1968 (10) TMI 34 - HC - Income Tax

Whether the Appellate Assistant Commissioner was justified in law in enhancing the revised figure of income computed by the ITO - AAC did not, on a perusal of the available material, reach the conclusion that there was any mistake committed by the ITO in reducing the income from the lorry business - question is answered in negative

Summary

Issues:
Whether the Appellate Assistant Commissioner was justified in enhancing the revised figure of income computed by the Income-tax Officer by a sum of Rs. 3,822.

Analysis:
The judgment pertains to a reference under section 66(2) of the Indian Income-tax Act, 1922, regarding the justification of the Appellate Assistant Commissioner's decision to enhance the revised income figure by Rs. 3,822. The assessee, a transport and clearing contractor for the Central Government, operated lorries for both contract and general transportation. Initially, the Income-tax Officer determined the income from transport and lorry businesses as Rs. 6,875 and Rs. 8,600, respectively. However, upon reassessment under section 34, the Officer revised the figures to Rs. 15,525 for transport and Rs. 4,778 for lorries, resulting in a reduction of Rs. 3,822 from the original lorry business income.

The Appellate Assistant Commissioner, relying on a previous court decision, sought to enhance the lorry business income back to the original figure of Rs. 8,600, claiming the Officer lacked the authority to reduce it. The High Court disagreed, emphasizing that the assessee operated a single integrated business involving both transport and lorry activities for the government. Despite the Officer's separate income calculations, the total income was interconnected. The Court highlighted that the Officer's reassessment aimed to increase transport income and decrease lorry income, resulting in a higher total income assessment, aligning with the section 34 notice indicating a reassessment of total income.

The Court criticized the Appellate Assistant Commissioner's reliance on the previous decision, stating it was inapplicable to the current scenario. The Commissioner's decision lacked a factual basis for disputing the Officer's income reduction, solely contending the Officer's lack of authority. Consequently, the Court ruled in favor of the assessee, declaring the Commissioner's decision to enhance the income figure unjustified in law. The assessee was awarded costs, including advocate's fees of Rs. 250.