal held that there was no scope for fastening the excess profits tax liability or business profits tax liability on the assessee. The Tribunal also took the view that when the settlement order fixes both the income and the tax payable thereon in full and final settlement and the matter has become final and conclusive under section 34(1D) of the 1922 Act, the attempt to fasten the excess profits tax and the business profits tax liabilities over and above what has been settled under section 34(1B) of the 1922 Act cannot be legally sustained and so the appeal of the assessee was allowed only to the extent that the amount of Rs. 2,98,000 is assessed as income from other sources and not as a business income but the claim of the assessee that this income should be assessed in the assessment year 1946-47 and not in the assessment year 1947-48 was rejected. However, the BPT Appeal No. 4 of 1967-68 and EPT Appeal No. 11 of 1967-6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust have been passed some time in December, 1971. The Appellate Assistant Commissioner disposed of the appeal on March 24, 1972. The Appellate Assistant Commissioner has held that the Income-tax Officer's order under section 155(3) of the 1961 Act raised an additional income-tax demand. The Appellate Assistant Commissioner referred to the settlement made with regard to the sum of Rs. 2,98,000. He has also pointed out that the settlement was made by the Board under section 34(1B) of the 1922 Act which quantified both the concealed income and the tax payable. The Appellate Assistant Commissioner has also pointed out that when the original assessment for the year 1947-48 was made, the Income-tax Officer also charged excess profits tax and business profits tax liabilities on the assessed income. The appellant contested that the amount of Rs. 2,98,000 did not constitute business income in his hands and, therefore, no excess profits tax or business profits tax could be fastened. The matter came up to the Tribunal and by the consolidated order dated November 30, 1970, in ITA No. 19095 of 1967-68 and BPTA No. 4 of 1967-68 and EPTA No. 11 of 1967-68, the Tribunal decided that on the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 35(6) of the 1922 Act, although the Income-tax Officer passed an order under section 155(3) of the 1961 Act. It was also submitted before the Tribunal that an order under section 35 of the 1922 Act was not appealable and, therefore, the appeal before the Appellate Assistant Commissioner was not a competent appeal. The Tribunal upheld the contention of the Department and held that the order of the Income-tax Officer has to be treated as an order under section 35(6) of the 1922 Act and so there could be no competent appeal before the Appellate Assistant Commissioner and so the Tribunal held that the Appellate Assistant Commissioner exceeded his jurisdiction in deciding the matter and he should have merely held that there was no competent appeal before him. The Tribunal also considered the merits of the claim of the assessee. The case of the Revenue was that the assessment for the assessment year 1947-48 had not been made under any settlement and the order which was being rectified by the Income-tax Officer had also not been made under any settlement. Thus, according to the Revenue, the order rectified was never a subject-matter of settlement and only because in a later s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stant Commissioner against the order of the Income-tax Officer ? (2) Whether in view of the finding of the Tribunal that there was no competent appeal before the Appellate Assistant Commissioner, the Tribunal was correct in entertaining the Departmental appeal and in setting aside the order of the Appellate Assistant Commissioner ? (3) Whether, on the facts and in the circumstances of the case, section 34(1D) of the Indian Income-tax Act, 1922, was a bar to the Revenue in rectifying the assessment order for the assessment year 1947-48 in the manner done by the Income-tax Officer ? " It appears that the assessee had also suggested the following question to be referred as question No. (1) : " (1) Whether, on the facts and in the circumstances of the case, the order of the Income-tax Officer is an order under section 35(6) of the old Act or section 155(4) of the new Act ? " The Tribunal held that question No. (1) suggested above is purely an academic question in view of the fact that the order which was to be rectified had admittedly been passed under the provisions of the 1922 Act and for this purpose the Tribunal relied on the Supreme Court decision in Sankappa v. ITO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the Government against the sum of money payable mentioned above, the balance that remains to be paid is Rs. 4,50,000. 4. That the said balance of sum shall be paid in the manner and according to the instalments stipulated in the annexure hereto. The firm's first instalment of Rs. 1,12,000 which was agreed to be paid on or before July 31, 1960, shall be paid by the assessee within 14 days of the receipt of this order. " Annexure " C " shows that it is agreed that on the materials available with the Income-tax Department, the income, profits and gains which have escaped assessment in the hands of the assessees, including Chattu Ram and Guru Prasad and others named therein as individuals and as an association of individuals during the accounting years relevant to the assessment years 1940-41 to 1947-48 is Rs. 86,03,349, and that after deducting from the above said amount of Rs. 86,03,349, a sum of Rs. 25,64,742 representing the amount already assessed or disallowed in the course of the original assessment, the balance that remains to be taxed is Rs. 60,38,607. It was also agreed that having regard to the crippled financial condition of the assessees, the sum of money payabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e may, after considering the terms of settlement proposed and subject to the previous approval of the Central Government, accept the terms of such settlement, and, if it does so, shall make an order in accordance with the terms of such settlement specifying among other things the sum of money payable by the assessee. Section 34(1D) of the 1922 Act lays down that any settlement arrived at under this section shall be conclusive as to the matters stated therein; and no person, whose assessments have been so settled, shall be entitled to reopen in any proceeding for the recovery of any sum under this Act or in any subsequent assessment or reassessment proceeding relating to any tax chargeable under this Act or in any other proceeding whatsoever before any court or other authority any matter which forms part of such settlement. As regards Taxation Case No. 17 of 1972, it cannot be doubted that annexure " C " in Taxation Case No. 44 of 1975 clearly mentions that it was agreed that out of Rs. 86,03,349, a sum of Rs. 25,64,742 representing the amount already assessed or disallowed in the course of the original assessment, the balance that remained to be taxed is Rs. 60,38,607. The se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y which the amount of Rs. 2,98,000 was treated ultimately by the Tribunal as income from other sources on the basis of the encashment through high denomination notes, it should be assessed in the assessment year 1946-47 as the encashment was on January 19, 1946. Thus, the financial year for the amount of Rs. 2,98,000 will be the financial year 1945-46 and, on this basis, Mr. K. N. Jain submitted that the amount should have been assessed in the assessment year 1946-47 and not in the assessment year 1947-48. On the other hand, Mr. B. P. Rajgarhia, for the Revenue, has submitted that the amount was covered by the settlement as will be evident from the order of the Appellate Assistant Commissioner, annexure " B ", in Taxation Case No. 17 of 1972 and, according to the settlement, this amount was considered in the assessment year 1947-48, and so the assessee is now debarred from raising this plea. The Income-tax Officer assessed the amount at Rs. 2,98,000 in the assessment year 1947-48 by the assessment order dated December 30, 1949. The Appellate Assistant Commissioner also held that this can be assessed only in the assessment year 1947-48 in view of the settlement. The Tribunal i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess profits tax and business profits tax were deducted from the total income of Rs. 3,13,759. Mr. B. P. Rajgarhia, for the Revenue, has relied on annexure " B the order of the Appellate Assistant Commissioner in Taxation Case No. 17 of 1972, which shows that this appeal was instituted on April 8, 1964, and the income assessed was shown as Rs. 3,13,759. On this basis, Mr. B. P. Rajgarhia, learned advocate for the Revenue, has submitted that till April 8, 1964, the excess profits tax and business profits tax had not been allowed. He has, therefore, submitted that if the excess profits tax and business profits tax were allowed after April 8, 1964, then the amount was not covered by the settlement and as the Income-tax Officer had allowed deduction of the excess profits tax and business profits tax after April 8, 1964, he withdrew the same by the rectification order, annexure "A", in Taxation Case No. 44 of 1975. The Income-tax Officer passed rectification order under section 155(3) of the 1961 Act. This rectification order was passed in view of the fact that the Tribunal by order dated November 30, 1970, annexure " C " in Taxation Case No. 17 of 1972, disposed of ITA No. 19095 of 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee cannot now assert that excess profits tax and business profits tax liability allowed as deduction subsequent to the assessment cannot be withdrawn by the rectification order. The first point which arises for consideration is whether the rectification is under section 35(6) of the 1922 Act or it is a rectification under section 155(3) of the 1961 Act. The Income-tax Officer has taken action for rectification under section 155(3) of the 1961 Act. On appeal against the order of rectification, the Appellate Assistant Commissioner held that the Income-tax Officer was not competent to pass rectification order, as it was covered by the settlement under section 34(1B) of the 1922 Act and so neither the Income-tax Officer nor the assessee could claim for disturbing the settlement and so the Appellate Assistant Commissioner cancelled the rectification order of the Income-tax Officer, as will be evident from annexure " B " in Taxation Case No. 44 of 1975. When the matter went up in appeal before the Tribunal in ITA No. 992 (Pat) of 1972, the Tribunal took the view that as the assessment was made under the 1922 Act, the rectification should be under section 35(6) of the 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 61 Act, it should be deemed to be a rectification under section 35(6) of the 1922 Act. It has been held in the case of L. Hazari Mal Kuthiala v. ITO [1961] 41 ITR 12, by their Lordships of the Supreme Court that the exercise of a power would be referable to jurisdiction which conferred validity upon it and not to a jurisdiction under which it would be nugatory; and the order of the Commissioner was not invalid merely because it was not made under the Patiala Act and that under sub-section (5) of section 5 of the 1922 Act, the Commissioner of Income-tax was required to consult the Minister-in-charge before taking action under that sub-section. The only substantial difference in the latter sub-section was that the Explanation which was added to section 5(7A) of the Indian Income-tax Act as a result of the decision of the Supreme Court in Bidi Supply Co. v. Union of India [1956] 29 ITR 717, did not find place in the Patiala Act. Their Lordships also pointed out that the Commissioner, when he transferred the case, referred not to the Patiala Income-tax Act but to the Indian Income-tax Act and it is contended that if the Patiala Income-tax Act was in force for the purposes of reassessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment would fall within the scope of this clause and the Supreme Court held that the words "proceedings for the assessment " used in the section had a very wide meaning and were comprehensive enough to include proceedings by way of revision or rectification of an assessment. Thus, in view of these decisions, it has to be held that if the original assessment was made under the 1922 Act, then rectification has to be made under 35(6) of the 1922 Act and although the Income-tax Officer treated the assessment as rectification under section 155(3) of the 1961 Act, it has to be deemed that the Income-tax Officer made the rectification under section 35(6) of the 1922 Act. In the case of Kalawati Devi Harlalka v. CIT [1967] 66 ITR 680, which is a decision of their Lordships of the Supreme Court, assessments were made on February 7, 1961, on the appellant for the assessment years 1952-53 to 1960-61 under the 1922 Act and on January 24, 1963, after the repeal of that Act by the 1961 Act, the Commissioner issued a notice under section 33B of the 1922 Act to revise those assessments and, in those circumstances, it was held that the Commissioner has jurisdiction to issue the notices under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the 1961 Act, because they related to assessment years when the 1922 Act was applicable so that the proceedings could be taken only under section 35(5) of the 1922 Act, in view of the provisions of section 297(2)(a) of the 1961 Act. It was then contended on behalf of the appellants, (i) that the proceedings for rectification under section 35(5) of the 1922 Act were not " proceedings for assessment " within the meaning of section 297(2)(a) of the 1961 Act and, therefore, the 1922 Act could not be resorted to; (ii) that the provisions of section 35(5) of the 1922 Act were not attracted because there was no assessment or reassessment of the firms when the Income-tax Officer rectified the assessments of the firms under section 35(1); and (iii) that before section 35(5) could be applied, it should be found that the share of the partners included in their assessments was not correct. The High Court dismissed the writ petition and, in those circumstances, their Lordships of the Supreme Court held that the proceedings taken for rectification of the assessment to tax either under section 35(1) or under section 35(5) of the 1922 Act were proceedings for assessment and that the orders pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1922 Act is an order of assessment as by an order of rectification, the Income-tax Officer issued revised demand notice and challan and so the rectification order should be treated as an assessment and once it is held that the rectification order is an assessment, then an appeal lies to the Appellate Assistant Commissioner. Mr. K. N. Jain for the assessee also submitted that the Income-tax Officer was justified in rectifying the assessment order under section 155(3) of the 1961 Act and not under section 35(6) of the 1922 Act. He relied on the case of Imperial Chemical Industries Ltd. v. CIT [1979] 116 ITR 516, which is a decision of the Calcutta High Court. In this decision, it has been held that the expression " may " must normally be construed as an enabling provision unless the expression is coupled with certain duty to the donee of the power when it becomes obligatory for him to exercise the enabling power. In those circumstances, the expression " may " is construed to mean " must ". The Calcutta High Court took the view that Parliament has deliberately used the expression " may " only in some sub-clauses of section 297(2) of the 1961 Act and due significance and weight must be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a distinction. On this basis, Mr. K. N. Jain has submitted that as rectification is a procedure of assessment, it has to be held that even on rectification under section 35(6) of the 1922 Act, an appeal will lie before the Appellate Assistant Commissioner as it will amount to a proceeding in the assessment. However, he has conceded before us that if the rectification under section 35 is a rectification simpliciter, no appeal will lie. But, in the present case, when the Income-tax Officer after making rectification issued a revised demand notice and challan, then it should be held that it is an assessment and so an appeal will lie to the Appellate Assistant Commissioner. It cannot be doubted that under section 246(f) of the 1961 Act, an appeal lies from an order under section 154 or section 155 of the 1961 Act having the effect of enhancing the assessment or reducing a refund or an order refusing to allow the claim made by the assessee under either of these sections. However, it cannot be doubted that no appeal lies under section 30 of the 1922 Act for rectification under section 35 of the 1922 Act. It is due to this difficulty that Mr. K. N. Jain argued that an appeal lies under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer proceeds under section 35 to rectify an assessment in which no penal interest for failure to pay advance tax was added and orders the levy of penal interest without sending any notice to the assessee, there will be a clear breach of principles of natural justice and the court will issue a writ of certiorari to quash the order made and that the authorities acting under the Income-tax Act, have to act judicially and one of the requirements of judicial action is to give a fair hearing to a person before deciding against him. Thus, in this case also, it has been held that the rectification proceeding under section 35 is also an assessment. On this basis also, Mr. K. N. Jain has submitted that when rectification is an order of assessment, appeal will lie under section 30 of the 1922 Act, even if it is held that it is rectification under section 35 of the 1922 Act. It cannot be doubted that in view of various decisions of the Supreme Court, it has to be held that the proceeding for rectification under section 35 of the 1922 Act is also a proceeding for assessment within the meaning of section 297(2)(a) of the 1961 Act. I have already pointed out in paragraph 43 that their Lordsh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal which held that the finding of the Income-tax Officer that the sum was to be assessed as untaxed profits of earlier years remitted to India in the accounting year did not arise in the course of giving effect to the Tribunal's order and by its order dated February 20, 1946, cancelled that finding and directed the Officer to revise the computation and then a reference was made under section 66(1) and a reference was also called for under section 66(2) of the 1922 Act. The High Court held that both the references were incompetent and refused to answer the question referred which was upheld by their Lordships of the Supreme Court. This decision is not applicable to the facts of the case before us. The Madras High Court in the case of CIT v. Vellingiri Gounder and Brothers [1953] 24 ITR 166, held on the basis of the decision in [1953] 23 ITR 180, that no appeal lay to the Appellate Assistant Commissioner against the order of the Income-tax Officer under section 35 of the Income-tax Act and, therefore, no appeal lay to the Appellate Tribunal against the order of the Appellate Assistant Commissioner and so the order of the Appellate Tribunal was not an order under section 33(4) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the income and that it may be based on any ground, whether of fact or law and it may be total denial of liability or denial of liability under the particular circumstances. It has also been held in this decision that the denial must be of the liability to be assessed under the Act and not merely under any particular provision of the Act. It has also been held that when an assessee claims that he is not liable to be proceeded against under section 35(1), he is not denying his liability to be assessed under the Act and that his objection is only against a proceeding for assessment under the particular provision of the Act. It has also been held that a right of appeal is given under section 30(1) against the various orders and each of the orders against which a right of appeal is conferred is described by reference to the source of power under which it is made and that an appeal lies from an assessment made under section 23 of the 1922 Act, but the assessee has no right of appeal under section 30(i) against an order of rectification made under section 35(1) of the 1922 Act. It has again been held by the Gujarat High Court relying on the Supreme Court decision in Sankappa v. ITO [1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r under section 32 of the Act refusing to review an appellate order passed by him under section 30 of the Act. This is a case under the Bihar Sales Tax Act and this decision will not be helpful for deciding the points in dispute before us, as there are direct decisions under the 1922 Act which should be followed. I find that in the Calcutta decision in Imperial Chemical Industries Ltd's case [1979] 116 ITR 516, the assessment order was passed under the 1961 Act and so it was held that the rectification order was passed under section 154 was appealable. In the present case, admittedly, the assessment order was passed on December 30, 1949, and so the assessment order had been passed under the 1922 Act. Under such circumstances, the rectification order cannot be passed under section 155(3) of the 1961 Act. I find that excepting the Calcutta High Court, the other High Courts have held that when an assessment is made under the 1922 Act, then rectification can be made only under section 35 of the 1922 Act and no appeal will lie against rectification under section 35 of the 1922 Act. Under such circumstances, I hold that even if the Income-tax Officer passed the rectification order, v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the excess profits tax and business profits tax which had been allowed as a deduction as rectification order has been passed in December, 1971. However, Mr. K. N. Jain, for the assessee, has submitted that the excess profits tax and business profits tax payable was allowed as a deduction some time after December 30, 1949, when the original assessment order was passed and before August 20, 1960, when the settlement order was passed. On this basis, he has submitted that as the settlement was made under section 34(1B) of the 1922 Act, the settlement is conclusive as to the matters stated therein under section 34(1D) of the 1922 Act. However, section 34(1D) of the 1922 Act lays down that any settlement arrived at shall be conclusive as to the matters stated therein; and no person, whose assessments have been so settled, shall be entitled to reopen in any proceeding for the recovery of any sum under this Act or in any subsequent assessment or reassessment proceeding relating to any tax chargeable under this Act or any other proceeding whatsoever before any court or other authority or any matter which forms part of such settlement. This gives an impression that an assessee, whose assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perusal of the settlement order suggests that there was full and final settlement of all tax liabilities and the tax liability was confined to the income-tax alone. The Tribunal, therefore, held that there was no scope for fastening the excess profits tax liability or business profits tax liability on the assessee and that when the settlement order fixes both the income and the tax payable thereon in full and final settlement and the matter has become final and conclusive under section 34(1D) of the 1922 Act, the attempt to fasten the excess profits tax and business profits tax liability over and above what has been settled under section 34(1B) of the 1922 Act cannot be legally sustained and so BPTA No. 4 of 1967-68 and EPTA No. 11 of 1968 filed by the Department were dismissed. In view of these decisions of the Tribunal in annexure " C " in Taxation Case No. 17 of 1972, now the assessee cannot argue having succeeded in the departmental appeals to say that the Income-tax Officer was not justified in rectifying the assessment order by withdrawing the excess profits tax and business profits tax allowed as a deduction previously. The Tribunal also took the view in annexure " D " i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount and it was only on this ground that the departmental appeals were dismissed. Once it is held that the amount of Rs. 2,98,000 is not business income but income from other sources, then it is natural that no excess profits tax and business profits tax will be payable. It is a subsequent development when the final order was passed by the Tribunal by annexure " C " dated November 30, 1970, in Taxation Case No. 17 of 1972. If a matter is decided subsequent to the settlement on a question of law, then there can be no estoppel against the law and so even if there was a settlement order and even if it is held that the amount of Rs. 2,98,000 was covered by the settlement order, even then the settlement will not affect any legal aspect of the matter. It is a settled principle of law that there can be no estoppel or acquiescence against an Act of the Legislature and there can be no estoppel against a statute. Mr B.P.Rajgarhia has relied on the case of K.Ramdas Shenoy v. Chief Officer Town Municipal Council, AIR 1974 SC 2177, where it has been held that the court declines to interfere for assistance of persons who seek its aid to relieve them against express statutory provisions. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 66(1) of the 1922 Act. Now, I shall take up Taxation Case No. 16 of 1972. In this case, the Income-tax Officer assessed the income of Rs. 1,27,000 as secreted profits of business along with other incomes and by his assessment order dated June 14, 1949, assessed the total income at Rs. 1,68,987 for the assessment year 1947-48, in the name of the assessee as individual, under section 23(3) of the 1922 Act, vide assessment order dated June 14, 1949. This assessment order has been annexed and marked as annexure " A " forming part of the statement of the case. On appeal before the Appellate Assistant Commissioner, it was asserted that the amount of Rs. 1,27,000 relating to the amount encashed relating to the high denomination notes should have been assessed in the assessment year 1946-47 and not in the assessment year 1947-48. The Appellate Assistant Commissioner held that the amount of Rs.1,27,000 was the subject-matter of the settlement under section 34(1B) of the 1922 Act and so the assessee cannot now raise the plea in view of section 34(l D) of the 1922 Act that the amount should be assessed in the assessment year 1946-47. The next point which was argued before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication orders under section 155(3) of the 1961 Act relating to the assessment years 1940-41, 1941-42 and 1942-43 by withdrawing the excess profits tax payable which was allowed as a deduction. The three rectification orders of the Income-tax Officer have been annexed and marked as annexures " A, A-1 and A-2 " forming part of the statement of the case. Three separate appeals were filed before the Appellate Assistant Commissioner relating to the assessment years 1940-41, 1941-42 and 1942-43. The Appellate Assistant Commissioner held that the matter was covered by a settlement under section 34(1B) of the 1922 Act and so the Income-tax Officer could not make any rectification in view of section 34(1D) of the 1922 Act. He, therefore, cancelled the rectification orders of the Income-tax Officer. The orders of the Appellate Assistant Commissioner for the assessment years 1940-41, 1941-42 and 1942-43 have been annexed and marked as annexures " B, B-1 and B-2 " forming part of the statement of the case. The assessee appealed before the Tribunal and the Tribunal disposed of the three appeals, namely, Income-tax Appeal Nos. 996, 997 and 998 (Pat) of 1972-73 by a consolidated order whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 11,29,000 as unproved cash credit. The cash credit was treated as business profits and so the assessee was assessed to excess profits tax amounting to Rs. 7,03,115 under the Excess Profits Tax Act, 1940, and under section 12(1) of this Act, the excess profits tax payable was deducted in computing the total income as assessable under the Income-tax Act which was withdrawn by rectification order. As regards the assessment year 1941-42, the copy of the reference application has been annexed and marked as annexure " F-2 " forming part of the statement of the case. It has been asserted in the application that for the assessment year 1941-42, the assessee was assessed by an order dated November 26, 1949, on a total income of Rs. 11,79,010 which included Rs. 6,92,900 as unproved cash credits which was treated as business profits and, accordingly, the assessee was also assessed to excess profits tax amounting to Rs. 4,51,706 under the Excess Profits Tax Act, 1940, and as provided under section 12(1) of this Act, the excess profits tax payable was deducted in computing the total income assessable under the Income-tax Act and it was this amount which was withdrawn by the rectification ..... X X X X Extracts X X X X X X X X Extracts X X X X
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