PHATAK, J. - This is a reference made by the Commissioner of Income tax under Section 66(3) of the Indian Income-tax Act in pursuance of the order of this Court, dated December 2, 1943. The question referred for decision by this Court are as follows :-
(1) Whether, in the circumstances of the case, the order of the Commissioner, dated 29th March, 1940, rejcting the revision petitions of the assessee under Section 33 of the Act, is 'otherwise prejudicial to him' (the assessee) within the meaning of sub-section (2) of Section 66 of the Act.
(2) Whether the order passed by the Commissioner under Section 33, without notice to the assessee and without giving him an opportunity to be heard, is an order without jurisdiction; and whether the validity of the said order is a question of law arising out of that order itself within the meaning of the first proviso to sub-section (2) of Section 66 of the Act
(3) Whether there was evidence before the Income-tax Officer from which it was permissible to draw the inferene that some income or accounts had been necessarily suppressed or concealed by the assessee and it was open to the Income-tax Officer to make a best judgment assessment
The material facts which appear from the statement of the case are these. The assessee is a Hindu undivided family carrying on business of various kinds. For the assesssment year 1937-38, the assessee was assessed on a total income of Rs. 2,476 by the Income-tax Officer, but on appeal the Assistant Commissioner came to the conclusion that the total income was only Rs. 792 and that the assessee was, therefore, exempt from taxation. The result was that the assessment made by the Income-tax Officer was annulled. In the course of the assessment for the following year, namely 1938-39, the Income-tax Officer examined the accounts of the relevant accounting year, Sambat 1993-94, and discovered that the assessee had an Amanat Khata which disclosed large sums of cash receipts and withdrawals. It also appeared that in Sambat year 1993-94 there was an excess deposit in this Khata. This discovery led the Income-tax Officer to scrutinize the account books of the earlier years with the results that it was found that there was excess of deposits over withdrawals in the Amanat Khata in the preceding five years also. The explanation submitted by the assessee with regard to the source of this surplus money not being satisfactory, the Income-tax Officer called upon the assessee by means of notices under Section 22(4) of the Indian Income-tax Act to produce the accounts which might have shown the source of the money deposited in the Amanat Khata. No such accounts were forthcoming, and the result was that the Income-tax Officer held that the surplus money in question represented concealed profits. That officer not only included the amount of the excess deposits as entered in the Amanat Khata of the accounts of the relevant year in the assessment for the year 1938-39 but also re-opened the assessment for the year 1937-38 under Section 34 of the Indian Income-tax Act and added to the income of the relevant year of account the excess deposits entered in the Amanat Khata of the accounts of that year.
It should be noted that the assessment for both the years 1937-38 and 1938-39 were made under Section 23(4) of the Indian Income-tax Act by reason of non-compliance on the part of the assessee with notices under Section 22(4). Thereupon the assessee made applications under Section 27 of the Indian Income-tax Act for cancellation of the assessment, but without sucess. The appeals from the orders passed on applications under Section 27 were also dismissed by the Appellate Assistant Commissioner who affirmed the conclusion reached by the Income-tax Officer that the assessee deliberately withheld the accounts which must have been maintained by him in respect of the moneys drawn from and returned to his private chest. Against the orders of the Appellate Assistant Commissioner, the assessee filed revision petitions under Section 33 of the Income-tax Act before the Commissioner in respect of the assessments for both the years mentioned above and by these revision petitions, the assessee challenged the correctness of the assessments as well as of the appellate orders whereby the orders passed by the Income-tax Officer under Section 27 were confirmed. The Commissioner examined the records and dismissed the revision petitions without giving an opportunity to the assessee to be heard in support of them as according to the Commissioner, the points in issue were quite clear from the records. Dissatisfied with the order passed by the Commissioner the assessee filed an application before him under Section 66(2) of the Indian Income-tax Act requesting him to refer to the High Court certain questions mentioned in the application. This application was rejected by the Commissioner upon the ground that by the order made by him under Section 33, the assesseements were not enhanced and the said orders were not otherwise prejudicial to the assessee within the meaning of Section 66(2). Thereupon the assessee made an application before this Court under Section 66 (3) of the Indian Income-tax Act and this Court was of the opinion that certain questions of law arose out of the order made by the Commissioner under Section 33 and directed the Commissioner to state the case. Hence this reference.
It may be noted at the outset that this reference is concerned with the interpretation of the relevant sections of the Indian Income-tax Act, as it stood before its amendments by the Indian Income-tax (Amendment) Act, 1939. It is necessary to quote Section 33 which is as follows :-
'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 inquiry to be made and, subject to the provision of this Act, may pass such orders 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 relevant portion of Section 66 may now be quoted :-
'66. (2) Within sixty days of the date on which he is served 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 decision by a Board of Referees under Section 33A, the assessee in respect of whom the order or decision was passed may, by application .... require the Commissioner to refer to the High Court any question of law arising out of such order or decision, and the Commissioner shall, within sixty days of the receipt of such aplication, draw up a statement of the case and refer it with his own opinion thereon to the High Court :
Provided that a reference shall lie from an order under Section 33 only on a question of law arising out of a previous order under Section 31 or Section 32, revised by the order under Section 33 ..........'
It must be noticed that the expression 'order prejudicial to an assessee' occurs in both the sections; and section 66 refers back, in express terms, to 'an order under Section 33 enhancing an assessment or otherwise prejudicial' to the assessee. Ordinarily it is always assumed that unless there are some special reasons, a word used more than once in a Statute is used in the same sense throughout. In the present case, it must be so, because of the express reference in Section 66 to an order passed under Section 33. The question what is the true meaning of the expression 'otherwise prejudicial to him' (the assessee) in Section 66 is beset with difficulty and there has been considerable divergence of opinion upon the point in the Court in India. It is clear that by Section 33 a discretion has been given to the Commissioner to call for the record of any proceeding under the Act and to make such inquiry as he considers fit. The Legislature has used the word 'may' both in sub-section (1) and sub-section (2) of that section. It is manifest that the assessee cannot claim, as a matter of right , to compel the Commissioner to call for the record or to make an inquiry. If the assessee makes an application, he is merely asking the Commissioner to exercise his discretionary power on his own motion. This discretion is only subject to the condition that if he contemplates alteration of an order sought to be revised, to the prejudice of the assessee, he must give him a reasonable opportunity of being heard. It has not been disputed that the expression 'prejudicial' in the proviso to Section 33 means altering the order sought to be revised to the prejudice of the assessee. In case the Commissioner declines to interfere or is contemplating merely to confirm the order, it cannot be said that he intends to pass an order 'prejudicial' to an assessee within the meaning of the proviso to Section 33. In this Court Mr. Justice Collister and Mr. Justice Bajpai, while considering the true meaning of Section 33 in the case of the Honble Mr. Justice Iqbal Ahmad, In re, expressed themselves thus :-
'The section does not 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 alsready is without giving him an opportunity of being heard.'
I am in respectful agreement with the view taken by the learned Judges who decided that case as ti the proper construction of Section 33.
The question then arises whether the expression 'prejudicial' in Section 66 (2) has been used in the same sense in which it has been used in Section 33. Upon this question, there has been as already stated, considerable divergence of opinion. Most of the cases have been summarised in the decision of this Court referred to above. In that decision, the learned Judges found themselves in agreement with the view taken by five learned Judges of the Madras High Court in Voora Sreeramulu Chetty v. Commissioner of Income-tax, Madras. In that Madras case, an earlier decision by three learned Judges of that Court was overruled and it was held that an order under Section 33 which merely confirms an order sought to be revised is also an order prejudicial to the assessee within the meaning of Section 66(2). It would follow therefore, that according to this view, the word 'prejudicial' would not mean the same thing in the two Sections 33 and 66. Indeed, Mr. Justice Dalip Singh of the Lahore High Court favoured the view that this word has been used in two different senses in the two sections : see Nanhe Mal Janki Nath v. Commissioner of Income-tax. The case of East Khas Jharia Colliery Co., Ltd. v. Commissioner of Income-tax, Bihar and Orissa deserves careful consideration. In that case, the question referred for the decision of the Court was identical with the question No. (1) referred to us in the present case. Sir Trevor Harries, C.J., and Mr. Justice Manohar Lall reviewed the earlier authorities including the above-mentioned decision of this Court and held that the assessee, in that case, was hit by the first proviso to Section 66, as the question of law that was referred to the High Court was common to both the Assistant Commissioners and the Commissioners orders. For this reason, they considered it unnecessary to answer the question, because even if the question had been answered in favour of the assessee, he was to get no relief. We could have followed the same course as had been taken in this case by the Patna High Court, but the position is slightly complicated by the fact that the order passed by the Commissioner under Section 33 dealt with not only the appellate order of the Assistant Commissioner confirming the order passed by the Income-tax Officer under Section 27, but also the order of assessment made under Section 23(4) by the Income-tax Officer. In an earlier case, namely that of Indarchand Kagriwal v. Commissioner of Income-tax, Bihar and Orissa, decided by the same Bench of the Patna High Court, it was held that as the order of the Assistant Commissioner had remained all the time against the assessee and had never been altered to his prejudice, there was no order 'prejudicial' to the assessee. The earlier Full Bench case of the Madras High Court, N.A.S.V. Venkatachalam Chettiar v. Commissioner of Income-tax, Madras, seems to have interpreted the expression 'prejudicial' as having been used in the same sense in both the Sections 33 and 66. But in the later Full Bench case of Voora Sreeramulu Chetty v. Commissioner of Income-tax, Madras, the learned Judges proceeded upon the analogy of the decree of an appellate Court confirming a decree of the Court of First instance and, as has been stated above, overruled the earlier decision. It may be a matter of some argument that there is some difference between the confirmation of a decree in appeal and refusal to interfere in revision. In the former case the litigant had got a right to be heard, and in the latter case the power to be exercised is discretionary. Can it be said that if a discretionary power is not exercised, prejudice is caused to the party who had no right to be heard Sometimes distinction has been drawn between cases where a petition under Section 33 has been dismissed in limine on the ground that it is belated and cases where merits hve been gone into and the order sought to be revised has been affirmed. Sir John Beaumont, C.J., and Chagla, J., of the Bombay High Court had to consider this question in the case of Commissioner of Income-tax, (Central), Bombay v. Bishwambharlal Maheshwari. Sir John Beaumont, C.J., observed that 'if the Commissioner called for the record and decided to take no action he had not made an order, prejudicial or otherwise, but if he heard the parties and rejected the application, it did not matter whether he rejected it in express terms, or declined to interfere.'
I consider that the first and the second questions referred to this Court are of considerable imp[ortance and I recommend that this case may be decided by a larger Bench.
SANKER SARAN, J. - As divergent views are held by different high Courts on the questions that arise in this case, I agree that this case may be decided by a larger Bench. I do not, however, consider it necessary to express any opinion on the question under considration.
BY THE COURT. - Let the record of this case be placed before the Honble the Chief Justice for the constitution of a Full Bench.