Commissioner of Income Tax vs United Trading Co.

S.P. Goyal, J.—The Tribunal on mandamus from this Court has referred the following question for our opinion:

Whether, on the facts and in the circumstances of the case, on a proper interpretation of section 3(4) of the income tax Act, 1961, the Appellate Tribunal was right in law in affirming the order of the income tax Officer and directing him to proceed on the basis as if consent for change of previous year had been granted?

However, after hearing the learned counsel for the parties, we find that no question of law arises from the order of the Tribunal and the reference as such has to be returned as unanswered.

The accounting year of the assessee-firm coincided with the calendar year up to the assessment year 1971-72. In the original as well as the revised return for the assessment year 1972-73, the assessee showed the previous year consisting of 15 months, ending on 31-3-1972. During the assessment proceedings, the assessee contended that it had made an application dated 6-12-1971 before Shri Jagmohan Chopra, predecessor of the assessing authority, for his consent u/s 3(4) of the income tax Act, 1961 (''the Act'') for varying the meaning of the expression ''previous year'' who had duly given his consent to the change of the previous years from the calendar year to the financial year. As the application as well as the orders passed on that application were not available on record, information was sought from Shri Jagmohan Chopra if any consent was given, as alleged. Shri Jagmohan Chopra having denied the same, the assessing authority rejected the contention of the assessee and framed the assessment adopting the previous year ending with the calendar year. On appeal, the order of the assessing authority was reversed by the AAC and the case remanded for reassessment on the basis that consent for the change of the previous year had been granted. Having failed before the Tribunal, the revenue got the above question referred for a mandamus as stated above.

The question as to whether the ITO gave his consent for varying, the meaning of the expression ''previous year'', as alleged by the assessee or not is purely a question of fact. The learned counsel for the revenue, however, urged that the AAC never recorded a finding that the consent was, in fact, allowed but remanded the case back holding that the consent would be deemed to have been granted. As the provisions of section 3(4) did not envisage any implied consent, the AAC was not competent to record the finding that the consent would be deemed to have been given. The argument is wholly fallacious and is based on the assumption that the AAC has recorded a finding that the consent would be deemed to have been given. On the contrary the finding recorded is that the consent had been given. No doubt, the inference drawn had not been stated in so many words but the expression ''that the circumstances appear to favour the assessee'' can be interpreted in no other way except to mean that the version of the assessee that the consent had been granted, was accepted by the AAC. The Tribunal also in so many words rejected the version given by Shri Jagmohan Chopra in his letter which necessarily means that the stand of the assessee regarding the grant of the consent had been accepted. Consequently, the interpretation sought to be put forward on the order of the AAC and the Tribunal by the learned counsel for the revenue has no basis. Once it is found that the finding recorded was that the consent had been duly granted u/s 3(4), no question of law which may need determination by this Court would arise from the order of the Tribunal. This reference is accordingly declined. No costs.