1952 (4) TMI 45 - HC - Income Tax

Summary

Issues: Assessment of excess profits tax for the years 1941, 1942, and 1943; Validity of the Excess Profits Tax Officer's action under Section 15 of the Act; Interpretation of the term "discovered" in Section 15; Comparison with relevant case laws; Nature of relief granted by the Central Board of Revenue; Legality of the original assessment as conditional.

The judgment by the Bombay High Court involved the assessment of excess profits tax for the years 1941, 1942, and 1943. The assessee company had initially succeeded in obtaining relief from the Central Board of Revenue under Section 26(3) of the Act based on the representation that certain provisions would not be required for business purposes after the war. However, the Excess Profits Tax Officer later revised the assessments under Section 15 upon discovering that the buildings, plant, and machinery were indeed used for business post-war. The primary contention was whether Section 15 could be invoked in this scenario. The court analyzed the term "discovered" in Section 15, emphasizing that it applies to facts existing at the time of assessment, not new facts. The judgment distinguished relevant case laws like Dodworth v. Dale and Anderton and Halstead v. Birrell to highlight the distinction between existing and subsequent facts in assessment validity.

The court rejected the argument that the original assessment was conditional, asserting that every assessment is subject to reopening under Section 15. The judgment clarified that the relief granted by the Central Board of Revenue was contingent on a fact that could only be determined post-war. As the fact emerged that the assessee had used the provisions for business, excessive relief was deemed granted, justifying the Excess Profits Tax Officer's revision under Section 15. The court reframed the second question to confirm the Officer's authority to revise the order despite the Central Board of Revenue's initial decision under Section 26(3).

In conclusion, the judgment upheld the Excess Profits Tax Officer's action under Section 15, emphasizing the importance of existing facts at the time of assessment and the subsequent discovery of new facts. It affirmed the legality of revising the assessments based on the post-war usage of provisions, thereby denying the excessive relief initially granted. The court's comprehensive analysis reconciled the legal provisions with equitable considerations, ensuring that relief is granted based on factual circumstances rather than mere estimates or opinions.