Chagla, C.J. - (1.) A rather important question arises on this reference as regards the power of the Commissioner to revise the orders of an Income-tax Officer under Section 33B.
(2.) The assessee is a Hindu undivided family, the 'karta' of which is one Tejaji Farasram Khara-wala. This Hindu undivided family was the sole selling agent of dyes and chemicals manufactured by Ciba (India) Ltd. and Imperial Chemical Industries (India), Ltd. On 24-10-1947, this family agreed to transfer this business to a private limited company by the name of Tcjaji Farasram Khara-wala, Ltd., and the share-holders of this company were the members of the joint family. Under the agreement of sale the goodwill of the business was fixed at Rs. 50,000. The family's income for Samvat Year 2003 was computed at Rs. 3,51,506. This amount included a sum of Rs. 25,000 which was included as representing the goodwill of the business which had been transferred to the private limited company. As the goodwill was transferred for Rs. 50,000, the Income-tax Officer computed the balance of Rs. 25,000 as capital gain under Section 12-B, Income-tax Act. The Hindu undivided family appealed to the Appellate Assistant commissioner on 18-4-1949. One of the grounds of appeal was with regard to the computation of the capital gains at Rs. 25,000. The assessee's appeal with regard to the computation of the capital gains was dismissed by the Appellate Assistant Commissioner. Thereafter the Commissioner of Income-tax purporting to act under Section 33B of the Act computed the capital gains at Rs. 10,00,000. The family thereupon appealed to the Appellate Tribunal, and the Appellate Tribunal held that the Commissioner had no jurisdiction to revise the order passed by the income-tax Officer, and it is with regard to this decision that a question of law has been submitted to us on this reference.
(3.) Now, in order to appreciate the contentions of the parties it is necessary to look at the scheme of the Act. The Commissioner has been given no right of appeal from an order of assessment passed by the income-tax Officer. The right of appeal is confined to the assessee; and before Section 33B was enacted, the position in law was that if the assessee did not appeal from the order of the income-tax Officer, that order became final and conclusive, But If the assessee appealed from the order of the Income-tax Officer, the widest jurisdiction was given to the Appellate Assistant Commissioner in appeal. He had the power to confirm, reduce, enhance or annul the assessment, he had the power to direct the Income-tax Officer to make a fresh assessment, and the only limitation that was laid down on the exercise of his jurisdiction was that if. he wanted to enhance the assessment, he must give the assessee a reasonable opportunity of showing cause -against the enhancement. From the decision of the Appellate Assistant Commissioner the right was given both to the Commissioner and to the assessee to appeal to the Appellate Tribunal. Section 33A gave the Commissioner the power of revision, but that power of revision could only be exercised by the Commissioner in favour of the assessee, because that section iu terms provided that no order passed by the Commissioner should be prejudicial to the assessee. Section 33B was enacted by Act 48 of 1943 and, to repeat once again, prior to the enactment of that section not only did the order of the Income-tax Officer become final and conclusive-if the assessee did not appeal, but even the Commissioner under Section 33A had no power to revise that order, section 33B gave much wider powers of revision to the Commissioner, and the section provided that : "The Commissioner may call for and examine the record of any proceeding under this Act and if he considers that any order passed therein by the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such enquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment, and directing a fresh assessment." Therefore, it was intended that the Commissioner should exercise the power given to him under Section 33B in the interest of the public revenue. Therefore, for the first time by reason of the enactment of Section 33B the orders of the Income-tax Officer became subject to a revision although the assessee might accept those orders and may not appeal from them to the Appellate Assistant Commissioner. But one important distinction between Section 33A and Section 33B may be immediately noticed. Whereas the power of revision conferred upon the Commissioner under Section 33A was against any order passed by any authority subordinate to him, the power of revision conferred upon the Commissioner under Section 33B was restricted to any order passed by the Income-tax Officer. Therefore, in terms Section 33B conferred upon the Commissioner the power to revise only the orders of the Income-tax Officer. The Legislature advisedly did not confer upon the Commissioner the power to revise either the orders of the Appellate Assistant Commissioner or the Appellate Tribunal.;