1943 (9) TMI 13 - HC - Income Tax

Summary

Issues:
Jurisdiction of Assistant Commissioner to substitute a different method of computation in appeal.

Analysis:
The case involved a question of law referred to the High Court by the Commissioner of Income-tax regarding the jurisdiction of the Assistant Commissioner in appeal to substitute a different method of computation for the one adopted by the Income-tax Officer. The facts revealed that the assessee, a Hindu undivided family engaged in various businesses, had their profits assessed by the Income-tax Officer at Rs. 32,489 for the year 1933-34, using a combination of methods including flat rates on turnover. Upon appeal to the Assistant Commissioner, a report was requested from the Income-tax Officer, and eventually, the Assistant Commissioner disagreed with the method used by the Income-tax Officer. The Assistant Commissioner recalculated the profits, deducting certain amounts obtained through flat rates, and added other amounts from capital deposits, resulting in a revised total income of Rs. 51,842.

The High Court examined the provisions of the Income-tax Act, particularly Sections 31(2) and 31(3), to determine the scope of authority of the Assistant Commissioner in such matters. It was argued that the proviso to Section 13 might restrict the Assistant Commissioner's power to interfere with the method of computation. However, the court held that the language of the proviso did not support this contention. The court emphasized that the wide language of Section 31(2)(a) allowed for broad powers of the higher authorities in the Department to review assessments. Referring to a previous case, the court reiterated that there were no restrictions on the powers of higher authorities under Sections 31 and 32 regarding assessments made under the proviso to Section 13.

The court dismissed the argument that the Assistant Commissioner exceeded his authority by setting aside the flat rate adopted by the Income-tax Officer. It clarified that the Assistant Commissioner was entitled to request a report from the Income-tax Officer and make a decision based on the findings. The court concluded that the Assistant Commissioner had the power to determine the profits from the account books themselves and was not restricted by the Act in doing so. Therefore, the court answered the question referred to them in the affirmative, affirming the jurisdiction of the Assistant Commissioner in the present case to substitute a different method of computation in appeal.