EAST KHAS JHARIA COLLIERY COMPANY LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Commissioner of Income-tax by an order of this Court was required to state a case upon the question whether his review order under Section 33 of the Indian Income-tax Act, 1922, dated 17th February, 1940, declining to interfere with the order of the Assistant Commissioner is an order prejudicial to the assessee, within the meaning of Section 66, sub-section (2), Indian Income-tax Act, 1922.

(2.) THE fact of the case may be briefly stated. THE assessee is a private limited Company carrying on coal mining business in Jharia. THE Khas Jharia Company (1933) limited, hereinafter to be referred to as the Khas Company is an allied private concern belonging to the same share-holders and under the same management as the assessee.

(3.) IN 1933 the Madras High Court in a Full Bench of 5 Judges-Voora Sreeramulu Chetty-ovrruled the decision in Venkatachalam Chettiar. The learned Chief Justice who delivered the judgment of the Bench (the other learned Judges agreeing) expressly observed that Section 66 (2) merely contemplates a prejudicial order and if an order of the INcome-tax Officer is prejudicial, an order which confirms it or rejects an application asking that it be revised is also prejudicial. It could not be said that a decree of an appellate Court dismissing an appeal from a Court of first instance is not prejudicial to the appellant. It is just as prejudicial as the original decree. There is no difference in this respect between a dismissal of an appeal and the dismissal of an application for revision when the law permits such an application to be made. The learned Chief Justice repelled the argument advanced on behalf of the Commissioner that the first proviso to Section 66 (2) was not complied with in that case by stating that the effect of the proviso was merely this that a reference shall lie only when a question of law arises out of the order passed under Section 33, but if the matter is one which relates to an order under SEction 31 or Section 32 a question of law which arose out of the previous order alone cannot be referred. It should be stated here that in this case also the assessee had not moved the Assistant Commissioner and, therefore, there was no order under Section 31.