- (1.) The High court of Mysore in a reference under S. 66 (1) of the Indian Income Tax Act, 1922 (hereinafter called 'the Act') had held against the Revenue on the question: (1) whether in the circumstances of the case the refund granted by Income Tax Officer under section 48 of the Mysore lncometaxact,1923 (hereinafter called 'the Mysore Act') amounted to an -assessment and, (2) whether the interpretation placed by the Income Tax tribunal on the words 'such income, profits and gains' in paragraph 5 (1) of the Part B States (Taxation Concession) Order, 1950 (hereinafter called 'the Order') is correct On the first question its answer was in the affirmative and on the second in the negative. Against this Judgment two appeals have been filed by special leave by the Commissioner of Income Tax, Mysore.
(2.) The facts which gave rise to the reference before the High court are that a registered firm of partnership known as C. M. Jaffar Khan and Co. , Bangalore of which the assessee was a partner filed a return in respect of its income for the period ending 30/06/1949 under the Mysore Act and an assessment was made thereon in a sum of Rs. 3,376.70 which was duly paid. On 15/03/1950 the assessee filed his return in respect of his individual income including his share of income from the partnership firm for the accounting year ending 30/06/1949. This return was also made under the Mysore Act and it appears that in respect of this return, by an order, dated 20/03/1950 the Income Tax Officer directed a refund of Rs. 641.30 to the assessee due to the difference in the rate of tax applicable to him and the maximum rate. It further appears that in the course of the proceedings for the assessment years 1951-52 and 1952-53 the Income Tax Officer was of the opinion that the assessee's income had escaped assessment in the accounting year ending 30/06/1949 and he therefore issued a notice to him under S. 34 of the Act. The assessee objected to the reopening of the assessment on the ground that he had already been assessed in respect of the income for the year ending 30/06/1949 under the Mysore Act; that a refund of tax had been given to him, as such the Income Tax Officer has made an assessment under the Mysore Act; and that according to paragraph 5 of the Order an assessment under the Act would be possible onlyif, before the appointed date namely on 1/04/1950 the assessee had not been assessed under the Mysore Act. The Income Tax Officer rejected these contentions on the ground that the assessment made on the firm could not be regarded as an assessment made on the assessee individually and completed the assessment for the year 1950-5 1/03/1955 on a total income of Rs. 3,21,821. 00.
(3.) The assessee appealed to the Income Tax Appellate Assistant Commissioner and raised similar contentions to those raised before the Income Tax Officer. The Income Tax Officer on the other hand contended that as the respondent assessee had disclosed only a share income from the firm 'c. M. Jaffar Khan and Co. ' and as the income from the property and other sources was not disclosed such profits and gains had not been assessed under the Mysore Act and, therefore, action under S. 34 of the Act was fully justified. The Appellate Assistant Commissioner however, rejected the contention of the Income Tax Officer and held that the re-assessment under S. 34 of the Act was not valid. In this view he set aside the assessment made by the Income Tax Officer. The Department filed an appeal to the Income Tax tribunal against the order of the Appellate Assistant Commissioner. The tribunal however was of the view that the refund granted by the Income Tax Officer under section 18 of the Mysore Act was not an assessment as contemplated under S. 23 of the Act and that the words 'such. income, profits and gains' used in paragraph 5 (1) of the Order referred to identity of income or sources and that it is only in cases wherein income has been assessed under the Mysore Act, that the Income Tax Officer is prohibited from taking any further action thereon. The appeal was therefore allowed and the assessment made by the Income Tax Officer restored.;