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Commissioner of Income-tax Vs. Brij Transport Company Ltd. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberMisc. Income-tax Reference No. 131 of 1967
Judge
Reported in[1973]87ITR52(All)
ActsIncome Tax Act, 1922 - Sections 23A, 23A(1) and 34(3); Finance Act, 1955; Finance Act, 1957
AppellantCommissioner of Income-tax
RespondentBrij Transport Company Ltd.
Appellant AdvocateGopal Behari, Adv.
Respondent AdvocateR.K. Gulati, Adv.
Excerpt:
- - amongst other points, the assessee raised a contention that the order passed under section 23a(1) of the act was bad in law as it wasbarred by time, having been passed after the expiry of four years from the end of the assessment year......under section 23a after its amendment by the finance act of 1955 in the instant case was barred by time. the tribunal, however, did not consider the second contention raised on behalf of the assessee. on the finding that the proceedings under section 23a of the act were barred by time, the tribunal set aside the order made by the income-tax officer. at the instance of the commissioner of income-tax, the tribunal has referred the following question for the opinion of this court:' whether, on the facts and in the circumstances of the case, the tribunal was right in holding that an order under section 23a of the act after its amendment by the finance act of 1955 is an order of assessment to which the period of limitation prescribed, under section 34(3) applies and such an order cannot,.....
Judgment:

H.N. Seth, J.

1. This is a reference under Section 66(1) of the Income-taxAct, 1922, at the instance of the Commissioner of Income-tax. The assesseein this case is M/s. Brij Transport Company Ltd., Saharanpur, and theassessment year involved is 1956-57.

2. The company was assessed to income-tax for the assessment year 1956-57, by an order dated 16th July, 1957. 'The total income of the company was computed at Rs. 30,274 and the tax payable was determined as Rs. 13,150. The distributable surplus amounted to Rs. 17,127. The company was required to distribute 60% of the distributable surplus as dividend within the twelve months immediately following the expiry of the previous year, under Section 23A of the Act, This was not done. Hence, the Income-tax Officer invoked the provisions of Section 23A(1) of the Act and levied super-tax at the rate of 37% on the undistributed balance of Rs. 17,127 amounting to Rs. 6,337 by his order dated 29th March, 1963.

3. The assessee went up in appeal before the Appellate Assistant Commissioner. Amongst other points, the assessee raised a contention that the order passed under Section 23A(1) of the Act was bad in law as it wasbarred by time, having been passed after the expiry of four years from the end of the assessment year. The Appellate Assistant Commissioner, however, rejected the contention of the assessee and held that there was no time limit applicable to the orders passed under Section 23A of the Act after its amendment in 1955.

4. The assessee then went up in appeal before the Income-tax Appellate Tribunal and raised two contentions. In support of its contention that the order under Section 23A of the Act was barred by limitation, reliance was placed on the decision of the Gujarat High Court in the case of Navanagar Transport & Industries Ltd. v. Income-tax Officer, Special Investigation Circle A, Ahmedabad, [1964] 54 I.T.R. 271 (Guj.) wherein the Gujarat High Court had held that an order under Section 23A after its amendment by the Finance Act of 1955 was an order of assessment to which the period of limitation prescribed under Section 34(3) applied. Any assessment made after the expiration of the period of four years from the end of the assessment year was barred by time. Relying upon the decision of the Gujarat High Court, the Tribunal held that the order passed under Section 23A after its amendment by the Finance Act of 1955 in the instant case was barred by time. The Tribunal, however, did not consider the second contention raised on behalf of the assessee. On the finding that the proceedings under Section 23A of the Act were barred by time, the Tribunal set aside the order made by the Income-tax Officer. At the instance of the Commissioner of Income-tax, the Tribunal has referred the following question for the opinion of this court:

' Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that an order under Section 23A of the Act after its amendment by the Finance Act of 1955 is an order of assessment to which the period of limitation prescribed, under Section 34(3) applies and such an order cannot, therefore, be made after the expiration of the period of four years from the end of the assessment year '

5. The decision on which reliance was placed by the Tribunal was taken up in appeal before the Supreme Court. The Supreme Court held that an order under Section 23A of the Indian Income-tax Act, 1922, as amended by the Finance Acts of 1955 and 1957, made by the Income-tax Officer directing payment of additional super-tax was not an order of assessment within the meaning of Section 34(3) of the Act, and to such an order the period of limitation prescribed under Section 34(3) did not apply. The decision of the Supreme Court is reported as M. M. Parikh v. Navanagar Transport and Industries Ltd., [1967] 63 I.T.R. 663; [1967] 2 S.C.R. 38 (S.C.)

6. In view of the pronouncement of the Supreme Court mentioned! above, the question referred to us for opinion is answered in the negative and in favour of the Commissioner of Income-tax. We hold that an order under section 23A of the Act after its amendment by the Finance Act, 1955, is not an order of assessment to which the period of limitation prescribed under Section 34(3) applies. In the circumstances, it is open to the Income-tax Officer to make an order after the expiration of the period of four years from the end of the assessment year.

7. As no one has appeared on behalf of the assessee we make no order as to the costs of this reference. Counsel's fee is assessed at Rs. 200.


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