DERBYSHIRE, C. J. - In this matter Mussammat Hashen Banu Bibi obtained a Rule against the Commissioner of Income-tax Bengal, which is very lengthy in its terms. Its purpose was that he should state a case with regard to certain legal points which are said to arise out of an husband the late Khan Bahadur Hafez Mohammad Hossain, for the year of assessment 1937-38. The return of income made by the deceased showed a net loss of Rs. 45,032.
The deceased carried on a general merchants business and apparently also held quantities of stocks and shares which he sold and with the proceeds brought other stocks and shares. Apparently he used the stocks and shares like other commodities in his business.
On July 21, 1938, the Income-tax Officer of Dacca made an assessment upon the deceased in respect of the business. The deceased made a return which showed a loss of Rs. 99,071. We are told that this result was arrived at by bringing forward the valuation of the closing stocks for 1342 B. S. as the figure for the opening stock in 1343 B. S. and taking the assessees valuation as the figure for the closing stocks on the last day of 1343 B. S.
The Income-tax Officer, however, held that there was a net profit of Rs. 2,26,670. We are told that this result was arrived at by valuing the opening stocks at the market price prevailing on the last day of the year 1342 B. S. and the closing stocks at the market price prevailing on the last day of the year 1343 B. S.
There was an appeal filed against that assessment order on August 15, 1938 which was heard on September 3, 1938 by an Assistant Commissioner. The assessee was represented by Mr. B. C. Bhattacharjee a pleader. There was a further hearing of the appeal on January 13, 1939. On March 14, 1939, the assessee - the Khan Bahadur - died, and on March 24, 1939 there was an appellate order passed by the Assistant Commissioner upholding the decision of the Income-tax Officer.
On May 29, 1939, there was an application to the Commissioner of Income-tax to state a case under Section 66 (2) of the Act. That application was made by Mr. B. C. Bhattacharjee, pleader, and it was made on behalf of the present applicant Mussammat Hashen Banu Bibi on behalf of herself and her minor children.
The applicant had given a Vakalatnama in favour of the said pleader in these terms :
'In the matter an application under Section 66 (2) on behalf of Khan Bahadur Hafez Mohammad Hossain, a firm of Zinzira in the District of Dacca.
I, hereby, nominate and appoint the under noted gentlemen as my lawful pleaders and empower them, hereby, to sing and file papers, petitions, certificates, returns, accounts, appeals, etc., to receive copies of same and of orders, notes & c. & c. to plead and argue on my behalf, to deposit monies, to claim and withdraw refunds, to receive and accept services of the notices and refund orders on my behalf and generally to represent me for all purposes under sections of the Indian Income-tax Act, XI of 1922. Dated, Calcutta the 25th day of May, 1939'.
We have seen the original. It was signed by Mussammat Hashen Banu Bibi, partner for the firm of Khan Bahadur Hafez Mohammad Hossain.
On September 14, 1939, Mr. Bhattacharjee, the pleader appeared before the Commissioner to argue in support of this application under Section 66 (2). On September 22, 1939 there was an order by the Commissioner rejecting the application under Section 66 (2). We are told that there was a further order by the Commissioner in revision under Section 33, the Commissioner acting suo motu. The pleader, Mr. Bhattacharjee, argued to a reduced figure after discussion showing a total income of Rs. 1,95,364. On October 11, 1939 an order rejecting the application under Section 66 (2) was forwarded to the pleader, Mr. Bhattacharjee and received by him on October 13, 1939. On November 1, 1939, there was a letter from the pleader, Mr. Bhattacharjee to the Commissioner applying to withdraw the petition under Section 66 (2) and asking for a refund of the deposit of Rs. 100. On November 22, 1939, there was a refund voucher issued by the Commissioner in the name of the Khan Bahadur and forwarded to the pleader. On January 10, 1940, there was letter from the present petitioner Mussammat Hashen Banu Bibi to the Commissioner returning the refund voucher and stating that she had not been informed of the decision regarding the reference and repudiating the authority of the pleader to compromise or withdraw the application. On March 14, 1940 there was a letter from the present application by the pleader to the Commissioner under Section 35 to rectify an error in the order in revision of September 22, 1939. On March 15, 1940 there was a letter written by the Commissioner to the present applicant Mussammat Hashen Babu Bibi in which the Commissioner stated that he had ascertained from the pleader that he the pleader had acted upon proper instructions. On April 13, 1940, there was an order by the Commissioner refusing to accede to the application of March 14, under Section 35 which was based upon a compromise as the income to be taken for the purpose of assessment was decide after a considerable discussion and agreed to by the pleader. On April 22, 1940 an application was made by the petitioner to this Court for a Rule Nisi calling upon the Commissioner to state a case under Section 66 (3) of the Indian Income-tax Act.
In the application to us it was represented that a question of law arose namely as to whether the market values of the stocks and shares beginning at the end of the year formed the basis of computation of the income or whether it should be on some other basis. We are not informed that previous application had been made to the Commissioner to state a case under Section 66 (2).
The Commissioner has shown cause by a letter in which he states that all the facts of the case had not been placed before the Court when the application was made. He sets out some of the facts that I have stated above. He also says :
'My predecessor heard the learned pleader in support of this application on the 14th September, 1939, and then by his order dated the 22nd September, 1939 rejected the same refusing to state the case on the ground that no question of law arose in the matter. As the same time my predecessor being of opinion that the assessee might have some real grievance as regards the quantum of assessment decided to interfere under Section 33 of the Act and after having discussed the figures with the assessees said pleader reduced the quantum of total assessable income from Rs. 2,84,929 to Rs. 1,95,364 and the assessee was given relief accordingly. As a matter of fact this figure was decided on after considerable discussion and was agreed to by the applicants representative, Mr. B. C. Bhattacharjee. These orders refusing to state a case on the ground that no question of law arose and giving relief under Section 33 were both communicated to the applicant through her pleader the said Mr. B. C. Bhattacharjee on the 13th October, 1939. The applicant was entitled to have only a notice of the order passed by the Commissioner. But as a matter of fact a copy of the order refusing to state the case was issued to the applicant addressed in the care of Mr. B. C. Bhattacharjee, pleader, on the 11th October 1939 and the same was received by him on the 13th October 1939.'
After setting out a still further matter the Commissioner goes on :
'On the 12th January, 1940 I received a petition from this gentlemans widow (the present petitioner) dated the 10th January 1940.... In this petition the assessees widow stated that she never authorised Mr. Bhattacharjee to compromise the reference or to apply for a refund of the fee of Rs. 100. On receipt of this petition Mr Bhattacharjee was asked whether he acted on the instructions of his client and the stated that he had so acted. I thereupon told the applicant in my letter No. 25367 C. T. dated the 15th March 1940 (a copy of which is appended) that I had ascertained from Mr. Bhattacharjee that he had acted under proper instructions and that if she wished the Rs. 100 fee refunded, it would be done; otherwise she could take such action as she might think fit'.
To my mind it is quite clear that on November 1, a duly authorised pleader applied to withdraw the petition for a case under Section 66 (2) and that he applied to withdraw that petition because of a compromise that had been arrived at and a reduction of the assessment from Rs. 2,84,929 to Rs. 1,93,364. After a reduction of that kind it is not unnatural for a petition in a case under Section 66 (2) to be withdrawn. The application made by the pleader was what one would have expected under the circumstances.
The applicant, however, repudiates that. She says that she knew nothing about it. I have the greatest difficulty in accepting her story and I do not accept it. A large amount of money was involved and a pleader had been appointed to make this application before the Commissioner. He had succeeded in getting a reduction of the assessment by one - third - a sum of about Rs. 90,000. It is inconceivable to me that that was not communicated somewhere about the time namely, September 22, 1939 to the applicant. She says that she never authorised him to withdraw the application. In the Vakalatnama amongst other things she authorised him generally to represent her 'for all purposes under all sections of the Indian Income-tax Act, XI of 1922'.
The application was under Section 66 (2). One of the provisos of Section 66 (2) is that -
'if, in exercise of his power of revision under Section 33, the Commissioner decides the question.... or if, in exercise of his powers under sub-section (3), the Commissioner refuses to state the case, the assessee may within thirty days from the date on which he receives notice of the order passed by the Commissioner withdraw his application, and if he does so, the fee paid shall be refunded.'
The assessee was entitled to withdraw the application. The assessee had in the Vakalatnama appointed a pleader in particular to represent her in the application under Section 66 (2) and generally to represent her 'for all purposes under all sections of the Indian Income-tax Act'. In my opinion the pleader was, under the Vakalatnama, authorised to withdraw the application and he did so acting within his powers and for a very good reason - the assessment had been reduced by one - third, to wit, about Rs. 90,000.
The applicant in my opinion knew about the reduction of the assessment and the withdrawal of the petition for a case to be stated under Section 66 (2) at the time her pleader agreed to withdraw the petition. She agreed to withdraw her petition because she had got a solid benefit, a reduction of Rs. 90,000 in the assessment. She is bound by that compromise and is not now entitled to have a case stated.
Under these circumstances I am of the opinion that this Rule must be discharged with costs - the hearing fee being assessed at three gold mohurs.
MUKHERJEE, J. - I agree.