MULLA IRSHAD ALI Vs. COMMISSIONER INCOME TAX

JUDGEMENT

(1.) THIS is a reference under Section 66 (2) of the Indian Income-tax Act, 1922. By an order dated the 26th July 1957 of a Division Bench of this Court directed the Appellate Tribunal to state the following questions for the opinion of this Cour t:-

(2.) WAS a second appeal competent before the Tribunal -

(3.) BEFORE proceeding to answer the questions stated for our opinion, it is necessary to state that the Taxation Laws (Extension to Merged States and Amendment) Act, 1949, extended to the Bhopal State, which was administered by virtue of the States Merger (Chief Commissioners' Provinces) Order; 1949, the Indian Income-tax Act, 1922, and the Indian Finance Act, 1949, and these Acts operated in that State as if extended to, and brought into force in, Bhopal on 1st April 1949. Section 7 of the Taxation Laws (Extension to Merged States and Amendment) Act, 1949, provided that if immediately before 26th August 1949 there was in force in any of the merged States any law relating to Income -tax, that law would cease to have effect except for the purpose of the levy, assessment and collection of income -tax and super-tax in respect of any period not included in the previous year for the purposes of assessment under the Indian Income-tax Act for the year 1949 -50 or any subsequent year. It further laid down that any reference in any such law to an officer, authority, tribunal or Court should be construed as a reference to the corresponding officer, authority, tribunal or Court appointed under the Indian Income -tax Act. When the definition of "taxable territories" was amended by the Finance Act, 1950, the merged territories to which the Taxation Laws (Extension to Merged States and Amendment) Act, 1949, was applicable came to be included in the taxable territories as respects any period after 31st March 1949 for any of the purposes of the Indian Income -tax Act. Thus the Indian Income -tax Act became applicable to Bhopal State as from the assessment year 1949-50, or the accounting year 1948-49. The assessment year in question here is 1946-47. The Indian Income -tax Act not being in force in Bhopal State during the period of this assessment year the re -assessment of income for that year could only be under the Bhopal State law the operation of which was preserved for the purpose of levy, assessment and collection of tax in respect of income of previous years relevant to the assessment years prior to 1949 -50, There could be no re -assessment of income for the assessment year 1946 -47 under the Indian Income -tax Act. There is no dispute about this legal position It is also not disputed that under Section 37 of the Bhopal Income -tax Act an appeal lay to the Assistant Commissioner from orders specified in Section 36 made by an Income -tax Officer or the Assistant Income -tax Officer and that an appeal lay under Section 37 -A to the Commissioner from certain orders of the Assistant Commissioner. The Bhopal Act did not constitute any Tribunal corresponding to the Tribunal under the Indian Income -tax Act, and gave no right of reference as under Section 66 of the Indian Income -tax Act. The order of assessment made against the petitioner by the Income -tax Officer and upheld in appeal by the Assistant Commissioner was not one against which a second appeal could have been filed to the Commissioner under Section 37 -A of the Bhopal Act.