RAM CHANDRA BANSHIDHAR Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE points raised in this reference under Section 66(2) of the Indian Income -tax Act 1922 are as follows

(2.) THE facts as found by the Tribunal are that the firm of Ramchandra Banshidhar was being assessed to income -tax as a Hindu undivided family for several years prior to 1943, and that in that year Ramnarain Goenka and Narasingha Das entered into a partnership by an instrument of partnership executed on the 24th May, 1943. During the previous income -tax assessment years 1939 -40 and 1942 -43 the Assessee was declaring his status as a firm, and claimed registration as such, under Section 26(a) of the Indian Income -Tax Act. The Assessee had already got himself registered as a firm on the 16th October, 1939, under the Indian Partnership Act, consisting of two partners, namely, Ramnarain son of Ramchandra Goenka, and Narasingha Das Bhowsinka son of Banshidhar Bhowsinka. On the strength of this he claimed to be registered as a firm, for purposes of assessment, under Section 26(a) of the Income -tax Act, but this claim was repeatedly rejected by the income -tax authorities as there was no instrument of partnership specifying the individual shares of the partners, as required under that Sub -section. Subsequently, the Assessee was served with a notice, under Section 15 of the Excess Profits Tax Act 1940, for the chargeable accounting period, commencing from 17 -3 -42 and ending with 4 -3 -43. The Assessee filed a return declaring a profit of Rs. 65,536/ -, but claimed a set -off of the deficiency of the earlier periods. The Excess Profits Tax Officer disallowed the set -off holding that there had been a change in the persons carrying on the business and that therefore the Assessee was not entitled to any relief under Section 7 of the Act. An appeal against this order to the Appellate Assistant Commissioner having proved unsuccessful, the matter was taken up to the Income -Tax Appellate Tribunal, Madras Bench -B in E.P.T.A. No. 247 of 1948 -49. The Tribunal, in disposing of this appeal, held that the status of the Assessee who had been described as a Hindu Undivided Family in the Income - Tax Officer's orders of the previous years could not be challenged in the proceedings under the Excess Profits Tax Act. They accordingly agreed with the finding of the Excess Profits Tax Officer, and held that there was a change of persons carrying on the business when the new partnership was constituted on 24 -5 -43 between the Hindu undivided family and Narasingha Das who was a stranger. The appeal was, therefor, dismissed.

(3.) IT will be noticed that Section 21 of the Excess Profits Tax Act extends certain provisions of the Income -Tax Act to proceedings under the former Act the provisions of the several Sections of the Indian Income Tax Act apply, with modifications, as if they were incorporated in the Excess Profits Tax Act. But Section 26(a) of the Indian Income -Tax Act is not one of those Sections which is made applicable to proceedings under the Excess Profits Tax Act. The intention of the Legislature was that irrespective of the status of an Assessee for purposes of income -tax it was open to him to claim relief under Section 7 of the Excess Profits Tax Act. The refusal of the Income -Tax authorities to register the Assessee as a firm is, therefore no bar to a reconsideration of the claim made on his behalf, in the proceedings under the Excess Profits Tax Act i and as such the principle of res judicata, as such cannot apply to orders made by taxing officers in assessment proceedings, as the Income -Tax Officer is not a Court, and his previous orders treating the Assessee as a Hindu family are final only in so far as the assessments for those years are concerned.