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Narayan Atmaram Patkar Vs. the Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMumbai
Decided On
Case NumberCivil Application No. 696 of 1933
Judge
Reported in(1934)36BOMLR818; 152Ind.Cas.972
AppellantNarayan Atmaram Patkar
RespondentThe Commissioner of Income-tax
Excerpt:
indian income-tax act (xi of 1922), sections 13 and 66, clauses (2) and (3) - assessee-commissioner of income-tax-submission of question of law to high court-assessee to formulate such question-power of high court to direct commissioner to refer other question- method of accounting-compulation fixed by income-tax officer-legality of assessment- question of law.;where an assessee desires to have a question of law referred to the high court by the commissioner of income-tax, under section 66, clause (2), of the indian income-tax act, 1922, he should formulate such question before the commissioner.;where an application is made under section 68, clause (3), of the indian income-tax act, 1922, the high court has power to direct the commissioner to refer some question other than that which the..........in our opinion the proper course for the parties to adopt, when they desire the commissioner to refer a question of law to the court, is to formulate the question which they desire to have so referred. in the present case the only question which was formulated before the commissioner was a question which the parties do not in fact desire to raise, and in the petition to this court no attempt is made to formulate the question which it is desired we should direct the commissioner to raise. the petition is framed on the basis of a petition of appeal alleging that the commissioner has committed various errors of law. it is, i think, clearly open to this court on an application under sub-section (3) of section 66 to direct the commissioner to refer some question other than that which the.....
Judgment:

John Beaumont, Kt., C.J.

1. This is a petition asking us to direct the Commissioner of Income-tax to submit a question of law for the decision of this Court under Sub-section (3) of Section 66 of the Indian Income-tax Act. The parties in this case have not followed the correct procedure under Sub-section (2) of Section 66. That section empowers the assessee to require the Commissioner to refer to the High Court any question of law arising out of the order of the Assistant Commissioner, and the Commissioner is then directed to draw up a statement of the case and refer it with his opinion thereon to the High Court. Then Sub-section (3) provides that if the Commissioner refuses to state a case on the ground that no question of law arises, the assessee may apply to the High Court, and the High Court, if it is not satisfied of the correctness of the Commissioner's decision, may require the Commissioner to state a case and to refer it. In our opinion the proper course for the parties to adopt, when they desire the Commissioner to refer a question of law to the Court, is to formulate the question which they desire to have so referred. In the present case the only question which was formulated before the Commissioner was a question which the parties do not in fact desire to raise, and in the petition to this Court no attempt is made to formulate the question which it is desired we should direct the Commissioner to raise. The petition is framed on the basis of a petition of appeal alleging that the Commissioner has committed various errors of law. It is, I think, clearly open to this Court on an application under Sub-section (3) of Section 66 to direct the Commissioner to refer some question other than that which the parties have formulated. But generally, I think, the Court should be slow to go outside the question which the parties have themselves asked the Commissioner to state. In the present case the question which counsel for the applicant says that he desires to raise is, whether the Income-tax Officer was justified in computing the income on a basis determined under Section 13 of the Act; and, if so, whether the basis adopted was legal. Now, Section 13 provides that the income shall be computed in accordance with the method of accounting regularly employed by the assessee. Then there is a proviso, that, if no method of accounting has been regularly employed, or, if the method employed is such that, in the opinion of the Income-tax Officer, the income, profits and gains cannot properly be deduced therefrom, the computation shall be made upon such basis and in such manner as the Income-tax Officer may determine. It is, in our opinion, clear from the order of the Income-tax Officer, and the order of the Assistant Commissioner on appeal, that both those Officers were of opinion that no regular method of accounting had been employed and the method which was employed was such that the income, profits and gains could not properly be deduced therefrom. That is a decision upon a question of fact by which we are bound. That being so, the only question which can arise is whether the method adopted by the Income-tax Officer of assessing the assessee was a legal method. No doubt where the Income-tax Officer makes the best assessment he can under the proviso to Section 13, it may be shown that he has proceeded on a wrong basis of law, but I am not prepared to say that in every case where the Income-tax Officer proceeds under that proviso, a question of law arises as to whether his assessment is legal or not. Here the Income-tax Officer, having found that the books of the assessee, who is a money-lender, were not such as to enable the income to be deduced therefrom took the capital as shown in the books, subject to a deduction in respect of part of that capital which the assessee alleged to have been lost, and on that balance of capital the Income-tax Officer charged the assessee what he considered a fair rate of interest. That seems a proper method and we do not see that any question of law arises which should be referred to the Court.

2. We discharge the rule with costs to be taxed on the original side scale by the Taxing Master.


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