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TMI Blog1962 (1) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-tax Act in the circumstances of the case of the applicant in respect of the item of Rs. 76,836 ? " We may first state the relevant facts. The assessee, appellant before us, is a partnership firm which ran a sugar mill at Cawnpore and dealt in the manufacture and sale of sugar. The process adopted by the assessee for the manufacture of sugar involved the conversion of gur into sugar. In the relevant assessment year 1942-43, the account year being October 1, 1940, to September 30, 1941, the assessee submitted a return of income and on the basis of that return the Income-tax Officer concerned made an assessment on November 30, 1944. When making this assessment the Income-tax Officer added to the income shown by the assessee two sums of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee and rejected the appeal by his order dated July 8, 1946. On July 5, 1946, however, he issued a notice to the assessee under section 28(3) of the Income-tax Act asking it to show cause why a penalty under section 28(1)(c) should not be imposed on it on the ground that it had concealed the particulars of its income or deliberately furnished inaccurate particulars of its income, inasmuch as the stock of " goods in process " amounting to 7,106 maunds was not accounted for and a sum of Rs. 76,836 on account of excise duty relating to another year was debited against the profits of the year of account. On July 22, 1946, the assessee furnished an explanation in answer to the notice. This was considered by the Appellate Assistant Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal on August 7, 1947. As to the penalty imposed under section 28(1)(c) of the Income-tax Act, the Tribunal held that the penalty was rightly imposed but reduced the quantum of penalty to Rs. 43,000. Thereafter, the assessee moved the Tribunal for referring three questions of law which, according to it, arose out of the Tribunal's order. One of these questions, question No. 3, we have already set out at the beginning of this judgment, being the question which the Tribunal referred to the High Court. The other two questions were : " (1) Whether in view of the finding that the stock of sugar in process has never been shown in the accounts under section 13 of the Income-tax Act and that the value of the closing stock of sugar in process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this. When the reference came to the High Court on the third question on a case being stated by the Tribunal, the assessee made an application to the High Court under sub-sections (4) and (5) of section 66 and prayed that the Tribunal be asked to state a case on the other two questions also, questions as to which the Tribunal had refused to make a reference. This application the High Court rejected. The High Court then dealt with the third question which had been referred to it by the Tribunal and held that the Appellate Assistant Commissioner was legally justified in issuing a notice under section 28 of the Income-tax Act to the assessee in respect of the item of Rs. 76,836. The High Court disposed of the reference on that footing. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded that the first question and the third question were inter-connected and even though the Tribunal had refused to refer the first question, it was open to the High Court to ask the Tribunal to state a case on the first question also. We are unable to agree. Sub-section (4) of section 66 states clearly that if the High Court is not satisfied that the statements in a case referred under the section are sufficient to enable it to determine the question raised thereby, the court may refer the case back to the Tribunal to make such additions thereto or alterations therein as the court may direct in that behalf. It is manifestly clear that this sub-section does not imply that the High Court can ask the Tribunal to state a case on a question wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt case. In the present case the first question was entirely different from the third question and the Tribunal held that it related to a finding of fact only. Whether it so related or not, it cannot be said that the first question was implicit in the third question or that the third question was required to be reframed in any other form. The third question raised a very simple point of law, namely, whether the Appellate Assistant Commissioner was legally justified in issuing a notice under section 28 of the Income-tax Act against the assessee in respect of the sum of Rs. 76,836. That question had no connection with the merits of the case, namely, whether the penalty under section 28 was rightly imposed on the assessee or not. We are, there ..... X X X X Extracts X X X X X X X X Extracts X X X X
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