This is an application under Section 66 (3) of the Indian Income-tax Act, 1922, and the prayer contained in the application is that the Income-tax Commissioner be directed to refer the questions of law formulated in the application to this Court for decision. The application arises under the following circumstances.
The Income-tax Officer in making assessment for the year 1937-38 disallowed certain items on account of alleged depreciation in machinery and on account of interest paid by the applicants, the assessee. The applicants, then appealed to the Assistant Commissioner, who with sight modifications, affirmed the order of the Income-tax Officer. The applicants then applied to the Income-tax Commissioner praying in the alternative that either the Income-tax Commissioner should exercise the power of review vested in him by Section 33 of the Act, or should refer the matter to the High Court in accordance with Section 66 (2) of the Act. The Commissioner heard the application on January 3, 1940, and on September 14, 1940, sent to the applicants a draft statement of facts and the question of law that he proposed to refer to this Court, and asked the petitioners to suggest such additions and amendments as they liked. In the draft, the question of law that the Commissioner proposed to refer to this Court was set out. In the draft it was also mentioned that the Commissioner did not see his way to give any relief to the assessees under Section 33 of the Act. The applicants sent the draft back to the Commissioner after making certain suggestions for amendments in the draft. After the receipt of the draft the Commissioner decided to exercise the power of review vested in him, and, in the exercise of that power, he sent the case back to the Assistant Commissioner with certain directions to make further inquiry into the matter. On November 20, 1940, the Commissioner informed the applicants that, as he had exercised the power of review, no reference could be made this Court, and asked them to withdraw the application that they had made under Section 66 (2). This the applicants declined to do and requested the Commissioner to refer the alleged questions of law to this Court. The Commissioner by his letter dated March 4, 1941, intimated that he was not prepared to accede to the prayer of the applicants. The present application was then filed in this Court.
It is clear from the facts stated above that, by the time that the draft was sent by the Commissioner to the applicants, the Commissioner had not finally decided the matter pending before him. It is also manifest that when the draft with the suggested amendments was sent back by the applicants to the Commissioner, the Commissioner was seized of the case and, not having decided the combined application under Section 33 and Section 66 (2) of the Act, was fully competent to give such decision he considered right and proper. It was within the discretion of the Commissioner of accede to the prayer contained in the application about the exercise of the power of review and this is what the Commissioner did. As the Commissioner in exercise of the power of review vested in him sent the case back to the Assistant Commissioner, the case cannot yet be said to be finally decided by the Assistant Commissioner, and, as such, no order prejudicial to the applicants can be said to have yet been passed by the Assistant Commissioner. In this view of the matter no reference was permissible to this Court. The Commissioner was, therefore, right in refusing to make a reference to this Court. The application is dismissed with costs. The counsel for the Department is entitled to a fee of Rs. 75 and he is allowed one month within which to file his fee certificate.