CHETANDAS GULABCHAND Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN this case a notice was served under section 22(2) of the INcome-tax Act upon the assessee on the 24th April, 1946, for filing the return of its income for the accounting year ending on the 9th April, 1946, corresponding to the assessment year 1946-47. The assessee prayed for time for complying with the notice and, accordingly, time was granted by the INcome-tax Officer till the 30th June, 1946. The assessee prayed for time again and it was granted time till the 31st July, 1946, for complying with the notice. It appears that the assessee was again granted time till the 10th September, 1946, but no return was filed within the time granted and, therefore, the INcome-tax Officer made the assessment on the 28th September, 1946, under section 23(4) of the INcome-tax Act on a total income of Rs. 1,20,000. The assessee took the matter in appeal to the Appellate Assistant Commissioner, who considered that the estimate of the INcome-tax Officer was excessive and held that the income of the assessee should be estimated property at Rs. 50,000. The assessee presented an appeal to the INcome-tax Appellate Tribunal which further reduced the estimated income to the sum of Rs. 42,000. It appears that after the order of assessment made by the INcome-tax Officer on 28th September, 1946, there was a proceeding for excess profits assessment in which the assessee filed a return and after scrutiny of the accounts the INcome-tax Officer estimated the income for the accounting year at Rs. 1,37,947. There was an appeal before the Appellate Assistant Commissioner who reduced the income from Rs. 1,37,947 to Rs. 1,07,946. On further appeal to the Tribunal the income was further reduced to Rs. 35,614 for the purpose of excess profits assessment. The order of the Tribunal is dated 21st January, 1955. The appeal which was filed by the assessee against the income-tax assessment under section 23(4) was heard by the Appellate Assistant Commissioner and by the INcome-tax Appellate Tribunal after the 21st January, 1955, which was the date of the appellate order of the INcome-tax Appellate Tribunal in the excess profits assessment proceeding. The contention of the assessee in the appeal under section 23(4) of the INcome-tax Act was that the amount fixed in the excess profits assessment proceeding should be taken into consideration in the appeal preferred against the income-tax assessment under section 23(4) of the INcome-tax Act. The Appellate Assistant Commissioner took the appellate order of the INcome-tax Tribunal dated the 21st January, 1955, into consideration in making the estimate of income, but the Appellate Tribunal held that the proceedings in the excess profits assessment "cannot legitimately be taken into consideration."

(2.) UNDER section 66(2) of the Income-tax Act the Income-tax Appellate Tribunal has stated the case and referred it to the High Court on the following question of law :