Suganchand Saraogi v. Commissioner Of Income-Tax, Calcutta.

- The facts in this case are shortly as follows : The petitioner in this case is Messrs. Suganchand Saraogi stated to be a partnership firm. Since the assessment year 1950-51 it has been assessed to income-tax as an unregistered firm. In this case we are concerned with the assessment of the firm for the year 1953-54. On or about the 25th September, 1953, a notice under section 22(2) of the Income-tax Act was served upon the assessee. No return was filed. On the 4th March, 1957, a notice under section 22(4) of the said Act was issued and served on the assessee on the 6th March, 1957. No response was received from the assessee although reminders were issued on 25th June, 1957, and 4th July, 1957, requesting it to appear before the Income-tax Officer with the books of account. No response having been received, a final notice was served to the effect that if the party failed to appear, an ex parte assessment would be completed. In spite of the reminders the assessee failed to comply with the requisition. Thereupon, on the 31st July, 1957, the Income-tax Officer completed the assessment on an ex parte basis. This was, therefore, a best judgment assessment based on previous records and information available to the Income-tax Officer. The total income was computed to be Rs. 3 lakhs. Against this assessment order no appeal was preferred, but an application was made for revision to the Commissioner of Income-tax by petition dated 15th November, 1957. In this petition it is stated that at the relevant time all the partners (seven in number) were out of Calcutta and that the agent in Calcutta was ill and so forth. It was urged that the computation of rupees three lakhs as income in the assessment order was "hard and heavy without any basis whatsoever." The matter was considered by the Commissioner of Income-tax and he passed an order dated 20th January, 1960, a copy whereof is annexure "D" to the petition. The Commissioner did not accept the story of the assessee about the circumstances leading to the ex parte assessment. He then dealt with the question of quantum. It was stated in the order that the Income-tax Officer has subsequently examined the books of account and a tabular statement was set out showing the basis on which the assessment had been made for other years, namely, between the years 1950-51 and 1955-56. This tabular statement contains two columns which are important. The first sets out the income on which the assessment had been made during these assessment years, and the other column sets out the "gross income from brokerage". This firm carried on business as commission agents and brokers, so that the income from brokerage was the principal income, but there were incomes from other sources as well. This is evident from the figures of 1954-55. In that year, the income on which the assessment was made was Rs. 1,22,400 but the gross income from brokerage was Rs. 1,11,943. That the income varied widely from year to year is also apparent from the fact that the gross income from brokerage in 1952-53 was Rs. 3,32,661 whereas the income in 1950-51 was Rs. 58,952 and in 1955-66 it was Rs. 67,174. Having considered these figures, the Commissioner stated as follows :

"The Income-tax Officer examined subsequently the books of accounts relating to the assessment year 1953-54 and found that the assessees brokerage income was Rs. 1,18,000 gross.

From the facts noted above even if one does not go into the books of account (which cannot be made the basis of assessment when an exparte assessment is going to be framed), the estimate of the assessees income at Rs. 3 lakhs seems to be wide off the mark....... However, taking into account all the relevant facts of the case I would reduce the business income to Rs. 1,75,000."

The assessee had also made an application for getting the benefit of registration. This prayer was rejected, because the assessee had not made an application for registration at the proper time. It is against this order of the Commissioner under section 33A of the Income-tax Act, that this application is directed. The rule that has been issued called upon the Commissioner of Income-tax to show cause why this order dated 20th January, 1960, should not be quashed by a writ in the nature of certiorari.

Mr. Meyer appearing on behalf of the respondents has taken a preliminary point that an order of the Commissioner of Income-tax under section 33A is an administrative order and as such no writ of certiorari can lie to quash such an order. Although it seems to me that the matter can be disposed of on this preliminary point, I would like to say something on the merits. Even on the merits, I do not see that any ground has been made out for my interference. What Mr. Mitra argues is that the figure of Rs. 1,75,000 as income is an impossible figure, where the gross income is Rs. 1,18,000. In other words, he argues that the Income-tax Officer after looking into the books of account has found that the total income of the assessee is Rs. 1,18,000 gross and yet the Commissioner holds the business income for the assessment year to be Rs. 1,75,000. Mr. Mitra argues that out of Rs. 1,18,000 gross, at least Rs. 40,000 would have to be deducted as expenses, so that the figure of Rs. 1,75,000 must necessarily be bad. In this argument there seems to be several flaws. The sum of Rs. 1,18,000 has not been found to be the total gross income of the assessee for the assessment year 1953-54, but is the gross income of the firm from brokerage only. As I said above, it is evident that the firm has other sources of income. It is true that the Commissioner has not stated the details of the figures upon which he has arrived at the sum of Rs. 1,75,000 as the income of the firm for the relevant assessment year. But then, he has stated that he has taken into account "all the relevant facts" of the case. It is clear from the order itself that the Income-tax office had examined the books of account and the result of the examination was doubtlessly available to the Commissioner of Income-tax. This jurisdiction cannot be said to be a court of appeal on facts and figures. The error must be an error of law apparent on the face of the record. Mr. Mitra argues that the Income-tax Act requires all the detailed computations to be set out in the assessment order. He has not been able to cite any authority to that effect. He has cited authority to show that for an assessment there must be computation. That must necessarily be so. This, however, does not mean that every detail of the calculations should be set out in the order under section 33A. The fact that such an order is an administrative order and not a judicial one, has some bearing on the question. If it is an administrative order, it is not justiciable and, therefore, I do not see why the detailed reasonings should be given. This is a risk which the assessee takes in exercising his rights under section 33A(2) of the Income-tax Act. He has an alternative remedy by way of appeal, and if he does not choose to avail himself of a judicial order, he cannot complain that the matter is not in a form in which we expect judicial orders to be made. As I stated above, this is not a court of appeal on facts and figures. Of course, if there were an inherent impossibility, that might have been different. I see, however, no absurdity on the face of the order.

I now come to the preliminary point which is well-founded. The question is as to whether an order made by the Commissioner in revision under section 33A of the Income-tax Act is an administrative order or a judicial one. This exact point was dealt with by me in Sitalpore Colliery Concern Ltd. v. Union of India [[1957] 32 I.T.R. 26.]. I pointed out that originally the power of revision granted to the Commissioner was contained in section 33. Under it, the Commissioner could of his own motion, call for the record of any proceeding under the Act in which an order had been passed by any authority subordinate to him, and he had the same powers as are conferred upon him under section 33A. The only difference between the original section 33 and section 33a which has supplemented that section in the Income-tax Act, is that a right has now been given under sub-section (2) of section 33a to the assessee to make an application for revision. Even now, an order under section 33A can only be made, which is not prejudicial to the assessee. The question as to whether an order under section 33 as it originally stood was an administrative order or a judicial one had been determined by the Privy Council in Commissioner of Income-tax v. Tribune Trust, Lahore [[1948] 16 I.T.R. 214.]. It was held by the Judicial Committee that the order was wholly administrative and not judicial. I relied on the Privy Council decision and also pointed out several facts which tended to show that an order under section 33A was also administrative. Inter alia I pointed out that if the order under section 33A was judicial, there was no reason whatsoever why it could not be to the prejudice of the assessee. It was only because such a revisional procedure was considered administrative that it was made of a summary nature. The Commissioner could act by himself, he could look into the records, not necessarily in the presence of the assessee, and was not called upon to hear the assessee. Such an order cannot be said to be judicial. I pointed out that if the order was judicial, he would have to give notice to the assessee at every stage of the proceedings. From a comparison with the other sections in the Act which require a hearing to be given to the assessee before an order could be made, I came to the conclusion that an order under section 33A was administrative and not judicial. This decision has now been supported by various High Courts in India. In Edara Venkaiah v. Commissioner of Income-tax [[1959] 35 I.T.R. 24.], the High Court of Andhra Pradesh held that the revisional power of the Commissioner under section 33A of the Income-tax Act is exercised only in his administrative capacity. There is only one aspect of this decision to which I would like to refer. Reddy J. was dealing with the question as to whether the Commissioner should give his reasons for coming to a different conclusion from the Income-tax Officer. He appears to have held that, where the revisional authority allows that petition for revision and sets aside the decision of an inferior tribunal, he must give reasons for coming to a different conclusion. With great respect I do not see how it can be held that the order under section 33A is administrative and yet lay down that the order must set out reasons. The idea for compelling reasons to be given is to be able to examine the same when the matter comes up before a higher tribunal. Since the matter is administrative, it is not justiciable in higher courts. Although I think that it is very desirable that reasons should be given in such an order, I do not see how it can be held that without such reasons being given, the order would be defective. In this case, reasons have been given, but not with that thoroughness as would be expected in a judicial order. I do not think that the order could be said to be bad, because of that reason.

The next case cited is a decision of Division Bench of the Andhra Pradesh High Court in Additional Income-tax Officer, Cuddapah v. Cuddapah Star Transport Co. Ltd. [[1960] 40 I.T.R. 200.]. It was held that, while acting under section 33A of the Income-tax Act the Commissioner does not perform any judicial or quasi-judicial functions. The order of revision passed by the Commissioner under section 33A is an administrative order and as such is outside the purview of the extraordinary jurisdiction of the High Court under article 226 of the Constitution and an order of the Commissioner under section 33A cannot be quashed by the issue of a writ in the nature of certiorari. In this case the divisional bench referred to and relied on my judgment stated above. It also referred to the Privy Council case mentioned above. The other case that needs to be cited on this point is a decision of the Bombay High Court in Bhagwandas is Kevaldas v. N.D. Mehrotra [[1959] 36 I.T.R. 538.]. This was a case in which an application under section 33A was made before the Commissioner of Income-tax and the High Court interfered by issuing a writ in the nature of certiorari, whereby the order was quashed on the ground that there was error of law on the face of the record. In this case, however, the point that an order under section 33A was an administrative and not a judicial order, and that a writ in the nature of certiorari cannot be issued was not raised and was not considered at all. Therefore, it does not render any assistance in solving the issue we have before us in this application. None of the decisions cited above were considered, and indeed, such a point was not raise by the respondent and as such did not fall to be considered.

The result is that for the reasons aforesaid, this application fails. The rule is discharged. Interim orders are vacated. No order as to costs.

Application dismissed.