Vazirbun Trading Co. vs Commissioner of Income Tax

R. Jayasimha Babu, J.—Counsel contends that there is no condition in Section 3(4) of the Income Tax Act, 1961, as it stood during the

assessment year 1981-82 that consent of the Income Tax Officer should be sought before effecting change in the previous year, and therefore a

request made for such change three years later was required to be acceded to.

All the authorties under the Act as also the Tribunal have held that the Income Tax Officer was justified in declining the request on the ground of

long delay. It is not in dispute that the request for the change was only made in the year 1984 though the assessment year for which such change

was sought was the year 1981-82. Advance tax for that year had also been paid by treating the full period of 12 months from April 1, 1980, as the

previous year for the purpose of assessment. The only reason given for the change sought, which was sought at the time of the assessment was that

there was a change in the firm as on May 20, 1980, and, therefore, the period from April 1, 1980 to May 20, 1980, should be allowed to be

regarded as a separate previous year,

The Income Tax Officer took note of the fact that the request for the change came long after the end of the assessment year and during the

assessment year in question the advance tax had been paid for the full year. It is submitted before us by counsel for the Revenue that acceding to

the request would result in loss to the Revenue as the rate at which the tax is to be levied being dependent upon the total income, any reduction in

that income by allowing a different previous year would result in loss to the Revenue. Counsel for the assessee relied on the case of Additional

Commissioner of Income Tax Vs. Mumtaz Silk Centre, , to contend that the permission to change the commencement of the year (sic). In that

case the permission was granted for such change, and the Tribunal''s view that it was permissible to grant such permission in the circumstances was

confirmed by the High Court.

Here, the discretion vested in the Income Tax Officer has been exercised against the assessee and having regard to the facts and submissions

before us, we cannot say that such discretion has been exercised illegally. We, therefore, answer the question referred to us regarding the

correctness of the Tribunal''s view that the rejection of the assessee''s request for change in the previous year was justified, in the affirmative against

the assessee and in favour of the Revenue.