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Saurashtra Salt Manufacturing Company Vs. Commissioner of Income-tax, Gujarat - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtGujarat High Court
Decided On
Case NumberIncome-tax Reference No. 8 of 1966
Judge
Reported in(1968)9GLR509; [1967]66ITR404(Guj)
ActsIncome Tax Act, 1922 - Sections 22, 33(4) and 33(5)
AppellantSaurashtra Salt Manufacturing Company
RespondentCommissioner of Income-tax, Gujarat
Appellant Advocate K.H. Kaji, Adv.
Respondent AdvocateJ.M. Thakore (Advocate-General)
Cases ReferredHukumchand Mills Ltd. v. Commissioner of Income
Excerpt:
.....thereon as it thinks fit' and the tribunal can, while setting aside the assessment in appeal, direct the income-tax officer to make a fresh assessment on the assessee. the tribunal, therefore, clearly had power, whilst setting aside the assessment of dinshaw's share of the income in the hands of the assessee, to direct the income-tax officer to make a fresh assessment of dinshaw's share of the income on the assessee after giving due notice to the assessee......having set aside the assessment was justified indirecting the income-tax officer to reassess the share income of the non-resident after due notice to the assessee firm as representing the non-resident partner ?' 2. the determination of the question depends on the true interpretation of section 33, sub-section (4), which deals with power of the tribunal to make orders on the appeal preferred to it. this sub-section provides that the appellate tribunal may, after giving both parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, and shall communicate any such orders to the assessee and to the commissioner. the power conferred on the tribunal under this sub-section is in the widest terms, for the tribunal can pass such orders on the appeal as it.....
Judgment:

Bhagwati, J.

1. This reference arises out of an assessment made for the assessment year 1958-59, there relevant account year being the period 1st July, 1956, to 30th June, 1957. The assessee was a registered firm consisting of several partners of whom one Dinshaw was a non-resident partner. While assessing the assessee under Section 23(5)(a), the Income-tax Officer, therefore, under the second proviso to that section assessed Dinshaw's share of the income on the assessee at the rate which would be applicable if it were assessed on him personally and directed that the sum so determined as payable shall be paid by the assessee. The assessee appealed against the assessment order to the Appellate Assistant Commissioner and one of the contentions urged by him in support of the appeal was that the assessment of Dinshaw's share of the income on the assessee under the second proviso to section 23(5)(a) was invalid since the procedure for making such assessment as required by section 22 was not followed by the Income-tax Officer. This contention was rejected by the Appellate Assistant Commissioner and the assessment of Dinshaw's share of the income in the hands of the assessee was confirmed. The assessee thereupon carried the matter in appeal to the Tribunal. Before the Tribunal the same contention was repeated on behalf of the assessee. The Tribunal found substance in the contention and held that inasmuch as the assessment of Dinshaw's share of the income was to be made on the rate which would be applicable if it were assessed on him personally, a specific notice ought to have been given to the assessee before proceeding to make such assessment and since no such notice was given, the assessment was not properly made. The Tribunal accordingly set aside the assessment in so far as it pertained to the assessment of Dinshaw's share of the income in the hands of the assessee and directed the Income-tax Officer to reassess it after due notice to the assessee as representing Dinshaw. The assessee was of the view that it was not competent to the Tribunal to give direction to the Income-tax Officer to make a fresh assessment of Dinshaw's share of the income in the hands of the assessee after due notice to the assessee as representing Dinshaw and, he, therefore, applied for a reference and on such application the Tribunal referred the following question for the determination of the court :

'Whether, on the facts and in the circumstances of the case, the Tribunal having set aside the assessment was justified indirecting the Income-tax Officer to reassess the share income of the non-resident after due notice to the assessee firm as representing the non-resident partner ?'

2. The determination of the question depends on the true interpretation of section 33, sub-section (4), which deals with power of the Tribunal to make orders on the appeal preferred to it. This sub-section provides that the Appellate Tribunal may, after giving both parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, and shall communicate any such orders to the assessee and to the Commissioner. The power conferred on the Tribunal under this sub-section is in the widest terms, for the Tribunal can pass such orders on the appeal as it thinks fit and, prima facie, we do not see why the Tribunal cannot pass an order setting aside an assessment and directing the Income-tax Officer to make a fresh assessment after giving due notice to the assessee. As a matter of fact sub-section (5), of section 33 clearly postulates that such an order may be passed by the tribunal of an appeal under section 33, sub-section (4). Section 33, sub-section (5), says that, where as the result of an appeal any change is made in the assessment of a firm or association of persons or an we assessment of a firm or association of persons is ordered to be made, the Appellate Tribunal may authorize the Income-tax Officer to amend accordingly any assessment made on any partner of the firm or any member of the association. This sub-section clearly contemplates a case where the Tribunal may, on an appeal before it, make an order directing a new assessment of a firm or association of persons to be made after setting aside the assessment impugned in the appeal. The power to set aside the assessment and to direct the Income-tax Officer to make of fresh assessment is, therefore clearly comprehended within the width and amplitude of the words 'pass such orders thereon as it thinks fit' and the Tribunal can, while setting aside the assessment in appeal, direct the Income-tax Officer to make a fresh assessment on the assessee. This view is incontrovertible on the plain reading of sub-sections (4) and (5) of section 33 and it has also received the imprimatur of the highest court in the land in Hukumchand Mills Ltd. v. Commissioner of Income-tax. The Supreme Court in that case held that the powers of the Tribunal in dealing with appeals are expressed in section 33(4) in the widest possible terms and the words 'pass such orders as the Tribunal thinks fit' include all the powers (except possibly the power of enhancement) which are conferred on the Appellate Assistant Commissioner or the Income-tax Officer to hold a further enquiry and dispose of the case on the basis of such inquiry. The Tribunal, therefore, clearly had power, whilst setting aside the assessment of Dinshaw's share of the income in the hands of the assessee, to direct the Income-tax Officer to make a fresh assessment of Dinshaw's share of the income on the assessee after giving due notice to the assessee.

3. We must, therefore, answer the question referred to us in the affirmative. The assessee will pay the costs of the reference to the commissioner.

4. Question answered in the affirmative.


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