COMMISSIONER OF INCOME TAX Vs. JOHN PETER

JUDGEMENT

(1.) THE assessee was a salaried employee of a company and the accounting year ended on July 31 for each year. THE asses-see's only income was the salary. He was assessed to tax on the salary by treating his previous year as the same as the previous year of his employer. He was so taxed for the assessment years 1976-77, 1977-78 and 1978-79. THE Assessing Officer subsequently reopened the assessment on the ground that as the assessee had only salary income his previous year could only be the financial year under Section 3(1)(a) of the Income-tax Act, 1961, as Section 3(1)(b) of the Act as it then stood had no application to the assessee. It may be mentioned that for the assessment year 1976-77, originally, the assessee had not been subjected to tax as he was not in employment for the period up to November 30, 1975.

(2.) THE appeal by the assessee before the Appellate Assistant Commissioner was unsuccessful. THE Tribunal on further appeal held that the Income-tax Officer was in error in denying the benefit of Section 3(1)(b) of the Act to the assessee. Before the Tribunal elaborate arguments had been advanced and the Bench which finally heard the appeal was unable to reach an unanimous verdict. THE Accountant Member held that the assessee is disentitled to the benefit of Section 3(1)(b) of the Act, while the Judicial Member held otherwise. THE third Member agreed with the Judicial Member.

(3.) IN the case of a salaried employee, the figures which the assessee is required to have record of are merely the actual amount of salary paid to him by the employer. It is for him to choose the period for which he will maintain that record and that by choice of period he can also indicate his option with regard to the previous year for the purpose of Section 3(1)(b). Ordinarily, there should be some tangible reason for choosing a period other than the financial year as the previous year. IN this case, the previous year of the employer ended on July 31, and the employee had considered it convenient to adopt that date as the closing period of the previous year. As the payments made, deductions effected, certificates required to be given with regard to deductions could have been made, effected or given by the employer on the basis of the employer's previous year it was a matter of convenience for the employee to adopt the same previous year.