RAJMANI DEVI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference under 66(3) of the Indian Income-tax Act, XI of 1922. The proceedings in connection with which the reference arose were proceedings under Sec. 27 of the Act and the assessment year was the year 1932-33 ending with Chait 1989. The assessee was one Lala Ramji Das who was a banker and carried on money-lending business on an extensive scale. He maintained his accounts by the year ending on the 15th Chait which corresponds roughly with the financial year. The previous year or the accounting year would in the present case end with the 15th of Chait 1388. When the assessment began Ramji Das was alive, but he died on April 9, 1933, and the application under Sec. 27 which was submitted by Ramji Das was continued by his widow Mst. Rajmani Devi. The Income tax Officer dismissed the application under Sec. 27 on April 13, 1934, and an appeal against the said decided was dismissed by the Assistant Commissioner on July 24, 1934. On August 27, 1934, the assessee filed a combined application for review and reference to the High Court. On October 8, 1934, the learned Commissioner refused to state a case and on the application for review he remitted certain issues to the Income tax Officer. We are not concerned in the present proceeding with the result of the application for review. The assessee, then filed an application in the High Court praying that we should require the Commissioner to state a case under Sec. 66(3) of the Act. By our order dated February 27, 1936, we required the Commissioner to state a case and formulated three questions of law. We mentioned then that the only matter which he had to decide at that state was was whether a question of law arose out of the decision of the Assistant Commissioner, and we were of the opinion that the three questions formulated by us did arise and we did not agree with the opinion of the Commissioner that no question of law arose although counsel for the department also pressed that point before us even at that stage.

(2.) THE learned Commissioner has now stated a case and has referred the three question of law which we had ourselves formulated, but once more he has lodged a mild protest questioning our jurisdiction in requiring him to state a case under Sec. 66(3), for he is still of the opinion that a question of law did not arise. He thinks that a question of law is foreign to an appeal pending before the Assistant Commissioner against an adverse order passed by an Income tax Officer under Sec. 27. He says :

(3.) FROM the words which we have underlines it is clear that the learned Judge was of the opinion that a question of law can arise from a refusal by the Income-tax Officer to cancel an assessment under Sec. 27 of the Act. This case, therefore, does not in any way support the opinion of the Commissioner. The Patna case also has no bearing on the present matter, for al that was decided in that case was that where an application under Section 27 of the Income -tax Act to reopen an assessment under Sec. 23(4) for failure to produce account books called for under Sec. 22(4) was dismissed by the Income tax Officer and an appeal therefrom was rejected by the Assistant Commissioner, such questions alone within the terms of Sec. 27 of the Act, which could have been taken on the appeal before the Assistance Commissioner, could be raised on a reference to the High Court under Sec. 66 and not questions regarding the assessment under Sec. 23(4) which is not appealable under Sec. 30(1) proviso. It would thus appear that all that was decided in this case was that as the assessment under Sec. 23(4) was not appealable no question regarding such assessment could be raised in proceedings under Sec. 27 and it was not decided as a general proposition that no question of law could arise in proceedings under Section 27. On the contrary the case decides that certain questions may form the subject of a reference under Section 66. The same may be said about the Rangoon case of Abdul Bari Chowdhary. Here also the question that was directly decided was that no question of law arises out of the Assistant Commissioners order in an appeal against a best judgment assessment because of the proviso to Section 30(1) and in the body of the judgment Page, C.J., observed :