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TMI Blog1971 (1) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... ssees with equal shares in the profit and loss. In proceedings for assessment of tax under the Excess Profits Tax Act, 1940, for the two chargeable accounting periods, the assessee informed the tax officer that the joint family of Gurbux Rai had been dissolved and there was a reconstitution of the business of the partnership with effect from July 4, 1943. According to the assessee, the constitution of the firm after partition was that in the firm at Kanpur the former two partners were interested, their share being equal, but in the business of the firm at Farrukhabad there were three partners--Harbux Rai with 8 as. share, Chameli Devi with 4 as. share and Gopaldas with 4 as. share. In assessing tax under the Indian Income-tax Act, 1922, f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y notice dated February 6, 1951, calling upon the assessee to show cause why appropriate adjustments should not be made in the assessment, and passed orders in that behalf for both the chargeable accounting periods holding that the main purpose of the partial partition of the family business of Gurbux Rai was avoidance of excess profits tax liability. By order dated February 21, 1951, passed under section 15 of the Excess Profits Tax Act, the Excess Profits Tax Officer modified the original excess profits tax assessment. In the revised assessment in pursuance of orders under section 10A he included the income of the branch shop at Farrukhabad in the total income of the assessee for purposes of excess profits tax assessment. The assessee app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Officer was competent to reopen the excess profits tax assessment ? (2) Whether, in the circumstances of this case, the Excess Profits Tax Officer was competent to apply the provisions of section 10A and make necessary adjustments in pursuance thereto in the revised assessment under section 15 ? " The High Court of Allahabad held that since the Excess Profits Tax Officer purported to reopen the assessment under section 15 of the Excess Profits Tax Act " only because of the order of the Appellate Assistant Commissioner of Income-tax holding that the Farrukhabad business was no longer the business of the assessee and that the family of Gurbux Rai had partitioned its movable property, all of which proceeded upon material which was alread ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts Tax Officer at Kanpur had served a notice under section 10A of the Excess Profits Tax Act requiring the assessee to show cause why appropriate adjustments as respects liability to excess profits tax should not be made so as to counteract the avoidance or reduction of liability to excess profits tax by converting the business in the name of Pussulal Jangalal--the Farrukhabad firm--into a separate business. The contention of the assessee that the disruption of the family was a genuine and bona fide transaction was rejected by the Excess Profits Tax Officer. The case was then taken to the Income-tax Appellate Tribunal. The Tribunal confirmed the order of the Excess Profits Tax Officer. But at the instance of the assessee the Tribunal referr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , he may,...make such adjustments as respects liability to excess profits tax as he considers appropriate so as to counteract the avoidance or reduction of liability to excess profits tax which would otherwise be effected by the transaction . . . " Section 15, in so far as it is relevant, provides : " If in consequence of definite information which has come into his possession, the Excess Profits Tax Officer discovers that profits of any chargeable accounting period chargeable to excess profits tax have escaped assessment, or have been under-assessed, or have been the subject of excessive relief, he may at any time . . . . serve on the person liable to such tax a notice containing all or any of the requirements which may be included in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was made. Expression of that opinion of the High Court is challenged. We are of the view that, in the interests of justice, it is necessary that a supplementary statement of the case should be called for on the question whether there was any proceeding pending under section 15. On the question whether the proceeding under section 15, if pending, was valid, we express no opinion at this stage. We direct the Tribunal to submit a supplementary statement of the case on the question whether the proceeding under section 10A was started in the course of assessment or reassessment proceeding commenced under section 15. The supplementary statement is to be submitted to this court within three months from the date on which the papers reach the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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