KHEMCHAND RAMDAS Vs. COMMISSIONER OF INCOME-TAX, BOMBAY

JUDGEMENT

(1.) This is an application under s. 66, cl. (3) Income Tax Act, XI of 1922, applying to this court for an order to direct the Commissioner to state the case and refer it to this court, The facts briefly are as follows. On 17 January, 1927, the applicants, Messrs. Khemchand Ramdas, who are the firm doing business at Bunder Abbas and Carmine, were assessed as a registered firm for income-tax for the year 1926-1927, and the assessment was duly levied. On 4 February, 1928, proceedings were taken by the Income-tax Collector, Sikarpur, under Section 34 for re-assessment on the income for the year 1926-1927. On 13 February, 1928, the Commissioner of Income-tax cancelled the registration of the firm and the proceedings under Section 34 were dropped. On 7 May, 1929, the applicants were served with a notice demanding a sum of Rs. 9,468-12-0 as super-tax for the year 1926-1927. An appeal was made to the Assistant Commissioner against the super-tax. On 12 April, 1930 the appeal was dismissed by the Assistant Commissioner under Section 31. An application was made under Section 33 to the Income-tax Commissioner for revision of that order. On 29 August, 1930, the revision application was rejected. The Commissioner by the same order in which the application was rejected quashed the proceedings culminating with the order of the Assistant Commissioner dismissing the appeal against super-tax on the ground that no appeal lay to the Assistant Commissioner. The applicants then made an application under Section 66, cl. (2), to the Commissioner to refer questions of law to this Court. On 22nd September, 1930, the application was rejected by the Commissioner on the ground that there being no appeal the Assistant Commissioner, no question of law arose which could be referred to this court. Our attention has been drawn to numerous points of law which are connected with the circumstances of the present case. The applicant in his application has referred to five of them namely : (1) Whether the fact that all the partners did not sign a partnership agreement was a valid ground for rejecting registration : (2) whether super-tax for a 1926-27 could be levied after 31 March, 1928; (3) whether super-tax could be levied without an assessment having been made on an unregistered firm; (4) whether the levy of a super-tax was legal in the absence of a notice demanding super-tax at the same time as the demand was made for income-tax; (5) lastly, whether it was legal to demand super-tax in view of the dropping of proceedings under Section s. 34.

(2.) The learned Government Pleaded on behalf of the Commissioner has taken the preliminary objection that question of law within the meaning of Section 66 arises since there was no appeal to the Assistant Commissioner from a notice demanding the payment of super-tax. In this connection, our attention has been drawn to Section 58, Income Tax Act and Secs.34 and 35 and in view of these sections we are unable to hold on the preliminary point that the Assistant Commissioner had to jurisdiction to inquire into the appeal from the order demanding super-tax. The second ground on which it is contented by the learned Government Pleader that this application should not be granted is that the rejection of the application under Section 66, cl. (2), was not on the ground that there was no question of law arising. In this connection, it is necessary to set out the order of the Commissioner of Income-tax. It is as follows : "As the appellate order has been quashed, no reference to the High Court can lie under Section 66(2) of the Act as such a reference is to be made only on questions of law arising out of such an order if it does exist. The assessment being under Section 23(4), however, no appeal will lie against it to the Assistant Commissioner and so there is no appellate order under S. 31."

(3.) The contention, therefore, of the learned Government Pleader comes to this. That if the Commissioner sees fit to hold the proceedings before the Assistant Commissioner ultra vires and a nullity, this court has no power to inquire into the validity of the Commissioners order since the quashing of the proceedings before the Assistant Commissioner results in the absence of any order which this court can inquire into. It seems to me clear that the ultimate authority on the question whether proceedings before the Assistant Commissioner. There would appear to me to be grounds for believing that questions of law arose in this case. I am of opinion that the questions of law raised by the applicants challenge the very foundation of the assessment of super-tax and that the applicants are entitled to have a case stated. I would therefore direct the Commissioner to state the case and refer it to this court. This is without prejudice to any contentions he may raise at the hearing. RUPCHAND, A. J. C. - Mr. Lobo has raised two points : (1) that no question of law arises out of the order of the Assistant Commissioner of Income-tax as that order has been vacated by the Commissioner of Income-tax as being ultra vires; and (2) that as the Commissioner of Income-tax has not refused to state a case to the court on the ground that no question of law arises out of the order of the Assistant Commissioner, but on the ground that there is no order of the Assistant Commissioner and not on the ground that no question of law arises, clause (3) does not apply.