The Commissioner of Income Tax vs In the matter of the 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. Thereupon the assessee moved the High Court and the 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 reopened u/s 34 on the same state of affairs, viz., ''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 u/s 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 for an order directing

the Commissioner to refer the case. It is admitted that the assessee 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 the matter of Lalla Mal

Hardeo Das Cotton Spinning Mills ILR (1923) A. 1 and In the matter of Makhan Lal Ram Sarup (1924) 23 A.L.J. 40. 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.