Skip to content


The Honble Mr Justice Iqbal Ahmad in Re. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad
Decided On
Reported in[1942]10ITR152(All)
AppellantThe Honble Mr Justice Iqbal Ahmad in Re.
Excerpt:
- - the application under section 33, has, however, been made practically six years after the assessments in question were dispose of, and although no statutory period for such applications has been laid down in the act, they are expected to be made within a reasonable time from the date the order complained against are passed and instructions have accordingly been issued by the central board of revenue to the effect that if a commissioner of income-tax desire to exercise his powers of revision in any case where more than a year has elapsed since the passing of the last order by the aubordinate authority, he should not do so without first consulting the central board of revenue-page 268, paragraph 104, income-tax manual (7th edn. this aspect of the matter also should be clearly brought.....s.this is a reference under section 66 (2) of the indian income-tax act.the assessee was an advocate of the high court. in 1932 he was appointed as an acting judge and he took his seat on the 19th april of that year. he remained on the bench until the 27th july of that same year, when the high court rose for the vacation. on the 17th october 1932 he was appointed as additional judge and on the 17th july 1933 he was confirmed as a puisne judge. the notification of his appointment was dated the 20th july 1933 and was published in the u. p. gaqette dated the 22nd july 1933. during the financial year 1932-33 the assessee practised as an advocate from the 1st to the 18th april and again from the 28th july to the 16th october 1932. for the year 1932-33 he was assessed under section 23 (1) of.....
Judgment:

S.

This is a reference under Section 66 (2) of the Indian Income-tax Act.

The assessee was an advocate of the High Court. In 1932 he was appointed as an Acting Judge and he took his seat on the 19th April of that year. He remained on the Bench until the 27th July of that same year, when the High Court rose for the vacation. On the 17th October 1932 he was appointed as Additional Judge and on the 17th July 1933 he was confirmed as a Puisne Judge. The notification of his appointment was dated the 20th JUly 1933 and was published in the U. P. Gaqette dated the 22nd July 1933. During the financial year 1932-33 the assessee practised as an advocate from the 1st to the 18th April and again from the 28th July to the 16th October 1932. For the year 1932-33 he was assessed under Section 23 (1) of the Act on the 22n September 1932 upon his total income for the previous year. The total income was Rs. 89,865 of which Rs. 88,007 represented his professional earnings. For the year 1933-34 he was again assessed under Section 23 (1) of the Act on the 15th November 1933 on the total income of the previous year, which amounted to Rs. 53,218.

The details were as below :

Rs.

Salary.....

27,917

Professional earnings....

21,940

Interest on securities....

1,650

Other Interest...

1,711

Total

53,218

The assessee did not appeal from either of these two assessments.

On the 28th April, 1939, the assessee preferred an application for relief under Section 25 (3) of the Act in respect to the assessment of 1932-33. Paragraph 3 of that application is in the following terms :

'That during the assessment year 1932-33 the petitioner practised the profession of law, as stated above, partly in April and partly between the Months of July and the 16th of October 1932, after which date, you petitioner discontinued the profession, was Rs. 27,917 for which the petitioner was assessed at source.'

From paragraph 5 to the end the application reads as follows :

'5. That the petitioner having discontinued the profession in October 1932, no tax was payable by him in respect of the income for the period between the end of the previous year and the date of such discontinuance, and the Income-tax Department should not have assessed the petitioner for the period under Section 25 (3) of the Income-tax Act, 1922, but in point of fact the petitioner was so assessed and he paid the amount demanded from him on the assumption that he was rightly assessed.

6. That the petitioner has only recently discovered that the assessment on him was wrongly made the Income-tax Department and if the petitioner had discovered this at that time, he would have laid claim to refund under Section 25 (3) of the Income-tax Act, 1922.

7. That the petitioner submits that in 1932-33 instead of being assessed in respect of this professional income of Rs. 88,007 he should have been assessed on Rs. 21, 940 and the difference between these two figures should be returned to the petitioner.

8. That your petitioner submits that in fairness this is a proper case for the exercise of your power of review under Section 33 of the Income-tax Act, 1922, and that you have the power to revise to assessment made by the subordinate authority after consulting the Central Board of Revenue (vide paragraph 104, p. 268 of the Income-tax Manual, 1937).

Wherefore you petitioner prays that you may be pleased in the exercise of your powers under Section 33 of the Income-tax Act, 1922 to call for the record of the petitioners assessment by the subordinate authority and order the refund to the petitioner of such amount as he may be found entitled to.'

Section 25 (3) of the Act read as follows :

'Where any business, profession or vocation on which tax was at any time charged under the provisions of the Indian Income-tax Act 1918, is discontinued, no tax shall be payable in respect of the income, profits and gains of the period between the end of the previous year and the date of such discontinuance, and the assessee may further claim that income, profits and gains of thee said period. Where any such claim is made, an assessment shall be made on the basis of the income, profits and gains of the said period, and if an amount of tax has already been paid in respect of the income, profits and gains of the previous year exceeding the amount payable on the basis of such assessment, a refund shall be given of the difference.'

By a letter dated the 7th June, 1939, the Commissioner of Income-tax, Central and United Provincess, referred the matter to the Central Board of Revenue. The Commissioners view was that relief should not be granted. He says :

'The claim of the petitioner is extremely belated and he should have put in his claim for the benefits so Section 25 (3) during the course of the proceedings for the assessment year 1933.34. In fact according to paragraph 96 of the Income-tax Mnual (7 Edn.), a claim to be assessee under Section 25 (3) could only be admitted, in this particular case, if it was made not later than the end of the calendar year 1933. ' The rule to which the Commissioner refers is admittedly a departmental rule, which can in no way affect a legal claim.

The Commissioners letter then goes on to say :

'The petitioner, however, is a Judge of the Allahabad High Court who sits on the Bench to hear income-tax references and as he obviosly considers that he has a fair claim in the department, I do not think it would be advisable to refuse his request.'

This remark is open to the interpretation that if the application were refused, the assessee might be expected in future to pass unfavourable orders on references by the income-tax authorities. If this is what the orders on references might be expected in future to pass unfavourable orders an references by the income-tax authorities. If this is what the Commissioner meant, his observation would amount to a gross contempt of court and we should have to take action upon it; but the learned Advocate-General explains the observaton as meaning that since the assessee was one of the Judges hearing income-tax references, his opinion was entitled to respect and should be deferred to. It this is what Mr. Mullan, the then Commissioner of Income-tax, meant he expressed his meaning in singularly unhappy language.

By a letter dated the 28th July, 1939, the Board regretted that it was unabl to authorise the Commissioner to exercise his powers of revision in favour of the assessee.

The matter again came before the Commissioner and by his order dated 29th August, 1939, he declined to exercise his powers of revision under Section 33 of the Act. The Commissioner at this time was Khan Bahadur M. A. G. Ansari, and he says :

'It is obvious from the wordings of Section 25 (3) that these claims could only be made in the course of the assessment for 1933-34. The assessee could claim that the income, which he had earned during July to October 1932 from profession should not be assessed in 1933-34 at all and could further claim that the profits or gains of the previous year were to be deemed to have been the income, profits or gains of the said period. In fact the Income-tax Officer himself was bound to excude this income from the assessment of 1933-34, if he only could be aware of the discontinuance of the proviso, but it appears that he had no idea of the discontinuance.

The application under Section 33, has, however, been made practically six years after the assessments in question were dispose of, and although no statutory period for such applications has been laid down in the Act, they are expected to be made within a reasonable time from the date the order complained against are passed and instructions have accordingly been issued by the Central Board of Revenue to the effect that if a Commissioner of Income-tax desire to exercise his powers of revision in any case where more than a year has elapsed since the passing of the last order by the aubordinate authority, he should not do so without first consulting the Central Board of Revenue-page 268, paragraph 104, Income-tax Manual (7th Edn.). In view of the above provision, my predecessor consulted the Central Board of Revenue if the application under Section 33 could be entertained, but the Board has replied to the effect that it is unable to authorise the Commissioner to exercise his powers of revision in this case.

I am, therefore, unable to exercise my powers of revision under Section 33 of the Income-tax Act.'

On the 18th September, 1939, the assessee prayed for a reference to the High Court under Section 66 (2) of the Act. After that he apparently received a letter dated 12th January, 1940 from the Commissioner and on the 18th January he sent a reply to the letter. Paragraph 3 of the reply reads as follows; '

'In paragraph 2 of your letter you refer to Section 25 (5) of the Act and observe that as my claim for a refund under Section 25 (3) was made after 1st April, 1939, it is time barred Under Section 25 (5). I am advised however, that the Section 25 (2) cannot affect my rights, which had accrued before the Amending Act of 1939 was passed. You have also drawn my attention to the proviso to Section 50 of the Act. I am also advised that the proviso to Section 50, which in Chapter VII of the Act, has no application to the circumstances of the present case.'

'It was towards the end of January or the beginning of February, 1939, that I learnt from the Honble Mr. Justice Mohammad Ismail that on account of the discontinuance of the profession by him by reason of his appointment to a seat on the Bench he was to be allowed by your department a refund of the income-tax paid by him. I then considered over my own case and got into touch with your Income-tax Officer at Allahabad. During a personal interview I explained to hi the whole case and said that I was entitled to a refund of the income-tax paid by me as I had been appointed a Judge of the High Court and had discontinued my profession. I made this claim in march, 1939 that is before the new Act came into force. While admitting the validity of may claim, the Income-tax Officer expressed his inability to refund the amountand said that I must make a proper application for review to Income-tax Commissioner.

2. Accordingly I made an application for review in April 1939. I therefore submit that the claim having been made to the Income-tax Officer at Aallahabad in March, 1939, no question of limitation under Section 25 (5) arises; but even if the claim had not been made by me in March, 1939, I am advised and urge accordingly that no limitation can possibly apply to an application for review under Section 33, which practically amounted to asking the Income-tax Department to undo the wrong which it had done.'

On 6th May, 1940, the assessee again wrote to the Commissioner and referred to the letters assumpti9on that a claim for relief was made for the first time in April, 1939, and that upon this assumption his claim was time barred under Amending Act of 1939-which came into force on the 1st April, 1939-and the assessee said :

'I am advised that that proposition is not legally correct and the amended Act, or to be more precise paragraphs 4 and 5 of Section 25 which have been added to the Income-tax Act for the first time in 1939, can only apply to assessment made after the passing of the Amending Act of 1939 and cannot apply to assessments made previously, even though claims for relief under Section 25 (3) may be made in regard to such assessments after the passing of the said Amending Act. This aspect of the matter also should be clearly brought out in the statement of the case and a clear question formulated thereon for the consideration of the Honble Court.'

On the 31st July, 1940, the Commissioner of Income-tax Mr. V. R. Wall made this reference to the High Court.

Before considering the questions of law which have been referred to us we may mention a concession which has been made before us by the Advocate-General and which indeed was made by Mr. Ansari in hes order of 29th August, 1939. It is conceded that the assessee was overcharged, that he had a perfectly good claim on merits and that the relief now sought for could have been granted by the Income-tax Officer if he had been aware of the fact that the assessee had discontinued his profession as an advocate. The equities are thus with the assessee; but the Advocate-General contends that the Income-tax Officer was totally unaware of the discontinuance of practice and that it was the duty of the assessee to apply during the assessment year 1933-34.

The Commissioner has referred to us a preliminary question of law and also three other question of law which will arise if the preliminary question is answered in the affirmative. The preliminary question is as follows :

'Whether the order of the Commissioner, dated the 29the August 1939 under Section 33 of the act is an order prejudicial to the assessee within the meaning of Section 66 (2) of the Act? '

Section 33 of the Act provides :

'33. (1) The Commissioner may of his own motion call for the record of any proceeding under this Act which has been taken by any authority subordinate to him or by himself when exercising the power of an Assistant Commissioner under sub-section (4) of Section 5.

(2) On receipt of the record the Commissioner may make such enquiry or cause such enquiry to be made and, subject to the provisions of this Act, may pass such order thereon as he thinks fit :

Provided that he shall not pass any order prejudicial to an assessee without hearing him or giving him a reasonable opportunity of being heard.'

The section does mention the right of an assessee to move the Commissioner to take action, but the assessee undoubtedly has the right of calling the attention of the Commissioner to a prejudicial order and of asking that action be taken.

The proviso to this section means that the Commissioner shall not put the assessee in a worse position than he already is without giving him an opportunity of being heard.

Section 66 (2) of the Act provides as follows :

'Within 6o days of the date on which he is weved with notice of an order under Section 31 or Section 32 or of an order under section 33 enhancing an assessment or otherwise prejudicial to him or of a decision by a Board of Referees under Section 33-A, the assessee in respect of whom the order or decision was passed may, by application accompained by a fee of one hundred rupees or such lesser sum as may be prescribed, require the Commissioner to refer to the High Court any question of law arising out of such application, draw up a statement of the case and refer it with his own opinion thereon to the High Court.'

There are two provion to this sub-section, the first of which is that 'a reference shall lie from an order under Section 33 only on a question of law arising out of that order itself, and not on a question of law arising out of a previous order under Section 31 or Section 32, revised by the order under Section 33.

In the present case the second part of this proviso has no application inasmuch as there is no question of law before us arising out of a previous order under Section 31 or Section 32, revised by the order under Section 33. What we have to decide is whether the order of the Commissioner dated 29th August, 1939, under Section 33 was or was not an order 'otherwise prejudicial' to the assessee.

In Central India Spinning, Weaving and . v. Commissioner of Income-tax, C. P. and U. P., a Bench of the Nagpur High Court following the decision of a Bench of three Judges of the Madras High Court in Venkatachalam Chettiar v. Commissioner of Income-tax, Madras2, held that where the Commissioner of Income-tax, acting under Section 33, refuses to review the order of an Assistant Commissioner, the position of th assessee not being altered as consequence, the assessee is not prejudiced within the meaning of Section 66 (2) and an application for reference is incomepetent. The decision in Venkatachalam Chettiars Case2 was, however, overruled by a Full Bench o five Judges in Voora sreeramulu Chetty v. Commissioner of Income-tax, Madras3 and it is therefore no longer good law so far as Madras is concerned. In Venkatachallam Chettiars Case the assessee applied to the Income-tax Officer for a refund of income-tax under Section 48 of the Act, but his application was refused. The petitioner then filed an application asking the Commissioner to revise the order of the Income-tax Officer under Section 33; but the Commissioner, having heard the application, declined to interfere. The petitioner then required the Commissioner to refer the matter to the High Court under section 66 (2) of the Act : but the Commissioner dismissed this application on the ground that it was incompetent. His reason was that his order under Section 33 was not an order enhacing the assessment or otherwise prejudicial to the applicant. In respect to this view of the matter Beasley, C. J., observed :

'What Section 33 clearly contempates is an order made by the Commissioner which alters the position of an assessee or an applicant to that person's prejudice. In this particular case, his position had been prejudiced already by the refusal of the Income-tax Officer to grant him the refund which he required. The Commissioners order did no more than leave him in that position and, it is question clear to us, was not an order which was prejudicial to the petitioner in the sense intended, namely, that his position at that time, that is the date of the Commissioners order, was altered by that order to one of prejudice to him.'

In the five Judges case Leach, C. J., after citing the above observations, says at page 266 :

'With great respect I am unable to accept this interpretation. It means that the Commissioners order must be more prejudicial than the order complained of before it can come within the purview of Section 66 (2). The section does not say so. All that it contemplates is prejudicial order. It seems to me that if an order of the Income-tax

(1) (1937) 5 I. T. R. 267 (2) (1935) 3 I. T. R. 55 (3) (1939) 7 I. T. R. 263

Officer is prejudicial, an order which confirms it or rejects an application asking that it be revised is also prejudicial. It could not be said that a decree of an appellate Court dismissing an appeal from a Cour of fires instance is not prejudicial to the appellant Court dismissing an appeal from Court of first instance is not prejudicial to the appellant. It is just as prejudicial as the original decree. There is no difference in this respect between a dismissal of an appeal and the dismissal of an application for revision when the law permits such an application to be made.'

The learned Ciedf Justice then considers the first proviso to Section 66 (2) and says :-

'Mr. Patanjali Sastri has suggested that the proviso only relates to orders under Section 31 and 32 revised under Section 33. In other words, he asks the Court to read the second part of the proviso the effect of the proviso to be this : A reference shall lie only when a question of law arises out of the order passed under Section 33, but if the matter is one which relates to an order under section 31 or Section 32 a question of law which arose out of the previous order alone cannot be referred'.

We are in full agreement with this interpretation of the proviso.

At page 267 the learned Chief Justice refers to the Nagpur decision which we have already mentioned and says :

'The Cour accepted Venkatachalm Chettiar Case1 without discussing it and therefore its judgment does not carry the matter further'.

The other four learned Judges concurred with the judgment of Leach, C. J.

This decision was referred to by a Full Bench of the Rangoon High Court in Amulakharai Chottalal Chottalal and others v. Commissioner of Income-tax, Burma2. The judgment was delivered by Roberts, C. J., and was concurred in by the other two learned Judges. At page 402 the learned Chief Justice states the facts as follows :

'The assessee had been the subject of an assessment which, upon the face of it, was a perfectly good one. It had been made year after year. After the death of a man named G. D. Paul the assessee, who had taken no notice of the Income-tax authorities demands for payment, suddenly came forward and declared that the assessments had been made without his knowledge and that G. Paul had been impersonatin him. But this was found as a fact against him by the Commissioner.'

At page 403 the Chief Justice says :

'In my opinion, this was clearly not an order to the prejudice of the assessee. It in no way altered the position as it existed before the

(1) (1935) 3 I. T. R. 55 (2) (1940) 8 I. T. R. 382

Commissioner chose to review the case; and, therefore, looking at the provision of Section 66 (2) of the Act, there is no ground for reference to be made in the events that have happened'.

Further on he refers to the case of Voora Sreeramulu Chetty v. Commissioner of Income-tax, Madas1, and observes.

'No doubt, the decision of the High Court of Madras to which we have been referred makes it clear that there may be an order which in confirming a prejudicial order, is in itself prejudicial, l but that is not the case here, for nothing has been done to alter an order which it is not proved was prejudicial in any sense of the word.'

Thus in the Rangoon case the order was not prejudicial to the assessee in the Madras case it was.

The learned Advocate-General refers us to the case of Indarchamd Kagriwal v. Commissioner of Income-tax, Bihar and Orissa2, which appears to afford some support to the view taken by the Income-tax authories : but the question of 'prejudice' was dealt with in a few lines by the learned Judges of the Patna High Court and no authorities were referred to.

In Nanhe Mal Janki Nath v. Commissioner of Income-tax, (Lahore) 3 Dalip Singh, J., was inclined to agree with the view taken by the Madras High Court in Voora Sreeramulu Chettus case. An argument was addressed to the learned Judges of the High Court at Lahore with a view to show that the above mentioned decision was wrong, and at page 439 Dalip Singh, J., observes :

'It is unneccessary to decide this point in view of the decision to which we have come on the over point, but I may remark that the word Prejudicialin section 66 (2). In Section 33 there in no application necessarily before the Commissioner at all. If he does act of his own motion, there is no necessity for him to pass any order at all and therefor when Section 33 says that he cannot pass an order prejudicial to the assessee without hearing him, the word prejudicial there is obviously used in the narrower sense of aprejudice occasioned to the assessee by the order of the Commissioner himself. In Section 66 (2) the reasoning does not apply because Section 66 (2) is dealing with the right of the assessee to make an application from such an order and, therefore, as at present advised, without expressing any final opinion on the point, I am inclined to hold that the decision of the Full Bench of the Madras High Court is correct, but it is unnecessary to decide this point for the proviso to Section 66 (2) expressly lays down

(1) (1939) 7 I. T. R. 263

(2) (1939) 7 I. T. R. 506

(3) (1940) 8 I. T. R. 437

that a reference from an order under Section 33 lies only on a question of law arising out of that order itself.'

We have carefully examined the various authorities and we find our selves in full accord with the view take by the five learned Judges of the Madras High Court in Vora Sreeramulu Chettys case1. We agree with the interpretation which that Court placed on the words 'otherwise prejudicial' and with the reasoning upon which their view is based. In the present case the assessee had admittedly been overcharged : he had a perfectly good case on merits : another Judge of this Court had obtained relief in similar circumstances and the assessees application for review was disallowed. It therefore appears to us that the order of the Commissioner of Income-tax dated 29th August 1939-whether right or wrong -was an order 'otherwise prejudicial' to the assessee within the meaning of Section 66 (2) of the Act. The reference is therefore competent and the preliminary question must be answered in the affirmative.

We now approach the three question of law arising out of the Commissioners order of 29th August 1939. The first question is :

'Whether on the materials before the Income-tax Officer at the time of the assessment for 1933-34, he was in law justified in assessing the assessee to income-tax without giving him relief under Section 25 (3) of the Act? '

Section 25 (3) provides as follows :

'Where any business, profession or vocation on which tax was at any time charged under the provisions of the Indian Income-tax Act, 1918, is discontinued, no tax shall be payable in respect of the assessment for 1933-34, he was in law justified in assessing the assessee to income-tax without giving him relief under Section 25 (3) of the Act?

Section 25 (3) provides as follows :

'Where any business, profession or vocaion on which tax was at any time charged under the provisions of the Indian Income-tax Act, 1918, is discontinued, no tax shall be payable in respect of the income, profits and gains of the period between the end of the previous year and the date of the previous year and the date of such discontinuance, and the assessee may further claim that the income, profits and gains of the previous year shall be deemed to have been the income profits and gains of the said period, and if an amount of tax has already been paid in respect of the income, profits and gains of the previous year exceeding the amount payable on the basis of such assessment, a refund shall be given of the difference.'

The words 'no tax shall be payable' impose a duty on the Income. tax Officer, and this is conceded; but it is contended that the Income-tax Officer was in no way responsible for the non-performance of this duty for the reason hat he had no knowledge of the fact that the assessee had discontinued his profession. In his order of 29th August, 1939, Mr. Ansari has stated that the Income-tax Officer 'was bound to

(1) (1939) 7. T. R. 263.

exclude this income from the assessment of 1933.34 if he only could be aware of the discontinuance of the profession, but it appears that he had no idea of the discontinuance.' The appointment of the assessee as a Puisne Judge was notified, as we have already said, in the Gazette of 22nd July, 1933, that is to say, four months before the order of assessment for the year 1933-34. It may be said with reason that the income-tax authorities cannot be expected to acquaint themselves with every appointment notified in the Gazette : but there are other circumstances which indicaate that the Income-tax Officer was aware of the fact that the assessee had become a Judge of the High Court. Curiously enough the is an acknowlegment slip (No. 183) which shows that the notice to submit a return was addressed to 'The Honble Mr. Justice Iqbal Ahmad'. The notice was served upon the assessee on the 4the April, 1933, at which date he was an addditional Judge of this Court. In the assessment form of 15th November 1933 the name of the assessee is shown as 'The Honble Mr. Justice Iqbal Ahmad.' By that time the assessee had become a Puisne Judge of the Court. Thus the Income-tax Officer had materials before him which should have put him on inquiry as to whether the assessee was entitled to relief under Section 25 (3) of the Act. This question must be answered in the negative.

The next question referred to us is as follows :-

'Whether the assessees claim for relief under Section 25 (3) of the Act in respect of his assessment for 1933-34, made in the circumstances stated above, is barred by limitation? '

In the Amending Act of 1939, which came into force on the 1st April, 1939, sub-section (5) was added to Section 25. It provides as follows :-

'No claim to the relief afforded under sub-section (3) or sub-section (4) shall be entertained, unless it is made before the expiry of one year from the date on which the business, profession or voction was discontinued......'

The right had accrued to the assessee before the 1st April, 1939. The application for relief under Section 25 (3) was preferred on the 28th April, 1939, but it is alleged on behalf of the assessee that he made a verbal claim at the office of the Income-tax Officer in March, 1939. In reply to a question referred to him by the Commissioner, the Income-tax Officer said :

'Regarding your inquiry about Justice Iqbals interview with some 14 months back, I am unable to give from memory the details desired by you. Justice Iqbal had seen me at the Income-tax Officer, Central Circle, about Section 25 (3) affair and I remember I had asked him to make a formal application if he liked. I cannot give any further details from memory. I might have made some note on the file.'

The Commissioner in his statement of the case says :

'It may....... be taken as established that an interview took place between the assessee and the Income-tax Officer on the subject of the formers claim in March, 1939, but a formal application for a refund under Section 25 (3) was not made till the 28th April, 1939, when the assessees application under Section 33 was persecuted to the Commissioner.

Thus it is a matter of admission that the assessee did make a verbal claim in March, 1939. It is contended on behalf of the department that a claim for relief under Section 25 (3) of the Act should be in writing; but there is nothing in the Act to justify this contention. The learned Advocate-General pleads that, having regard to the scheme of the Act as it appears from Chapter IV, which is headed 'Deductions and Assessments' and which contains Section 18 to 39, it must be held to have been contemplated by the Legislature that any such application should be preferred during the assessment year. What the Legislature may have contemplated is a matter of s [eculation, but a claim for refund of tax wrongly assessed cannot be barred except by statute and there was no such bar before the Amending Act. A bar of limitation cannot be read into the provisions of an Act in which no such bar is expressed. The amended sub-section itself goes t show that the Legislature was aware of the absence of any bar of limitation in the existing Act.

The Commissioner in his statement of the case says :

'The question whether the claim was within time if it were assumed to have been made verbally in March, 1939, does not arise out of the other under Section 33, ad there was no mention of any such claim having been made either in the perition under Section 33 or in the application under Section 66 (2) '

This is true so far as it goes, but the question has been raised for the first time by the Commissioner in his statement of the case. His predecessor in office, when he declined to grant relief under section 33, did not say that the application of th assessee was barred by time; he only said that it was not preferred within reasonable time, which is very different from saying that it was barred by a statutory procession.

The question of limitation therefore can either not be advanced by the Department at all or, if it can be advanced, it can be met by facts which came to light at the time when the question of preference to the High Court under Section 66 (2) was being considered by the Commissioner. the interview of the assessee with the Income-tax Officer in March, 1939, was brought to the notice of the Commissioner when he thought that the application ought to have been presented within a year.

Our reply to this question is in the negative.

'Whether the Commissioners discretion under Section 33 of the Act can legally be controlled by the Central Board of Revenue; and if so, whether the Central Board of Revenue acted judicially in refusing to authorise the Commissioner to exercise his power of revision in this case? '.

A Commissioner of Income-tax has no option but to obey deparmental orders of the Central Board of Revenue; but it cannot possibly be said that his discretion can be 'legally' controlled inasmuch as the discretion is vested in him by statue and the is not statutory control of such discretion. A Court or an official functioning as a Court must exercise its discretion judicial; but that is the only form of control which is known to the law. This being our view, the second part of the question does not arise.

To sum up, we answer the prelmimnary question in the affirmative and the first and second question of law in the negative. We also answer the first part of the third question of law in the negative. As regards the second part of this question, it is unnecessary to return an answer.

The Advocate-General is entitled to a fee of Rs. 200. The assessee is entitled to his costs.

A copy of this order will be sent under the seal of he Court and the signature of the Registar to the Commissioner of Income-tax.

Reference answered accordingly.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //