1971 (9) TMI 18 - SC - Income Tax

Held that refund granted by the Income-tax Officer under section 48 of the Mysore Income-tax Act, 1923 amounted to an assessment - Held that there could not be two assessments in respect of the income of an assessee for one year, one under the Mysore Act in respect of the income disclosed by the assessee and the other under the Indian Act in respect of the other income - revenue s appeal is dismissed

Summary

Issues:
1. Whether a refund granted by the Income-tax Officer under a state law amounted to an assessment.
2. Whether the interpretation of the words "such income, profits and gains" in a specific order was correct.

Analysis:
1. The High Court considered whether a refund granted by the Income-tax Officer under the Mysore Income-tax Act constituted an assessment. The assessee had already been assessed under the Mysore Act, and a refund was given due to a difference in tax rates. The Income-tax Officer later reopened the assessment under section 34 of the Indian Income-tax Act, claiming the income had escaped assessment. The High Court held that the refund order amounted to an assessment on the assessee, rejecting the Income-tax Officer's argument that the assessment on the firm did not apply to the individual assessee. The court concluded that the refund order constituted an assessment within the meaning of the relevant order.

2. The interpretation of the words "such income, profits and gains" in the Order was also scrutinized. The Income-tax Tribunal had allowed the Income-tax Officer's assessment, stating that the words referred to the identity of income or sources. However, the High Court disagreed, emphasizing that this interpretation would lead to double assessments on an assessee's income during one assessment year. The court upheld the reasoning of the Appellate Assistant Commissioner, stating that the Order aimed to prevent double taxation and that assessments made under the Mysore Act should not be reopened under the Indian Income-tax Act. The court found that the reasoning provided by the revenue did not align with the legislative intent behind the Order and dismissed the appeals, affirming the High Court's decision.

In conclusion, the Supreme Court upheld the High Court's decision that a refund granted by the Income-tax Officer constituted an assessment and that the interpretation of the words in the Order favored preventing double assessments on an assessee's income. The court emphasized the legislative intent behind the Order and rejected the revenue's contentions, dismissing the appeals.