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Jeewanlal (1929) Ltd. Vs. Commissioner of Income-tax (Central) and ors. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberMatter No. 362 of 1974
Judge
Reported in[1977]106ITR33(Cal)
ActsIncome Tax Act, 1961 - Sections 251 and 263; ;Finance Act, 1965 and 1966
AppellantJeewanlal (1929) Ltd.
RespondentCommissioner of Income-tax (Central) and ors.
Advocates:Debi Pal, ;P.K. Pal and ;Manisa Sen, Advs.
Cases ReferredOfficer v. Volkart Brothers
Excerpt:
- .....direction of the appellate assistant commissioner on the 13th november, 1972, the income-tax officer passed an orderpurporting to be one under section 251 of the act in which he gave effectto the appellate assistant commissioner's order in the manner following :' * * * * * ** * rs. 17,43,703less : rebate on 2% of export sale, i.e., 2% of rs. 26,16,093 @ 46.63% (i.e., 46-63% on rs. 52,322)24,398 17,19,305(average rate of tax for rebate on export profit = 17,43,703 x 10037,83,090= 46.09%) less : rebate on export profit @ 1/ 10th of 16.00% on rs. 25,25,489 (as per para (20) of a. a.c.'s order)1,16,173 16,03,132 '3. thereafter, the impugned notice was issued by the commissioner of income-tax on the 4th of november, 1974. in the said notice after setting out the facts, the commissioner.....
Judgment:

Sabyasachi Mukharji, J.

1. In this application under article 226 of the Constitution the petitioner has challenged the notice dated 4th November, 1974, issued under Section 263 of the Income-tax Act, 1961. The petitioner is a public limited company engaged in the business of manufacture and sale of aluminium utensils and articles. The petitioner has its factory at Bombay, Calcutta and Madras. The petitioner states that the petitioner is a company whose business consists of manufacture of aluminium articles as detailed in Part III of the First Schedule to the Finance Act, 1965. Accordingly, the petitioner claims that the petitioner is entitled to necessary rebate as contemplated by Paragraph F(1)(b)(ii)(a) of Part I of the First Schedule to the Finance Act, 1965. One of the main businesses of the petitioner consisted of export of aluminium utensils and articles and goods outside India. There was an order of assessment and being aggrieved by the aforesaid order of assessment for the assessment year 1965-66, the petitioner preferred an appeal before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner in his order held, inter alia, as follows :

'20. The next grievance is that the Income-tax Officer did not allow any rebate on export sales amounting to Rs. 26,10,093 and that he further failed to grant rebate on export profits amounting to Rs. 25,25,489. The Income-tax Officer has not mentioned anything on this point in the assessment order. The Income-tax Officer will check up this point and allow such relief and rebate as may be admissible in law to the applicant on export sales and export profits.

21. The next grievance is against the Income-tax Officer not allowing the rebate on surcharge as provided for in the Finance Act, 1965, Paragraph F(1)(b)(ii) read with Part III of the First Schedule. The Income-tax Officer will check up this point and allow such rebate as may be admissible in law to the applicant.'

2. By virtue of the aforesaid direction of the Appellate Assistant Commissioner on the 13th November, 1972, the Income-tax Officer passed an orderpurporting to be one under Section 251 of the Act in which he gave effectto the Appellate Assistant Commissioner's order in the manner following :

' * * * * * ** * Rs. 17,43,703Less : Rebate on 2% of export sale, i.e., 2% of Rs. 26,16,093 @ 46.63% (i.e., 46-63% on Rs. 52,322)

24,398

17,19,305(Average rate of tax for rebate on export profit = 17,43,703 x 100

37,83,090= 46.09%) Less : Rebate on export profit @ 1/ 10th of 16.00% on Rs. 25,25,489 (as per para (20) of A. A.C.'s order)1,16,173

16,03,132 '

3. Thereafter, the impugned notice was issued by the Commissioner of Income-tax on the 4th of November, 1974. In the said notice after setting out the facts, the Commissioner observed, inter alia, as follows :

'The Income-tax Officer while giving effect to the orders of the Appellate Assistant Commissioner allowed rebate on export profit amounting to Rs. 1,16,173 and Rs. 65,291 for the assessment years 1965-66 and 1966-67 respectively. In doing so, it appears that the Income-tax Officer had overlooked the clear provisions of the Finance Act, 1965, and 1966 to the effect that such rebate would be admissible only if the total income included any profits and gains derived from the export of any goods or merchandise outside India. Obviously, it appears to me that the Income-tax Officer incorrectly applied the provisions of the two Finance Acts.

It is also seen that the Income-tax Officer applied a lower rate of tax holding that the assessee manufactured articles specified in Part III of the First Schedule to the Finance Act, 1965, i.e., aluminium, whereas the assessee was producing aluminium utensils from aluminium. This also appears to be an incorrect application of the facts.'

4. The Commissioner thereupon observed that as the order under Section 251 by the Income-tax Officer was erroneous inasmuch as it was prejudicial to the interest of the revenue he proposed to set aside those orders and direct the Income-tax Officer to pass orders in accordance with the provisions oflaw. This notice, as mentioned before, is the subject-matter of challenge in this application under article 226 of the Constitution.

5. It was contended on behalf of the petitioner that inasmuch as the Income-tax Officer had passed the orders to give effect to the order of the Appellate Assistant Commissioner it was part of the order of the Appellate Assistant Commissioner in the process of implementation of that order and being part of the order of the Appellate Assistant Commissioner, could not be the subject-matter of revision by the Commissioner by virtue of his power under Section 263 of the Act. It has to be borne in mind that there is no question of any merger of this order of the Income-tax Officer with the order of the Appellate Assistant Commissioner. There cannot be any merger of the order of the appellate authority with an order of the subordinate authority. The question, therefore, is whether when the Income-tax Officer has passed an order to implement and to give effect to the order of the Appellate Assistant Commissioner it formed part of the appellate order passed by the Appellate Assistant Commissioner. This question, in my opinion, has to be judged in the light of the nature of the order passed by the appellate authority and the order passed by the subordinate authority to implement the direction of the appellate authority. In the instant case, the Appellate Assistant Commissioner had directed the Income-tax Officer to check up on the question of rebate on export sales and to allow such relief and rebate as might be admissible in law. Similarly, on the question of rebate on surcharge the Appellate Assistant Commissioner had directed the Income-tax Officer to check up this point and allow such rebate as might be admissible in law. Therefore, what the Appellate Assistant Commissioner had done was to direct the Income-tax Officer to consider the claim of the petitioner and to grant him such rebate and allowance which the petitioner was entitled to under the law. To what extent, if at all, the petitioner was entitled to such relief and rebate the Appellate Assistant Commissioner had not directed. While passing the order in consequence of the Appellate Assistant Commissioner's direction, the Income-tax Officer if he acts erroneously or contrary to the provisions of law, in my opinion, it cannot be said that the same formed part of the order of the Appellate Assistant Commissioner. This is an independent order in the manner it has been passed and as such, in my opinion, was amenable to the revisional jurisdiction of the Commissioner. Counsel for the petitioner drew my attention to the observations of the Supreme Court in the case of P. N. Krishna Iyer v. Commissioner of Income-tax : [1969]73ITR539(SC) and relied on the observations by the court at page 543 of the report. But the said observations are not quite relevant for determining the question whether the impugned order passed by the Income-tax Officer in theinstant case was really a part of the order of the Appellate Assistant Commissioner. There cannot be any dispute that if it was part of the order of the Appellate Assistant Commissioner then the same could not be touched by the Commissioner. But, on the other hand, if it was not a part of the order of the Appellate Assistant Commissioner but an independent order having an independent existence in the eye of law, then the same could be subject to the reviskmal jurisdiction of the Commissioner subject, however, to the limitation provided in the section.

6. Furthermore, there is another aspect of the matter. This order passed by the Income-tax Officer could itself be the subject-matter of appeal again. Reliance for this proposition may be placed on the observations of the Bench decision of this court in the case of Kooka Sidhwa & Co. v. Commissioner of Income-tax : [1964]54ITR54(Cal) . Reliance may also be placed on the decision in the case of Gopi Lal v. Commissioner of Income-tax . In the aforesaid view of the matter, in my opinion, it cannot be contended that the order in the instant case was part of the order of the Appellate Assistant Commissioner. This was an independent order passed by the Income-tax Officer though passed to implement the directions given by the Appellate Assistant Commissioner. If that be the position, then the said order is subject to the revisional power of the Commissioner. In the aforesaid view of the matter, I am unable to accept the contention urged in support of this application.

7. Counsel for the respondent drew my attention to the observations of the Supreme Court in the case of Commissioner of Income-lax v. Electro House : [1971]82ITR824(SC) and in the case of T.S. Balaraman, Income-tax Officer v. Volkart Brothers : [1971]82ITR50(SC) . In the view I have taken, it is not necessary for me to consider those decisions in detail. In the aforesaid view of the matter, this application must fail and is accordingly dismissed. Rule nisi is discharged. Interim order, if any, is vacated.

8. There will be no order as to costs.

9. There will be a stay of operation of this order for six weeks.


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