- (1.) THIS reference raises a rather important and interesting question as to the powers which the Appellate Assistant Commissioner can exercise when an appeal is preferred by an assessee against an assessment made by the Income-tax Officer.
(2.) THE assesses was carrying on a business in Bombay and in Rajkot and the accounting year of the Bombay and Rajkot business were different and therefore there was some overlapping of income. With regard to the profits of Rajkot, the Income-tax Officer assessed them proportionately at Rs. 1,17,643. He also considered the remittances made from Rajkot to Bombay and determined the amount at Rs. 4,00,000. He considered whether this remittance was liable to tax and came to the conclusion, in view of the concession allowed in Part B States Concession Order, that this sum was not liable to tax. The appeal of the assessee was confined to the profit of Rs. 1,17,643 and its case was that the Rajkot business had suffered a loss of Rs. 61,071. The Appellate Assistant Commissioner disagreed with the Income-tax Officer in his view that the profit should be ascertained on a proportionate basis and he directed that he should ascertain the actual profit for the relevant period earned by the business at Kajkot and he remanded the matter to the Income-tax Officer. On this order of remand a report was made by the Income-tax Officer on the 25th February 1953 which accepted the figure given by the assessee that the loss at Rajkot was Rs. 61,071, but reduced the amount, owing to certain considerations with which we are not concerned, to Rs. 35,988. The Income-tax Officer pointed out that no assessment order from the Income-tax Officer at Rajkot in respect of the earlier income was produced before him. He made a second remand report on the 21st July 1954 and in this report he stated that the order for assessment of the Rajkot income had been produced before him. He further pointed out that since the assessment had come up before the Appellate Assistant Commissioner in appeal and since the appeal was still pending, he would like to point out to the Appellate Assistant Commissioner that there was some error on the part of the Income-tax Officer in the interpretation of the Part B States (Taxation Concession) Order, 1950, and the assessment for 1950-51 should be enhanced by a sum of Rs. 4,00,000 being the remittance from Saurashtra as being chargeable to tax and having been erroneously excluded from assessment. On this the Appellate Assistant Commissioner passed an order setting aside the assessment and remanding the matter to the Income-tax Officer for re-assessment. It is this order that is now challenged by the assessee as beyond the competence of the Appellate Assistant Commissioner.
(3.) NOW, in order to understand what the competence of the Appellate Assistant Commissioner is and what are the powers conferred upon the Appellate Assistant Commissioner, it is necessary to bear in mind certain salient facts. It is only the assessee who has a right conferred upon him to prefer an appeal against the order of assessment passed by the Income-tax Officer. If the assessee does not choose to appeal, the order of assessment becomes final subject to any power of revision that the Commissioner might have under Section 33-B of the Income-tax Act. Therefore, it would be wholly erroneous to try and compare the powers of the Appellate Assistant Commissioner with the powers possessed by a Court of Appeal, under the Civil Procedure Code. The Appellate Assistant Commissioner is not an ordinary Court of Appeal in the sense in which that expression is understood in the Civil Procedure Code. It is impossible to talk of a Court of Appeal when only one party to the original decision is entitled to appeal and not the other party, and in view of this peculiar position occupied by the Appellate Assistant Commissioner, the Legislature, as we shall presently point out, has conferred very wide powers upon the Appellate Assistant Commissioner once an appeal is preferred to him by the assessee. If the assessee chooses to remain content with the order of the Income-tax Officer there is nothing that the Appellate Asst. Commissioner can do, however erroneous the assessment may be. But if the assessment is opened up by the action of the assessee himself, then the powers conferred upon the Appellate Assistant Commissioner are much wider than the powers of an ordinary Court of Appeal. The Statute provides that once an assessment comes before the Appellate Assistant Commissioner, his competence is not restricted to examining those aspects of the assessment which are complained of by the assessee; his competence ranges over the whole assessment and it is open to him to correct the Income-tax Officer not only with regard to a matter raised by the assessee but also with regard to a matter which has been considered by the Income-tax Officer and determined in the course of the assessment.;