COMMISSIONER OF INCOME-TAX, BOMBAY vs. M/S. AMRITLAL BHOGILAL & CO.

CIVIL APPEAL No. 128/1955Supreme Court[1959] 1 S.C.R. 71328 April 1958Bench: 3 JudgesAuthor: T.L. VENKATARAMA AIYYAR, P.B. GAJENDRAGADKAR, A.K. SARKAR17 pages
AI SummaryAllowed

What were the facts?

The respondent firm was assessed for assessment years 1947-48, 1948-49, and 1949-50. The Income-tax Officer renewed its registration under Section 26A and allocated partner shares. Appeals against assessment orders were filed with the Appellate Assistant Commissioner (AAC), who partly accepted appeals for 1947-48 and 1948-49, with the 1949-50 appeal pending. Subsequently, the Commissioner of Income-tax, under Section 33B(1), cancelled the firm's registration due to a minor partner and directed fresh assessments as an unregistered firm. The Appellate Tribunal allowed the respondent's appeals. The High Court, on reference, held that the Commissioner's revisional power under Section 33B(1) could not be exercised for years where assessment orders had merged with AAC's appellate orders, nor for the pending 1949-50 appeal, as the AAC could still consider the registration's propriety. The Commissioner appealed to the Supreme Court.

What did the Supreme Court hold?

The Supreme Court held that the Commissioner had the authority under Section 33B(1) to set aside the orders of registration made by the Income-tax Officer. The Court clarified that an order granting registration under Section 26A was not appealable before the Appellate Assistant Commissioner and could be cancelled by the Commissioner in his revisional powers under Section 33B(1). The doctrine of merger, which applies to assessment orders, does not apply to registration orders. Regarding the second issue, the Court found that while the Commissioner's order purported to set aside assessment orders, it was clear from the context that the intention was to direct the Income-tax Officer to make suitable consequential amendments in the machinery or procedure for recovering tax after the cancellation of registration. The Court noted that the Income-tax Officer had accepted the taxable income figures determined by the appellate authority and proceeded on the basis of the firm being unregistered. Therefore, the Commissioner's order was not bad in law on this ground. The third issue regarding the procedure for fresh assessments was considered academic if the principal question about the Commissioner's power was answered in favour of the appellant, and it was conceded that no further notice was needed when the Income-tax Officer merely adopted a different machinery for tax recovery. Consequently, all questions were answered in favour of the appellant.

What were the issues?

1. Whether the Commissioner had the authority under Section 33B(1) of the Indian Income-tax Act, 1922, to cancel the registration granted under Section 26A, notwithstanding that the assessment orders for some years had been partly modified by the Appellate Assistant Commissioner. - Assessee's contention: The Commissioner's revisional power under Section 33B(1) could not be exercised because the orders of registration had merged with the appellate orders of the AAC, and for the pending appeal year, the AAC could still consider the registration's validity. - Revenue's contention: The Commissioner had the power to cancel the registration under Section 33B(1) as it was a separate order from the assessment order and not subject to the merger doctrine applicable to assessment orders. 2. Whether the Commissioner's order directing fresh assessments was invalid because it purported to set aside assessment orders already modified by the Appellate Assistant Commissioner. - Assessee's contention: The Commissioner could not set aside assessment orders that had already been modified by the AAC. - Revenue's contention: The Commissioner did not intend to set aside the assessment orders but merely to direct consequential amendments in the recovery procedure following the cancellation of registration. 3. Whether the procedure adopted by the Income-tax Officer in passing fresh orders after the Commissioner's cancellation of registration was invalid.

Which sections of the Income-tax Act were involved?

Section 26A,Section 23(3),Section 23(6),Section 33B(1),Section 31,Section 66(1),Section 13,Section 55,Section 23(5)(b)

AI-generated summary — verify with the full judgment below

s.c.R. SUPREME COURT REPORTS had been made in stating that no super-tax was r95'8 1eviable. This decision clearly shows that the sub- v k-h 1 sequent cancellation of the assessees' registration was en a~'~ ~.am held by Their Lordships of the Privy Council to form Bombay nyeing &.. part of the record retrospectively in the light of the Mfg. co., Ltd. said subsequent event, and the order was deemed to . ·-· - ·. suffer from a mistake apparent from the record SO as Ga;enliragaflkar ]. to justify the exercise of the rectification powers under s. 35 of the Act. It is because Their Lordships thought thats. 35 would have been clearly applicable that they did not decide the question as to whe'ther s. 34 could also have beeninvoked. This decision lends consider- able support to the view which we are disposed to take about the true meaning and scope of the expres- sion ''-the inistake apparent from the record" occur~ ring in s. 35. · We must accordingly hold that the High Court. of Bombay was in error in coming .to the conch,1sion that the notice issued by the Income-tax Officer calling upon the respondent to pay the sum of Rs. 29,446-9-0 was not warranted by law. ·

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 26A

All 40 judgments and leading authorities on Section 26A →

Recent GST High Court judgments

Search GST case law →