LexTHE COMMISSIONER OF INCOME-TAX versus SHAPOORJI PALLONJI MISTRY
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
38.C.R.
SUPREME COURT REPORTS
171
THE COMMISSIONER OF INCJME-TAX
v.
SHAPOORJI PALLONJI MISTRY
(S. K. DAS, M. HmAYATULLAH and J.C. SHAH, JJ.)
Income Tax-Power of Appellate Assistant Commissioner
to enhance ass€ss1nent-ltems not mentioned in return or consi·
dered by the Income Tax Officer-Whether new source,s of income
could be taxed-Indian Income Tax Act, 1922, (11 of 1922),
ss. 31(3)(a), 33B, 34.
The assessee had received in July 1946, a sum of
Rs. 40,000/· which according to him represented a receipt of
a capital nature.
This fact was brought to the ·notice of the
Income Tax Officer during the proceedings for the assessn1ent
year l946-47 and the Income Tax Officer made a note that
the question would be considered again at the time of 1947-48
assessment.
In the return filed for the assessment year
1947-48 this amount was not shown by the assessee. and the
Income 'fax Officer also overlooked his previous note, with
the result that this item was omitted.
During the pendency
of the appeal by the assessee before the Appellate Assistant
Commissioner the Income Tax Officer wrote a letter to the
Appellate Assistant Comlnissioner inter alia requesting him
to assess the amount of Rs .. 40,000/-.
'fhe amount was
assessed and included in the original assessment.
On reference, the High Court answered that the Appel-
late Assistant Commissioner was not comp~tent to enhance
the assessment. The question is whether in an appeal filed
by an assessee, the Appellate Assistant Commissioner can
find a new source of income not considered by the Income-tax
Officer and assess it under his powers granted by s. 31 of the
Act and travel beyond the reco1-d in enhancing the assessment
for any year.
He/,d, that in view of the provisions of ss. 34 and 33B by
which escaped income can be brought to tax., the power of the
Appellate Assistant Commissioner is limited ; he has no power
to travel beyond the record to enhance the assessment of any
year by discovering new source of income not mentioned in
the return of the asses see or considered by the Income Tax
Officer in the order appealed from.
He.ld, further, that provisions of ss. 33B and 34 enable
escaped income from new sources to be brought to tax after
following special procedure. Enhancement of assessment by
the discovery of new sources of income is not contemplated
1961
1962
1·1it Cor;,n,iuior.er 1/
lncornc•lax
v.
Shaj,oQrji l'allonji
.\1 istr;•
Hidayati.llah- J.
172 SUPREME COURT REPORTS [1962) SOPP.
under s. 31, bcc,1u~e if frt:sh sources of incon1c arc
as~es~cd
undr.r tha.t ~ection 1 the assc~sce \vill lie deprived of a finding
Ly l\\'O tribunals, and one right to aµpccd.
'l'hc pu\vcrs of
rcn1aud should be cxcrcisr.U. in ~uch casr.s.
__ ;.\:arroJ.t 1/f.l.'/ Jlanorda .. ~s v.
Cu1nuii.~-si•Jncr_ of
lnc~11t'~·frt(,,
!l9:>1j 31 1.1'.ll. 909,.Jayarnalli Th~rani v. G'o1nniissioner of
lncl)11t•! 1'r1.r:, (1925j f.L.ll, 1t P..i.L JIJJ, (),1ja!a.}a,_i;hn1i Uinn,iny
}"'~ctory v. (]1 .. Hnrni.s<;i1Jnt:1 of I 11,-:oni•:-ta.i.:, [I 952J 22 I :I'.({. 502,
li1sh11:r11uzth l'ritsad JJ!uzyu-at J>r,i:;a<l v. Co11inn'ssio11,fr of /nOJllH:.-
fux, [l9:)5J 2!) I:I'.ll. 74B ;u1tl. 1'hc ()onani,;;sioner of l11,r:o1nt·lri.c
v. Mis. JfcJJil/an & Co. [l~"JBj S.C.R. 689, referred to.
CIVIL Al'l'ELLATE Jt:HISD!CTION: Civil Appeal
Xo. 420 of l!J6l.
Appeal by ~pecial leavo from tho judgment
and order dated ilhrch 14, 1958, of the Bombay
High Court iu I.T.H. No. 54 of 195i.
I(: N. Rajagopal &i~tri and D. Gupta, for the
appellant.
R. J, Kolah, D. Ii. Dw1srkcw.U1S, S. N. Andlcy,
Rwne;;hunr Nath aud P.L. Vohra, for tho rcspondl•nt.
l!lui. :l!'eburary 14.
The Judgment of the
Court was delivered by
liIDAYATl:LLAll, J:-The asscssee, who is the
respondent here, had received on July 20, l!l·Hl a
a sum
of Rs. 40,000/·.
In tho proceedings for
assrlisment for the assessment ye.u, I 94tl . .i7, this
came to the notice of tho Income·t<1x Officer. Since
tho receipt fell within the accounting year rolative
to tho assessment year, 1947-48, tlio Income-tax
Officer <lid not assess the amount making a noto,
"The question will however bo oonsidered again at
tho time of 19i7--i8 assessment." In the return fil~d
for the 8.sseesment year, l!J.!7-48, this amount was
not shown by the a88essee. The Income-tax Oflicer
also overlooked tho note at tho end of bi" order in
the back yoar's 'lBsessrnent, with the result that
this it.cm was omitted, The asExcerpt shown. Read the full judgment & AI analysis in Lexace.