Commissioner of Income Tax, Madras vs Vellingiri Gounder and Brothers, Coimbatore

Satyanarayana Rao J.

u/s 66(1), Indian Income Tax Act the Appellate Tribunal referred to this Court for decision the following question:

Whether on the facts and in the circumstances of the case an appeal lay to the Appellate Assistant Commissioner against the order of the Income

Tax Officer made u/s 35.

The facts as they appear from the statement of the case were ; The assessees were the managing agents of certain mills at Coimbatore. In respect

of the sssessment year, 1944-45, they were assessed to tax as a registered firm. In making this assessment the Income Tax Officer did not deduct

from the amount of excess profits tax payable by the firm the proportionate excess profits tax payable on the commission paid to one Nanjappa

which commission the firm was entitled to claim u/s 12-A of the Act. After the order of assessment, the Income Tax Officer thought that he failed

to deduct proportionate excess profits tax attributable to commission paid to Nanjappa and that it was a mistake apparent on the face of the

record and therefore purporting to exercise jurisdiction u/s 35 of the Act rectified the mistake. Due notice of this was given to the assessee as

required by the section. After deducting proportionate excess profits tax attributable to the commission, payable to Nanjappa, the income liable to

tax was increased from Rs. 61,243 to Rs. 78,979. The assessable income was, therefore enhanced.

There was an appeal against this order by the assessees to the Appellate Assistant Commissioner and the Appellate Assistant Commissioner

passed an order dated 22-2-1947 dismissing the appeal as incompetent. There was an appeal against that order by the assessees to the Income

Tax Appellate Tribunal, Madras. On 11-3-1948, the appellate Tribunal by an order held that the appeal to the Appellate Assistant Commissioner

was competent and that the order u/s 35 must be read along with the original order u/s 23(3). In the result the Tribunal remanded the appeal back

to the Appellate Assistant Commissioner for disposal on merits. Against the order of the Tribunal the Commissioner of Income Tax obtained a

reference to this Court on the question stated above u/s 66(1) of the Act.

When this reference came before this Court on an earlier occasion the matter was adjourned till the appeal was disposed of by the Appellate

Assistant Commissioner. The Appellate Assistant Commissioner again expressed the opinion that the order made by the Income Tax Officer was

within the purview of Section 35 of the Act but the order was not justified on merits. This reference was also kept pending as an appeal against a

decision of this Court in a similar matter was pending decision before the Supreme Court. It has been now finally settled by the Supreme Court in -

- Commissioner of Income Tax, Madras Vs. Mtt. Ar. S. Ar. Arunachalam Chettiar, , that if the order of the Appellate Tribunal was not one within

Section 33(4) of the Act a reference u/s 66(1) was incompetent. From a perusal of the decision of the Supreme Court it is clear that no appeal lies

against an order made u/s 35 of the Act to the Appellate Assistant Commissioner as it would not fall within the purview of Section 30 of the Act,

and further there will be no appeal against the order of the appellate Assistant Commissioner to the tribunal. In view of the decision of the Supreme

Court we think that the reference u/s 66(1) of the Act was incompetent and therefore we must refuse to answer the reference. The application is

dismissed. No costs.