EDARA VENKAIAH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS writ petition seeks to have the orders of the Commissioner of Income-tax, Hyderabad, passed in revision under section 33a of the Income-tax Act, quashed and prays for suitable directions that the amounts of Rs. 8, 449 for 1947-48 and Rs. 15, 667 for 1948-49 be refunded or otherwise adjusted The petitioner is the proprietor of Messrs. Rama and Co. , a firm of printers and publishers having its head office at Eluru and branch offices at Guntur, Rajahmundry and Bhimavaram. He was assessed for the year 1947-48 on the 20th March, 1951, on a taxable income of Rs. 29, 061 and for 1948-49 on the 23rd November, 1951, on a taxable income of Rs. 34, 425. Against both these assessments he filed appeals before the Appellate Assistant Commissioner, Bezwada, and they were disposed of on June 26, 1953, and June 28, 1953, respectively. In the appeal pertaining to 1947-48 the total income was reduced by Rs. 8, 887 and with respect to 1948-49 the total income was reduced by Rs. 18, 368 and the tax was recomputed in both the cases and the excess amount was directed to be refunded. In so far as the assessments for 1949-50 and 1950-51 were concerned they ultimately resulted in an appeal to the Income-tax Appellate Tribunal, Madras Bench 'a', which was allowed on April 14, 1954. In these appeals the assessee complained that the Income-tax Officer whose assessment orders were upheld by the Appellate Assistant Commissioner had not only taken the turnover of the head office, but also added the turnover of the branches to which the head office had supplied books and thus swelled up the total turnover treating the issue to the branches as if they were sales to the branches. The Appellate Tribunal thought that a proper approach in these assessments was to consider the turnover of both the head office and the branches as one unit and, ignoring the inter-branch transactions, to estimate the profits on the outside sales at suitable differential rates for own publications, and others. From this aspect it considered the assessments to be somewhat excessive and directed the deletion of the excess amounts over Rs. 8, 000 and Rs. 10, 000 for the assessment year 1949-50 and 1950-51 respectively. It may be stated that the petitioner had not filed any appeals against the Appellate Assistant Commissioner's orders with respect to 1947-48 and 1948-49, which, by the time of the Appellate Tribunal's order on April 14, 1954 with respect to 1949-50 and 1950-51, had become time-barred. Taking advantage of the amendment to section 33a, he filed two revisions before the Commissioner of Income-tax, Hyderabad, with respect to each of the assessment years 1947-48 and 1948-49with respect to the assessment for the year 1947-48, the petitioner stated that he had admitted an income of Rs. 1, 887 from property, Rs. 13, 522 from business of printing and publication of books and sale of books etc. , and Rs. 258 from other sources ; but the Income-tax Officer while accepting the income returned under property, assessed the income from business of printing and publication of books and sale of books etc. at Rs. 30, 850 and Rs. 324 from other sources and in doing so he added two lump sums of Rs. 8, 887 and Rs. 8, 449 as difference in gross profit, estimating the same on sales at 40% in head office and at 15% in branches respectively. The Appellate Assistant Commissioner has, as already stated, reduced that amount by Rs. 8, 887. In paragraph 6 the petitioner contended that in the matter of working out the gross profits both at the head office and branches treating the inter-branch sales as turnover the Income-tax Officer added the difference even though it was represented that effective sales, in respect of own publications and other books etc. , both at the head office and branches, may be taken as one unit and the gross profit rates compared. The petitioner also referred to the order of the Appellate Tribunal relating to the assessment years 1949-50 and 1950-51 and prayed that the additions relating to the branch offices be deleted. A similar plea was raised with respect to 1948-49 for which year a sum of Rs. 2, 128 was returned as income from printing and publication of books and sale of books etc. , but the Income-tax Officer rejected it and instead computed an income of Rs. 27, 163 on this count and Rs. 9, 324 from other sources. In computing an income of Rs. 27, 163 the Income-tax Officer added two lump sums of Rs. 14, 368 and Rs. 10, 667 as difference in gross profits estimating the same on sales at 40% in head office and at 15% in branches respectively while a sum of Rs. 9, 000 received by the daughter-in-law of the petitioner from her parents through a bank cheque was added to the income admitted under other sourcesthe Commissioner of Income-tax dismissed both these petitions by a common order dated the 30th January, 1955, which is as follows

(2.) LEARNED advocate contends that the Commissioner in exercise of his revisional powers has not considered the main contention raised by him in his revision petition, viz. , that the Income-tax Officer as well as the Appellate Assistant Commissioner had not treated the turnover of the head office and the branch offices as one unit, but as different units, nor did he take into consideration that in the other two assessments for the years 1949-50 and 1950-51 the Tribunal had reduced the turnover by treating them as one unit. The advocate for the Department on the other hand submits that the provisions of section 33a are only administrative and it is not necessary for the Commissioner to give full and sufficient reasons for rejecting the revision petitions. In the counter filed by the Income-tax Officer, S. I. B. , on behalf of the respondent, it was submitted that the petitions are liable to be dismissed for inordinate delay, the Commissioner's order under section 33a dated 30th January, 955, having been served on the applicant on 9th February, 1955, while the writ petition with the High Court's notice was received on July 24, 1956, after a lapse of one year and five months. I may at once state that the fact that the notice was served on the Department late is not relevant, but what does matter is the date on which the petition was filed. There can be no dispute that the writ petition was filed in the High Court on July 5, 1955, and consequently was within five months from the date of the service of notice. It has been held in the case of Eluru Venkata Subba Rao v. D. T. S. (Traffic), Vijayawada, by a Bench of this High Court, following the rules of the Supreme Court of England, that a period of six months for a writ of certiorari is reasonable within which a writ petition can be filed unless there are special circumstances for the delay. I do not, therefore, consider this contention tenablefurther it was contended that the Commissioner did not act arbitrarily or capriciously, but acted judicially and stated that he had considered the contentions of the petitioner, and found no merit in them. Even on the merits, it was submitted, that the petitioner had not availed himself of a remedy provided under the law, namely, an appeal to the Appellate Tribunal and consequently, he cannot invoke the jurisdiction on the ground that the Commissioner of Income-tax dismissed the revision petitions under section 33a holding that there were no valid grounds for interference in revision on merits. In any case the order of the Appellate Tribunal pertaining to the assessment years 1949-50 and 1950-51 was peculiar to the facts and circumstances of that case and the Appellate Tribunal only held that the net turnover in the entire business should be taken into account, and did not apply any particular rate of gross profit to such turnover and even following this procedure adopted by the Tribunal, the net turnover for 1947-48 assessment worked out to Rs. 1, 33, 125 and the gross profit works out to less than 33%, while for 1948-49 assessment the turnover was Rs. 1, 37, 204 and the gross profit worked out to less than 33. 2%. Even on this basis the gross profits worked out for 1947-48 and 1948-49 and the rates arrived at were not arbitrary or excessive and the Commissioner, taking into account all these matters, dismissed the revision petitions. It was further contended that section 33a creates no rights in the assessee to reopen assessments of previous years, that it is within the discretion of the Commissioner to interfere or not under that section and that it is not open to the petitioner by way of a writ to require the Commissioner to pass an order deleting the amounts from the order I may, however, state that the counter filed by the personal assistant to the Commissioner cannot remedy any defect in the Commissioner's order if there is in fact a defect on the face of the order which shows that he has not exercised the discretion vested in him judicially or has acted arbitrarily or capriciously

(3.) THE short question in this writ petition is whether the order of the Commissioner in revision would show that he has not exercised the jurisdiction vested in him properly and this will depend upon whether the Commissioner under section 33a is exercising judicial or quasi-judicial functions or only administrative functions. The order of the Commissioner shows on the face of it that the Commissioner has perused the grounds of revision and has refused to exercise the revisional jurisdiction vested in him and has dismissed the petition. Learned advocate for the petitioner contends that some reasons should have been shown for rejecting the main contention raised by the applicant in his petition, viz. , that the turnover of the head office and the branches should have been taken as one unit and not as separate units. In my view, there does not appear to be any force in this contention, because where an order is being confirmed, it is unnecessary to repeat the reasoning given by the inferior tribunal. The remedy is a discretionary one and the Commissioner may refuse to exercise it having regard to the circumstances of each case. Where, however, he is allowing the revision and setting aside the decision of the inferior Tribunal, he must give reasons for coming to a different conclusion. This point of view is supported by a decision of a Bench of this High Court in Duddu Venkateswara Rao v. The State of Madras (now Andhra) where Subba Rao, C. J. , as he then was, observed as follows