The Commissioner of Income Tax vs In Re: Income Tax Assessment of P. Thiruvengada Mudaliar

The assessee moved the Commissioner of Income Tax, Madras, to refer to the High Court certain questions of law which he alleged arose in

connection with the assessment made by the Income Tax Commissioner. The Income Tax Commissioner being of opinion that no question of law

in connection with the said assessment arose declined to make any reference. There upon the assessee moved the High Court and this High Court

by its order, dated the 9th March, 1926, directed the Income Tax Commissioner to state a case on three points mentioned in that order.

Subsequently the assessee moved the High Court to add a fourth point on which the Commissioner should be directed to state a case, the fourth

point being. ""Where, in the absence of accounts, assessment was levied at an agreed figure as the result of negotiations by and on behalf of the

assessee and the Income Tax Officer, whether the said assessment can be re-opened u/s 34 of the said state of affairs, namely, absence of

accounts or by raising the same question in other words."" The High Court by its order, dated the 25th April, 1927, ordered that the Income Tax

Commissioner should state a case with, reference to the fourth point also. When the case went back to the Income Tax Commissioner the learned

Commissioner raised a preliminary objection to his stating a case with reference to the fourth point. The preliminary objection to this reference

taken by the Commissioner of Income Tax is that the question of law sought to be argued here is one which was not argued before him and that it

cannot now be raised by reason of Section 66, Sub-section 2 of the Income Tax Act which permits the assessee to apply within one month of the

passing of the order under Sections 31 and 32 of the Act to the Commissioner to refer questions of law to the High Court; and upon his refusal to

state the case to apply to the High Court of order directing the Commissioner to refer the case. It is admitted that the assesses did not raise before

the Commissioner the question of law he seeks to argue here, viz, question No. 4, within one month of the passing Of the Commissioner''s order

u/s 34 of the Act. He raised the other question of law arising in the other three questions but not this one and the Commissioner now contends that

the assessee cannot be heard upon this question. The facts of the case are that in the previous year''s assessment, the assessee was assessed at a

figure which the Commissioner subsequently considered to have been too low and he accordingly proceeded to re-assess him u/s 34 increasing the

assessment in the previous year. The only questions here are whether the assessee is bound to raise before the Commissioner in his application to

him all questions of law relied upon by him and whether he can get a reference upon a question of law not raised by him before the Commissioner.

We are clearly of opinion that he cannot do the latter. u/s 66 (2) of the Income Tax Act the Commissioner may be required by the assessee to

refer any question or questions of law arising upon the order. It is we think beyond doubt that that can only mean any question of law then raised

before the Commissioner, not any question of law which the assessee may deem to be an arguable one thereafter. This view is also taken by the

Allahabad High Court in In the matter of Lalla Mal Hardeo Das Cotton Spinning Mills at page 266 of the Reports of the Income Tax Cases, Vol.

I, and In the matter of Makham Lal Ram Sarup at page 416, Vol. I, of the same Reports. If the point of law is not raised before the Commissioner

within the time specified by Section 66 (2) it cannot be raised at all and the Commissioner cannot be required to state a case raising that point. This

is not an appeal to the High Court. No appeal to the High Court is given by the Act. Questions of Law and not of fact may be referred to the High

Court but only subject to the provisions of Section 66, Sub-section 2, which only allows a reference upon such points of law as have been raised

before the Commissioner within one month of the passing of the order.

The preliminary objection of the Commissioner to a reference on question (4) succeeds and as the assessee does not propose to argue the other

three questions referred it is not necessary for us to pass any orders except to order the assessee to pay the costs of the Commissioner which we

fix at Rs. 250.