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Commissioner of Income-tax Vs. Rajasthan Industries Ltd. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtRajasthan High Court
Decided On
Case NumberD.B. Civil Income-tax Reference No. 47 of 1967
Judge
Reported in[1970]76ITR212(Raj)
ActsIncome Tax Act, 1922 - Sections 23, 23A, 23A(1) and 34(3); Finance Act, 1955
AppellantCommissioner of Income-tax
RespondentRajasthan Industries Ltd.
Appellant Advocate S.C. Bhandari and; Rajesh Balia, Advs.
Respondent Advocate M.D. Bhargava, Adv.
Cases ReferredAhmedabad v. Navanagar Transport and Industries Ltd.
Excerpt:
- .....for the opinion of the court:'whether, on the facts and in the circumstances of the case, the orders passed under section 23a of the income-tax act, 1922, as it stood after its amendment by the finance act, 1955, were orders of assessment and, therefore, subject to limitation prescribed under section 34(3) of the income-tax act, 1922?'2. in our opinion, the question must be answered in the negative as it is concluded by the decision of their lordships of the supreme court in m.m. parikh, income-tax officer, special investigation circle 'b', ahmedabad v. navanagar transport and industries ltd., [1967] 63 i.t.r. 663 (s.c.). in that case it has been pointed out that there was a vital difference between the assessment of tax under section 23 and imposition of liability under section 23a.....
Judgment:

Bhandari, C.J.

1. This is a reference under Section 66(1) of the Income-tax Act, 1922 (hereinafter called 'the Act'), by the Income-tax Appellate Tribunal, Delhi Bench 'C' (hereinafter called 'the Tribunal'). In this case the assessee is a limited company. For the assessment year 1955-56, the assessee was assessed on a total income of Rs. 56,887 and the income-tax payable was determined at Rs. 24,710. The net surplus available for distribution as dividend to the shareholders was Rs. 32,177. No dividend was declared by the company. The same happened in the assessment year 1956-57. The Income-tax Officer, A-Ward, Jaipur, took proceedings against the company under Section 23 A(1) of the Act in respect of both the assessment years and made an order in writing that the company was liable to pay super-tax at the rate of four annas in the rupee on the undistributed balance of the total income for the assessment year 1955-56, and by another order held the company liable to pay super-tax at the rate of eight annas in the rupee on the undistributed balance of total income for the assessment year 1956-57. These orders were passed on 29th March, 1963. Against these orders, appeals were filed before the Appellate Assistant Commissioner of Income-tax, A-Range, Jaipur, which were dismissed. Then two separate appeals were filed before the Tribunal. The Tribunal held that the order under Section 23A(1) having been passed beyond the period of limitation prescribed under Section 34(3) of the Act was not valid in law and the orders were, therefore, set aside. On the application by the Commissioner of Income-tax, this consolidated reference has been made by the Tribunal and the following question of law has been referred for the opinion of the court:

'Whether, on the facts and in the circumstances of the case, the orders passed under Section 23A of the Income-tax Act, 1922, as it stood after its amendment by the Finance Act, 1955, were orders of assessment and, therefore, subject to limitation prescribed under Section 34(3) of the Income-tax Act, 1922?'

2. In our opinion, the question must be answered in the negative as it is concluded by the decision of their Lordships of the Supreme Court in M.M. Parikh, Income-tax Officer, Special Investigation Circle 'B', Ahmedabad v. Navanagar Transport and Industries Ltd., [1967] 63 I.T.R. 663 (S.C.). In that case it has been pointed out that there was a vital difference between the assessment of tax under Section 23 and imposition of liability under Section 23A and that the order which contemplates computation of the amount of tax payable is not an order of assessment within the meaning of the Act; nor does prescribing of procedure for determining and imposing tax liability make it an order of assessment.

3. Learned counsel for the assessee has tried to obviate the force of this authority by pointing out that while computation of income for determination of the amount of tax payable is not an order of assessment and, therefore, is not covered by Section 34(3) of the Act, but after such an order is made, the actual assessment of the tax becomes an assessment within the meaning of the Act. This argument, in our opinion, is an argument of despair. Section 23A is a self-contained section for imposing liability which includes the computation of the amount of tax that the assessee is liable to pay. This being the position, we answer the reference in the negative. No order as to costs.


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