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TMI Blog1940 (12) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... Consequently section 23(4) of the Act was applied and assessment was made on the basis of the estimated income of the previous year. No appeal was preferred against the order of assessment, which accordingly became final as against the firm. When the firm came under liquidation no objection was taken for some years to the assessment. It was said by the Official Liquidator that the amount would be paid when funds were available. It was only when another person was appointed Official Liquidator in 1939 that an attempt was made to reopen the assessment. The facts are stated in the proof of claim by the Income-tax Officer submitted by the Legal Adviser to the Income-tax Department in an application dated the 2nd October, 1939. The claim was disputed by the Official Liquidator on the ground that the assessment was not equitable, no income having in fact accrued to the assessee for the year in question, and that in these circumstances it was open to him to ask for further enquiry by the Court into the claim. He filed a statement of accounts showing that a loss had actually accrued. Objection was taken to this statement by the Income-tax Department on the ground that it was not an audit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he act of bankruptcy or of the service of the petition, or is satisfied by the debtor that he is able to pay his debts, or that for other sufficient cause no order ought to be made the Court may dismiss 1 he petition". The question is whether the registrar had not a discretion under section 7, and whether he has rightly exercised that discretion. The mere fact that there is a judgment for the debt does not prevent the registrar from saying that there is no good petitioning creditor's debt. The Court of Bankruptcy can go behind the judgment, and can inquire whether, notwithstanding the judgment, there was a good debt." The provision in the Provincial Insolvency Act which most corresponds with the provisions of section 7 of the English Bankruptcy Act is section 50 which provides that where the receiver thinks that a debt has been improperly entered in the schedule, the Court may, on the application of the receiver and after notice to the creditor, and such enquiry (if any) as the Court thinks necessary, expunge such entry or reduce the amount of the debt. We consider that in deciding whether such an enquiry should be made the Court should act on the principles that have found favour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mits of time, I should think very likely on common law principles it might be possible for the Court to deal with the matter. In the case of an assessment there is no question of consideration as there is in the case of a judgment: there is a mere administrative assessment with a special mode of appeal provided which must be followed. I cannot think it possible that it is competent to the Bankruptcy Court, on the invitation of the trustee in bankruptcy or of the debtor, to reopen questions of that kind on a motion to expunge. It is quite impossible to conceive that it would be competent for me sitting here to go into the question of the rateable values of a union or of a parish, or any question of that sort. That seems to me to be a case which is analogous to the case in which I am at present invited to act. I think the application fails and must be dismissed with costs ; but my decision will not interfere with any application the debtor may be advised to make to the Inland Revenue under the Board of Trade Regulations of May, 1888". Learned Counsel for the appellant has relied upon the fact that there is in England a special provision which would entitle a debtor to go behind the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing on the Company". So. also in the present case there can be no question that the procedure followed in making the assessment was correct and that the firm of Dinshaw & Co., was alone responsible for the assessment being made as it was made without an examination of the accounts. In these circumstances it seems to us impossible to say that there was a miscarriage of justice, or that the assessment that was made ought not to have been made. It is clear that so faras the assessee was concerned there was no miscarriage of justice, and that the assessment could only have been made in the way in which it was made. A special procedure is provided by the Income-tax Act for assessment of income-tax, and the appellant's contention is not only that the assessment can be reopened in insolvency proceedings, but that a fresh enquiry should then be made by the Insolvency Court and a different procedure followed. If this were allowed, it is argued for the respondent, and we think the argument has force,--it would be possible to reopen in the same way the question of other liabilities incurred by the assessee prior to his adjudication as an insolvent. section 230 of the Indian Companies Act pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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