1970 (10) TMI 22 - HC - Income Tax

Whether the Income-tax Officer s order proceedings filed was an order of reassessment under the provisions of section 34 and, consequently, the Commissioner of Income-tax was precluded from revising the order by reason of sub-section (2)(a) of section 33B of the Income-tax Act, 1922

Summary

Issues:
1. Whether the Income-tax Officer's order of "proceeding filed" was an order of reassessment under section 34 of the Income-tax Act, 1922?
2. Whether the Commissioner of Income-tax was precluded from revising the order under section 33B(2)(a) due to the Income-tax Officer's order?

Analysis:
The judgment involves a reference made by the Income-tax Appellate Tribunal regarding the nature of the Income-tax Officer's order in a reassessment proceeding for the assessment year 1960-61. The controversy arose when the Income-tax Officer initiated proceedings under section 34 of the Act upon learning of a supposed sale in 1959 involving significant profit. The assessee objected, claiming the sale was nullified. The Income-tax Officer accepted this objection and issued a cryptic order of "proceeding filed." The Commissioner of Income-tax, considering this order erroneous, invoked section 33B to cancel it and direct continuation of the proceedings. The Tribunal, relying on precedent, held the Income-tax Officer's order constituted reassessment, barring action under section 33B. The department sought a reference to the High Court, leading to the present judgment.

The key contention was whether the Income-tax Officer's order amounted to reassessment under section 34, thus precluding the Commissioner's revision under section 33B(2)(a). The court examined the relevant provisions of the Act, emphasizing that the Income-tax Officer's actions were based on the supposed sale triggering reassessment proceedings. The court noted that the assessee's objection led to the conclusion that no reassessment was warranted, resulting in the order of "proceeding filed." Drawing parallels to a Supreme Court decision, the court affirmed that such orders in assessment proceedings are tantamount to reassessment.

The court distinguished cases cited by the department, highlighting the importance of factual context in interpreting phrases like "proceedings filed." It emphasized that each case must be evaluated based on its unique circumstances. In the present case, the court found the cryptic order of "proceeding filed" to indeed signify reassessment, as the Income-tax Officer had considered the matter and concluded no sale had occurred in 1959. Therefore, the court held that the Commissioner was precluded from revising the order under section 33B(2)(a) due to the nature of the Income-tax Officer's order.

In conclusion, the High Court answered the referred question in the affirmative, affirming that the Income-tax Officer's order of "proceeding filed" constituted reassessment, thereby precluding the Commissioner from revising it under section 33B(2)(a). The court awarded costs to the assessee and delivered a unanimous decision.