JETHAMAL SADA SUKH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) This is a reference under Section 66(1), Income-tax Act in which the Income-tax Appellate Tribunal has referred the following three questions for our decision : "1. Whether, in the circumstances of the case, the mere fact that the Income-tax Officer treated the income of 13 months and 5 days as the income of the previous year of 12 montlis ending Kartik Samvat 2000 made the entire assessment proceedings 'ultra vires' although the Tribunal in appeal excluded the income of one month five days from the assessment?

(2.) Whether, in the circumstances of the case, the date of succession for purposes of Section 25 (4), Income-tax Act is the date of actual succession viz. 1-11-41 as fixed in the order passed under Section 25A(1) or the date on which the order is actually passed during the assessment year 1944-45?

(3.) Whether, in the circumstances of the case, the relief under Section 25 (4) was open to the applicant in the assessment year 1944-45? 2. In this reference the relevant assessment year is 1944-45. The relevant accounting period for the assessment year 1944-45 began from 8-11-1942 to some date in November 1943. The assessee, however, did not close his accounts at the end of one year taut made computation of the account from 8-11-1942 to 13-12-1943, i.e. for a period of thirteen months and five days. The assessee claimed that though he had closed his accounts at the end of 13 months and 5 days, assessment for the year 1944-45 should be made on the basis of income made during one year, the previous accounting period, and claimed that the account made up by him for 13 months and 5 days should be proportionately reduced. This was not accepted by the Income-tax Officer and the appellate Assistant Commissioner, who were of the opinion that the assessee having made up his account for a period between 8-11-1942 and 13-12-1943, the income made during the whole of that period should be taken into account in making the assessment. The Appellate Tribunal, however, made the necessary correction and held that assessment can be made only on the income made during the previous accounting period which must be a period of twelve months. The Tribunal rightly relied on Section 2(11), Income-tax Act which defines previous year as the twelve months ending on 31st day of March next preceding the year for which the assessment is to be made, or, if the accounts of the assessee have been made up to a date within the said 12 months in respect of a year ending on any date other than the said 31st day of March then at the option of the assessee the year ending on the day to which his accounts have so been made up. On behalf of the assessee, however, it was claimed that the entire assessment proceedings were vitiated by reason of the fact that the Income-tax Officer had treated the income of 13 months and 5 days as the income of the previous year. Learned counsel has not been able to suggest any reason why the whole assessment proceedings were vitiated by reason of the fact that the Income-tax Officer had treated the account for 13 months and 5 days as the profits of the previous year and why it was not open to the Tribunal to correct the mistake and accept the assessee's own contention that the income for 12 months out of the 13 months and 5 days should be treated as income for the previous year. 3. Our answer, therefore, to the first question is in the negative.