1963 (12) TMI 39 - HC - Income Tax

Summary

Issues Involved:
1. Whether an appeal under section 30 of the Indian Income-tax Act against the quantum of a best judgment assessment can also combine an appeal against the refusal of registration when the assessment and the refusal are made in the same order under section 23(4) of the Income-tax Act.

Detailed Analysis:

Composite Appeal Validity under Section 30:

Background:
The assessee, a partnership firm, was assessed under section 23(4) due to non-compliance with notices under sections 22(2) and 22(4). The Income-tax Officer completed the assessment to the best of his judgment and refused the renewal of the firm's registration in the same order. The assessee appealed to the Appellate Assistant Commissioner, who allowed an additional ground regarding the refusal of registration.

Appellate Assistant Commissioner's Decision:
The Appellate Assistant Commissioner dismissed the quantum appeal but directed the Income-tax Officer to consider the application for renewal of registration under section 26A.

Tribunal's Decision:
The Tribunal held that the quantum and registration appeals are distinct matters. It concluded that the assessee should have filed two separate appeals: one in Form No. B for the quantum assessment and another in Form No. D-II for the refusal of registration.

Assessee's Contention:
The assessee argued that the order under section 23(4) was a composite order, and thus a single appeal in Form B should suffice. They cited rule 21, which requires the demand notice to be attached to the appeal, making it impractical to file two separate appeals.

Court's Analysis:
The court examined the relevant provisions of the Act:
- Section 23(4) allows best judgment assessment in specific scenarios and permits the Income-tax Officer to refuse or cancel the registration of a firm.
- Section 30 provides distinct rights of appeal against the quantum of assessment and the refusal of registration.
- Rule 21 prescribes different forms for various appeals, including Form D-II for appeals against refusal of registration under section 23(4).

The court noted that although the order under section 23(4) is composite, the right of appeal against the assessment and the refusal of registration are distinct and disjunctive. The rule-making authority was aware of the consequential nature of the refusal order but still required separate appeals.

Practical Difficulties:
The court acknowledged the practical difficulty of filing two appeals with the same demand notice. However, it agreed with the Tribunal that mentioning in one appeal that the demand notice was submitted in the other would suffice, treating it as an irregularity that could be condoned.

Distinction from Previous Case Law:
The court distinguished the present case from the decision in Smt. Durgabati v. Commissioner of Income-tax, where the issue was whether the Commissioner of Income-tax could revise an order granting registration while an appeal on quantum assessment was pending. The court clarified that the facts and issues in the present case were different.

Conclusion:
The court concluded that two separate appeals are required under the statutory provisions. The question was answered in the negative, meaning that an appeal against the quantum of a best judgment assessment cannot combine an appeal against the refusal of registration when both are made in the same order under section 23(4).

Costs:
Each party was directed to bear its own costs.

Agreement:
The judgment was concurred by both judges involved.

Final Decision:
The question was answered in the negative, requiring separate appeals for quantum assessment and refusal of registration.