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

LegalCrystal Citation
SubjectDirect Taxation
CourtMumbai
Decided On
Case NumberCivil Application No. 696 of 1933
Reported inAIR1934Bom378; [1934]2ITR486(Bom)
AppellantNarayan Atmaram Patkar
RespondentCommissioner of Income-tax.
Excerpt:
.....of the commissioners decision, may require the commissioner to state a case and to refer it. 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. 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......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 of if the method employed is such that in the opinion of the income tax officer the income, profits and gains cannot properly be deducted 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.....
Judgment:
BEAUMONT, C.J. - 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, Income Tax Act. The parties in this case have not followed the 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 no satisfied of the correctness of the Commissioners 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 of if the method employed is such that in the opinion of the Income Tax Officer the income, profits and gains cannot properly be deducted 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 deducted therefrom. That is a decision upon a question of fact by which we are bound. That being so the only 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 deducted 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. We discharge the rule with costs to be taxed on the original side scale by the Taxing Master. Rule discharged


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