ABDUL KHADER Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is an application under section 109 (3) of the Cochin Income-tax Act, VI of 1117, (registered as an Original Petition) to call upon the Commissioner of Income-tax to state a case in respect of an order made by him in a suo motu revision and refer the same to this Court. The petitioner, who will hereafter in this order be referred to as the assessee, is the proprietor of a Tile Factory in the Trichur District. The assessee submitted the return of his income for the assessment year 1122 M. E. showing an income of Rs. 3,179-13-6. The Income-tax Officer rejected the assessees account books which were produced to support the return and made the assessment to the best of his judgment by estimating the income at Rs. 22,500. The assessee preferred an appeal before the Appellate Assistant Commissioner who allowed it to the extent of reducing the income to Rs. 11,061. The basis of this decision was that in the course of the assessment for the succeeding year the Income-tax Officer who made the previous years assessment had himself found that in the previous year he had over-estimated the productive capacity of the factory and accordingly fixed the income for the Assessment year 1123 M. E. at Rs. 11,061, as against Rs. 22,500 fixed for 1122. The Appellate Assistant Commissioner considered that to be a safe guide for the disposal of the appeal. An appeal in respect of the assessment for the year 1123 M. E. was heard along with the appeal relating to the 1122 assessment and the assessee had conceded that, if the appeal for 1122 was allowed to the extent of reducing the income to that fixed for the assessment year 1123, he will have no complaint in respect of either year. Accordingly the appeal relating to 1123 was dismissed and the appeal with respect to the previous year (1122) was disposed of as indicated above. On the latter decision, that is, on the order disposing of the appeal in respect of the assessment for 1122, the Commissioner of Income-tax, however, started revision proceedings in exercise of the jurisdiction conferred on him under section 43 of the Cochin Income-tax Act. After due notice to the assessee and after hearing his representative the Commissioner fixed the income for that year at Rs. 30,184. The order is founded mainly on the ground that the Appellate Assistant Commissioner had not taken into account the special features pertaining to the assessment year 1122 and that he went wrong in brushing aside the grounds given by the Income-tax Officer to reject the accounts and make the assessment to the best of his judgment. Feeling aggrieved by this order the assessee moved the Commissioner under section 109 (2) of the Cochin Income-tax Act requiring him to refer to this Court certain questions of law which according to him arose out of the order. As many as eight questions were formulated in the application presented to the Commissioner. After due hearing the Commissioner rejected the application, stating that though the question set out as No. 1 in the application raised a question of law the answer to it was so obvious that a reference was unnecessary and that the remaining questions did not raise any question of law. THIS order was passed on 27th December, 1951, and a copy of it was communicated to the assessee on 11th January, 1952. The present application was made on 9th July, 1952, within the six months period prescribed in section 109 (3).

(2.) The assessee was represented before us by Shri T. S. Venkiteswara Iyer, Advocate, and Shri G. Rama Iyer, Advocate, appeared for the Commissioner of Income-tax. At the outset of his arguments the learned counsel for the assessee submitted that it would suffice if we call upon the Commissioner to refer to this Court the question set out as No. 1 in the application made to the Commissioner under section 109 (2) and in the present application and another. Question No. 1 read : "Has the Commissioner jurisdiction to initiate proceedings under section 43 of the Cochin Income-tax Act in view of the cancellation of the said Act by section 13 of the Indian Finance Act, 1950 ?" Though the second question as propounded by counsel is not one specifically included in the remaining question set out in the two applications it really arose out of them. Shri Venkiteswara Iyer formulated that question as whether the Commissioners finding in revision had any materials on the records of the proceedings to support it. Admittedly question No. 1 raises a question of law and question No. 2 as propounded by counsel raises a question which the High Court is competent to examine in the exercise of their jurisdiction under section 109. Though the High Court will not decide whether upon the evidence led the finding of the Commissioner on questions of fact is correct, still it is competent to the High Court to go into the question whether there are any materials at all to come to such a finding.