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TMI Blog1968 (9) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee has been described to be a public limited company, carrying on business in general insurance. In respect of the said years, the Income-tax Officer originally allowed rebates in the sum of Rs. 4,089.44 and of Rs. 7,708.11 at the rate of one anna in the rupee on the undistributed profits of the company. On March 8, 1958, the Income-tax Officer, however, passed orders under section 23A(1) by which the entire undistributed profits were deemed to have been distributed as dividends to the shareholders. As a consequence, the assessment orders were reopened under section 34 with the result the rebates granted earlier were withdrawn. The assessee was unsuccessful before the revenue as well as the Tribunal in his challenge as to the propriety ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent, which undoubtedly has been persuasive, is that grant of rebate under proviso (1) to Part B in Schedule I of the Finance Act postulates that the requisite conditions therefor have, in the opinion of the Income-tax Officer, been satisfied and that if, therefore, he proceeded on the basis that there has been no order made under section 23A, it was to that extent conclusive and could not be reopened or reviewed in exercise of his powers under section 34. Learned counsel urges that section 23A does not belong to the realm of assessment, unlike section 34, and it followed, therefore, that when rebate was granted, the decision of the Income-tax Officer that there has been no order under section 23A should stay, whatever may be the validity of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oviso charges additional tax subject to certain limits. In our view, this objective should be kept in mind in delimiting the scope and applicability of the proviso. The body of the proviso visualises that before the question of allowance of rebate is considered, the company concerned has made the prescribed arrangements for the declaration and payment of dividends payable out of the relative profits and has deducted super-tax from the dividends in accordance with the provisions of sub-sections (3D) or (3E) of section 18 of the Act. It is then one can examine whether the conditions for allowance of rebate in clause (1) of the proviso have been satisfied. The conditions are two-fold : (1) The total income as reduced by seven annas in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied the making of an order under section 23A and unless an order under section 23A was made the assessee became entitled automatically to the rebate of one anna in the rupee. Such a provision led to delay in the disposal of assessment proceedings and caused administrative inconvenience. It appears that the legislature modified the scheme of granting rebate in enacting the Finance Act of 1955, with a view to simplify the procedure and avoid delays . . ." Pitching himself on that position, Mr. Swaminathan urges that once rebate has been granted, it pre-supposes that a decision has been arrived at by the Income-tax Officer earlier or simultaneously under section 23A of the Income-tax Act and if that be so, there is no power vested in him un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he says that section 34 would not be attracted to the situation. We do not think that the authority cited supports him. All that was held in that case was that excess interest paid by the revenue could not be recovered by an order under section 34, on the strength of an amendment with retrospective effect because it did not relate to a charge of the income and, therefore, to an assessment of the income. We do not think that the analogy has application to the instant case. Section 34 is invoked in the present case not to reopen or reconsider an order under section 23A but to set right an assessment which has been made at too low a rate. If the Income-tax Officer has applied his mind to the conditions necessary for making or not making an ord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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