Horace Owen Compton Beasley, Kt., C.J.
1. The question referred to us by the Commissioner of Income-tax is:
When the Assistant Commissioner in an appeal to him from the order of assessment of the Income-tax Officer enhances the assessment under one head of income without causing an increase in the total income (by not including altogether income assessed under another head) does an appeal lie to the Commissioner under Section 32 against that order?
2. This is a novel point and the facts which give rise to the question are as follows : The petitioners were assessed by the Income-tax Officer, Madras, II Circle, on a total income of Rs. 41,154 made up as follows : (1) Property, Rs. 46,092 and (2) Other sources - dividends, interest on debentures and remittances of profits from Trichur, Rs. 2,206 less (3) loss in business, Rs. 7,144, making a total as before mentioned of Rs. 41,154. The tax levied was Rs. 4,068-12-0. The petitioners appealed to the Assistant Commissioner and claimed that the figure adopted by the Income-tax Officer under 'Other sources' should be reduced by Rs. 2,048. This point the Assistant Commissioner conceded. In the course of the appeal, however, the Assistant Commissioner whilst conceding that point which of course reduced pro tanto total income assessable of the assessee was of the opinion that the Income-tax Officer had incorrectly allowed two deductions from the income arrived at under the first heading, namely, 'Property'. He went into the matter and computed the income of the assessee under the heading of property at Rs. 47,744 instead of Rs. 46,092, the computation of the Income-tax Officer. The result was that the total income assessed by the Income-tax Officer was reduced by this method by Rs. 396, as the total income was found to be Rs. 40,758 by the Assistant Commissioner. The petitioners here argue that they were entitled under Section 32 of the Indian Income-tax Act to prefer an appeal to the Commissioner, arguing that there had been an enhancement of the assessment. Section 32(1) reads as follows:
Any assessee objecting to an order passed by an Assistant Commissioner under Section 28 or to an order enhancing his assessment under Sub-section (3) of Section 31, may appeal to the Commissioner within thirty days of the making of such order.
3. The argument of the assessee is that he computation of the income of an assessee arising under any or all of the various heads of income set out in the Act is itself an assessment and, that therefore what the Assistant Commissioner did by increasing the amount under 'Property' amounts to an enhancement of the assessment thereby giving the assessee the right of appeal to the Income-tax Commissioner. On the other hand, the Income-tax Commissioner contends that ' assessment' in Section 32 means the assessment of the total income of the assessee. Unfortunately we gain no help by any definition of the word 'assessment' in the Act because it is not therein defined. We have to see whether any other sections of the Act do give us any assistance. In my view, some assistance is to be gained from Section 23(1) which provides that if the Income-tax Officer is satisfied that a return made under Section 22 is correct and complete, he shall assess the 'total income' of the assessee, and shall determine the sum payable by him on the basis of such return. Then again Sub-section (3) of the same section provides that where the assessee has not made a return the Income-tax Officer shall by an order in writing assess the 'total income' of the assessee. There are some other sections which may possibly throw some light upon this question. Section 30 speaks of 'the assessment' which seems, in my view, to mean that there is only one assessment and not several. Then we have to see what the assessee is entitled to do by way of an appeal to the Assistant Commissioner. Under Section 30, if he 'objects to the 'amount' or 'rate' at which he is assessed under Section 23 or Section 27, he may prefer an appeal to the Assistant Commissioner and again by the use of the word 'amount' it seems to me to follow that what is meant is the total amount of the income and not the smaller amounts which go to make up the total. When he has got to the Assistant Commissioner, the Assistant Commissioner in disposing of the appeal may, in the case of an order of assessment, confirm, reduce, enhance or annul the assessment or set it aside. Having done that it is only when he has enhanced the assessment that under Section 32 any appeal lies to the Income-tax Commissioner. If, on an appeal to the Assistant Commissioner, the Assistant Commissioner upholds in toto the assessment of the Income-tax Officer there has been no enhancement of the assessment nor any reduction of it, clearly in such a case as that no appeal lies to the Commissioner of Income-tax. A fortiori, if, on appeal to the Assistant Commissioner, he accedes to some of the contentions of the assessee and reduces the total amount of the assessment, no appeal lies to the Income-tax Commissioner. The question here is, whether, when the Assistant Commissioner does not enhance the total income assessable to income-tax but by means of reduction under one head and an increase under another head allows the Income-tax Officer's total assessment to remain the same or reduces it, merely by reason of the fact that the Assistant Commissioner has increased the income under one head, does an appeal lie to the Income-tax Commissioner? The Income-tax Commissioner in his Order of Reference is of the opinion that the enhancement referred to in Sections 31(3) and 32(1) is an enhancement of the assessment and that it means an enhancement of the assessment as a whole and not an enhancement of a particular item of income in the assessment which does not result in the enhancement of the assessment as a whole. Income-tax, in his view, is one tax and not a collection of taxes on different items of income - that is obviously correct - and assessment to income-tax is one whole and not a group of assessments of different items of income. With that view I entirely agree. It cannot be correct that the computation of an income under each head set out in the Income-tax Act is itself an assessment. It is merely a computation of an item of income or class or classes of income which go to make the whole and, when the whole has been arrived at, there is an assessment. In my opinion, the view taken by the Income-tax Commissioner upon this point is the correct one and the answer to the question referred must be that an appeal in such a case does not lie.
4. Costs to the Commissioner of Income-tax Rs. 250.
Sundaram Chetty, J.
5. I agree.
6. I agree