RAM LAL KASHI RAM vs COMMISSIONER OF EXCESS PROFITS TAX, DELHI.

WESTON, C.J. - These are five application by one firm Messrs. Ram Lal Kanshi Ram of Amritsar u/s 66(2) of the Income Tax Act read with Section 21 of the Excess profits Tax Act asking us to require the Appellate Income Tax Tribunal to state a case following the refusal of the Tribunal so to do.

The facts necessary to be stated are that in the year 1943 a notice u/s 34 of the Income Tax Act was served on the assessee. As the Act then stood the Income Tax authorities were entitled to take action only in respect of concealed income for one year. As, according to the Income Tax authorities, the assessee had concealed income for a number of years further proceedings u/s 34 were not taken, but prosecution u/s 52 was threatened. Suggestions of compromise were then made, though it is not clear by whom, and u/s 53(2) of the Act the Inspection Assistant Commissioner compounded the matter with the assessee on payment by the latter of a sum of Rs. 45,000. In July 1943 in the course of proceeding for assessment of the assessee to excess profits tax the assessee or his counsel addressed a latter to the Excess Profits Tax Officer enquiring the amounts of concealed income for various years in respect to which the composition u/s 53(2) had been arrived at. The Excess Profits Tax Officer in February 1944 replied to this letter stating that the figures available were follows :-

Amritsar.

Bombay.

1935-36

121

7,060

1936-37

7,781

1937-38

3,230

1938-39

6,242

30,273

1939-40

1,965

2,316

1940-41

12,737

2,306

The assessee u/s 6(2)(c) of the Excess Profits Tax Act selected the years 1937-38 and 1938-39 as the "standard period". His case in the matter of excess profits tax then was this that the letter of the Excess Profits Tax Officer showed the assessment of Income Tax for the standard period, and under the second proviso to rule I of Schedule I of the Excess profits tax Act the profits for standard period must therefore be taken as stated in the letter under the years 1937-38 and 1938-39.

The material part of rule 1 of Schedule 1 is as follows :-

"1. The profits of a business during the standard period, or during any chargeable accounting period, shall be separately computed and shall, subject to provisions of this Schedule, be computed for the purposes of Income Tax u/s 10 of Indian Income Tax Act, 1922 :

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Provided further that where the profits during any standard period have already been determined for the purpose of an assessment under the Indian Income Tax Act, 1922, such profits as so determined shall subject to the adjustments required by this Schedule, be taken as the profits during that period for the purpose of excess profits tax."

It seems to me not open to argument that from the letter of the Excess Profits Tax Officer referred to above the assessee can claim that his profits during the standard period had been determined at the figures given in the letter for the purpose of an assessment under the Income Tax Act, 1922. There was no re-opening of the assessment u/s 34 of the Income Tax Act. The figures given by the Excess Profits Tax Officer were qualified as being only the figures available, and there is nothing whatever to show that these figures were arrived at by any process of assessment under the Income Tax Act. The amount of Rs. 45,000 paid by the assessee was not a payment of tax but was a payment in composition to avoid a threatened prosecution. No doubt, the Assistant Commissioner may well have taken into account of estimate of the concealed income in fixing or agreeing to the amount of Rs. 45,000 to be paid in composition, but it is quite impossible for an estimate of the concealed income to be made from this figure alone. It is equally impossible, even if such estimate could be made, to distribute the concealed income for the various years. Mr. Mahajan for the assessee has sought to put forward an alternative argument that if the second proviso to rule I of Schedule I does not apply, then the first part of the rule applies, but his client is not bound by the original assessment as that assessment was not complete on the admitted fact that there was considerable concealment of income. As I have said, there has never been re-opening of the assessment, and an assessment cannot be said not to have been made on the principles on which profits of a business are computed for the purpose of Income Tax u/s 10 of the Income Tax Act merely because the assessee has successfully committed fraud by concealment of part of his income.

It seems to me therefore that no point of law which can be called substantial arises on either of the two arguments, the one that the letter of Excess Profits Tax Officer is an assessment and the other that the assessee can avoid the operation of the first part of rule I of Schedule I by reason of his own fraud. I can see therefore no justification for requiring a reference to be made to us and I would dismiss this application with costs which I would assess at Rs. 200 for all five applications.

FALSHAW, J. - I agree.

Applications dismissed.