Sabyasachi Mukharji, J. -
(1.)In this application under article 226 of the Constitution the petitioner has challenged the notice dated 4th November, 1974, issued under Section 263 of the Income-tax Act, 1961. The petitioner is a public limited company engaged in the business of manufacture and sale of aluminium utensils and articles. The petitioner has its factory at Bombay, Calcutta and Madras. The petitioner states that the petitioner is a company whose business consists of manufacture of aluminium articles as detailed in Part III of the First Schedule to the Finance Act, 1965. Accordingly, the petitioner claims that the petitioner is entitled to necessary rebate as contemplated by Paragraph F(1)(b)(ii)(a) of Part I of the First Schedule to the Finance Act, 1965. One of the main businesses of the petitioner consisted of export of aluminium utensils and articles and goods outside India. There was an order of assessment and being aggrieved by the aforesaid order of assessment for the assessment year 1965-66, the petitioner preferred an appeal before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner in his order held, inter alia, as follows :
"20. The next grievance is that the Income-tax Officer did not allow any rebate on export sales amounting to Rs. 26,10,093 and that he further failed to grant rebate on export profits amounting to Rs. 25,25,489. The Income-tax Officer has not mentioned anything on this point in the assessment order. The Income-tax Officer will check up this point and allow such relief and rebate as may be admissible in law to the applicant on export sales and export profits. 21. The next grievance is against the Income-tax Officer not allowing the rebate on surcharge as provided for in the Finance Act, 1965, Paragraph F(1)(b)(ii) read with Part III of the First Schedule. The Income-tax Officer will check up this point and allow such rebate as may be admissible in law to the applicant."
(2.)By virtue of the aforesaid direction of the Appellate Assistant Commis sioner on the 13th November, 1972, the Income-tax Officer passed an order purporting to be one under Section 251 of the Act in which he gave effect to the Appellate Assistant Commissioner's order in the manner following :
Rs. 17,43,703 Less : Rebate on 2% of export sale, i.e., 2% of Rs. 26,16,093 @ 46.63% (i.e., 46-63% on Rs. 52,322) 24,398 17,19,305 (Average rate of tax for rebate on export profit = 17,43,703 x 100 37,83,090 = 46.09%) Less : Rebate on export profit @ 1/ 10th of 16.00% on Rs. 25,25,489 (as per para (20) of A. A.C.'s order) 1,16,173 16,03,132 "
(3.)Thereafter, the impugned notice was issued by the Commissioner of Income-tax on the 4th of November, 1974. In the said notice after setting out the facts, the Commissioner observed, inter alia, as follows :
"The Income-tax Officer while giving effect to the orders of the Appellate Assistant Commissioner allowed rebate on export profit amounting to Rs. 1,16,173 and Rs. 65,291 for the assessment years 1965-66 and 1966-67 respectively. In doing so, it appears that the Income-tax Officer had overlooked the clear provisions of the Finance Act, 1965, and 1966 to the effect that such rebate would be admissible only if the total income included any profits and gains derived from the export of any goods or merchandise outside India. Obviously, it appears to me that the Income-tax Officer incorrectly applied the provisions of the two Finance Acts. It is also seen that the Income-tax Officer applied a lower rate of tax holding that the assessee manufactured articles specified in Part III of the First Schedule to the Finance Act, 1965, i.e., aluminium, whereas the assessee was producing aluminium utensils from aluminium. This also appears to be an incorrect application of the facts."