GANGADHAR BAIJNATH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THESE reference applications under Section 66(2) of the Indian Income -tax Act, 1922, raise identical questions of law and are as such being disposed of by a common order.

(2.) THE reference applications relate to six assessment years 1942 -43 to 1947 -48. The assessee failed to file a return of income required under Section 34(1 A)/22(2) of the Act and to produce books of account and documents required under Section 22(4) of the Act. As a consequence, the Income -tax Officer made a best judgment assessment by estimate. Being aggrieved by the ex parte orders, the assessee filed applications under Section 27 of the Indian Income -tax Act, 1922, for all the six years in question. An affidavit of one Sri Krishujanuj Sahai Edoliya was filed on behalf of the assessee. It was averred that the assessee was prevented by sufficient cause from making the return under Section 34(lA)/22(2) of the Act and also that the assessee did not comply with the terms of the notice under Section 22(4) inasmuchas the assessee in its letter dated 16th August, 1960, and 29th August, 1960, asked the Income -tax Officer to stay proceedings in view of the fact that proceedings in some cases of the Bagla group had been stayed by the Allahabad High Court. It was also averred that the assessee did not comply with the notice under Section 22(4) of the Act inasmuch as the Income -tax Officer had told the assessee's employee, Mr. Edoliya, that the Income -tax Officer was going to Delhi to consult higher authorities and that the Income -tax Officer would let the assessee know the position after his return from Delhi. The Income -tax Officer held that the assessee was not prevented by sufficient cause either from making a return under Section 34(1 A)/22(2) of the Act or from complying with the directions contained in the notice under Section 22(2) of the Act. In this view of the matter, he rejected the application under Section 27 of the Act. The assessee thereafter went up in appeal before the Appellate Assistant Commissioner of Income -tax, which was dismissed on the ground that the Income -tax Officer was justified in making the best judgment assessment for the two defaults mentioned by the Income -tax Officer. The assessee thereafter filed appeals before the Tribunal.

(3.) IT was urged before the Tribunal that inasmuch as the earlier Bench of the Tribunal while remanding the case had set aside the orders of the Appellate Assistant Commissioner, it should be deemed that it had waived the default under Section 34(1A)/22(2) of the Act and, inasmuch as that order had become final, it was binding upon the Bench hearing the matter against the order of the Appellate Assistant Commissioner passed onremand. The Accountant Member held that the earlier order of the Tribunal was in reality in the nature of an interim order as the Tribunal did not go into the merits of the controversy relating to the first default under Section 34(1A) read with Section 22(2) of the Act, and no final order on merits as to whether there was any sufficient cause for not filing the return was passed in the appeal. The Judicial Member, however, held that the earlier order of the Tribunal was a final order and was binding on the parties as also on the subsequent Bench of the Tribunal. He, however, agreed with the Accountant Member that the previous Bench of the Tribunal had not waived the default committed by the assessee in not filing the return as required under Section 34(1A)/22(2) of the Act. He held further, disagreeing with the Accountant Member, that there was no default on the part of the assessee in complying with the notice under Section 22(4) of the Act inasmuch as it could not be held with certainty that the Income -tax Officer was at Kanpur on August 31, 1960. However, in view of the decision of the hon'ble Supreme Court in the case of Commissioner of Income -tax v. Segu Buchiah Setty, he held that inasmuch as the assessee had not been able to explain each of the two defaults committed under Section 22(4) of the Act, the assessments in question were justified. The Accountant Member held that the assessee had committed default on both counts, viz., under Section 34(1A) read with Section 22(2) of the Act and also under Section 22(4) of the Act. Inasmuch as the Bench had differed on the question as to whether the assessee had committed default under Section 22(4) of the Act, the question arises as to whether the matter should be referred to the President of the Tribunal. The Bench, however, declined to refer the case inasmuch as it thought that it was not necessary to do so on account of the decision of the hon'ble Supreme Court in Commissioner of Income -tax v. Segu Buchiah Setty. The questions raised in the present application related to the orders rejecting appeals under Section 27 of the Act. Both the Members of the Tribunal have found that the assessee had made a default in not filing return as required under Section 34(1A)/22(2) of the Act, and no sufficient cause had been shown by the assessee to explain this default. This being so, even if the assessee had not committed any default under Section 22(4) of the Act, the ex parte assessment cannot be touched in view of the decision of the Supreme Court in the case of Commissioner of Income -tax v. Segu Buchiah Setty : [1970]77ITR539(SC) .