Deb, J. - (1.) The following questions of law are involved in this reference under Section 66(1) of the Indian Income-tax Act, 1922: " (i) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the sale made by the assessee of mines and mining rights did not amount to a venture in the nature of trade or trading transaction so "that the surplus is not assessable as business profits ? (ii) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that there was no profit under Section 10(2)(vii) of the Indian Income-tax Act, 1922 ? "
(2.) The assessment year is 1957-58. The previous year ends on December 31, 1956. The assessee is a company. In the assessment-year, the assessee made a profit of Rs. 6,25,444 by transferring certain machinery and plants to five newly floated 100% subsidiary companies of the assessee and also made a profit of another sum of Rs. 17,16,369 by selling certain mining rights, buildings and other plants and machinery to those subsidiaries. The assessee did not disclose those transactions in the assessment year and accordingly they were not taken into consideration by the tax officer and from his assessment order dated March 29, 1962, the assessee filed an appeal on some other grounds with which we are not concerned.
(3.) While that appeal was pending, the Commissioner of Income-tax caused a show-cause notice, dated September 6, 1962, under Section 33B of the Act to be served on the assessee. Instead of appearing before the Commissioner and without making out any case whatsoever on the merits, the assessee wrote two letters dated September 26, 1963, and February 2, 1964, to the Commissioner, who, on February 24, 1964, passed an ex parte order under Section 33B by cancelling the said assessment order and directing the tax officer to make a fresh assessment after serving the statutory notice on the assessee and giving the assessee an opportunity of being heard on these transactions.;