Satish Chandra, J. - (1.) The question raised in this reference relates to the interpreatation of the second proviso to Section 34(3) of the Indian Income-tax Act, 1922.
(2.) The question relates to the assessment year 1955-56, the accounting period for which ended on March 31, 1955. During this accounting period, the assessee, which is a charitable trust, received a sum of Rs. 82,053 from M/s. Karam Chand Thapar & Bros. (Coal Sales) Ltd., as commission/ brokerage. It appears that the company had deducted the tax payable on this commission at source. In April, 1956, the assessee-trust filed an application before the Income-tax Officer under Section 48 of the Indian Income-tax Act, 1922, for the refund of the tax deducted at source. Its plea was that the assessee was a charitable trust not liable to tax. This plea was repelled by the Income-tax Officer, who in view of the C.B.R.'s order No. FN 20/20162-I.T. (AI) dated August 9, 1962, brought this amount of Rs. 82,053 to tax; and after taking into account the amount deducted at source in respect of tax payable on it, raised a demand of Rs. 14,921.99. He directed that this amount has been adjusted with the refund due to the trust for the assessment year 1956-57.
(3.) Being aggrieved, the assessee went up in appeal. At the hearing of the appeal, it was submitted that the Income-tax Officer had no jurisdiction to pass an assessment order on an application for refund made under Section 48 of the Act of 1922. No notice under Section 23 of the Act was served on the assessee nor any opportunity of hearing afforded to the assessee. The Appellate Assistant Commissioner accepted this submission. He set aside the impugned order and directed the Income-tax Officer to make fresh assessment according to law.;