1. This is an application under Section 109(3) of the Cochin Income-tax Act, 6 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. 3179-13-6. The Income-tax Officer rejected the assessee's 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.

2. 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 year's 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.

3. 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 & that the remaining questions did not raise any question of law. This order was passed on 27-12-1951 and a copy of it was communicated to the assessee on 11-1-1952. The present application was made on 9-7-1952, within the six months' period prescribed in S. 109(3).

4. 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 S. 109(2) aiid 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?”

5. Though the second question as propounded by counsel is not one specifically included in the remaining questions set out in the two applications it really arose out of them. Shri Venkiteswara Iyer formulated that question as whether the Commissioner's 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 S. 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.

6. Under Section 43 of the Cochin Income-tax Act it is competent for the Commissioner to pass such orders in revision he thinks fit. Unlike Section 33-A of the Indian Income-tax Act, 1922, dealing with revisional jurisdiction, there is no inhibition in it from passing an order prejudicial to an assessee; the only limitation imposed by Section 43 of the Cochin Act being that the Commissioner shall not pass any order prejudicial to an assessee without hearing him or giving him a reasonable opportunity of being heard. The question, therefore, whether the Cochin Income-tax Act remained effective law after the Indian Finance Act, 1950, amended the Indian Income-tax Act, 1922 and extended it to all Part B States, except Jammu and Kashmir, is really a material point in the case and admitted by the Commissioner it raises a Question of law. What we have therefore to decide is whether the Commissioner was justified in refusing to make a reference on the ground that the answer to it was so obvious as not to need a reference.

7. Section 13(1) of the Finance Act provides as follows:

“If immediately before the 1st day of April 1950, there is in force in any Part B State other than Jammu and Kashmir or in Mandipur, Tripura or Vindhya Pradesh or in the merged territory of Cooch-Behar any law relating to income-tax or super-tax on profits-of business, that law shall cease to have-effect except for the purposes of the levy, assessment and collection of income-tax and super-tax in respect of any period not included in the previous year for the purposes of assessment under the Indian Income-tax: Act, 1922 (11 of 1922), for the year ending-on the 31st day of March 1951, or for any subsequent year, or, as the case may be., the levy, assessment and collection of the tax on profits of business for any chargeable accounting period ending on or before the 31st day of March 1949:

Provided that any reference in any such, law to an officer, authority, tribunal or Court shall be construed as a reference to the corresponding officer, authority, tribunal or Court appointed or constituted under the said Act, and if any question arises as to who such corresponding officer, authority;, tribunal or Court is, the decision of the Central Government thereon shall be final;

Provided further…………………………… Notwithstanding the difficult language employed in the section it is fairly clear that according to the Section the Cochin Income-tax Act continued to be effective law for the purpose of levy, assessment and collection of income-tax, and super-tax in respect of any period not included in the previous year for the assessment under the Indian Income-tax Act, 1922, for 1950-1951 or for any Subsequent year. It may here be stated that the assessment year 1122 M.E ended on 31-3-1946. The section enacts that for any period not falling within’ “the previous year” for purposes of assessment under the Indian Income-tax Act for the financial or accounting year 1950-1951, the levy, assessment and collection will be done according to the old State law, that is, the Cochin Act. The words keeping the State law alive for purposes specified cover all the three stages of the imposition of income-tax.

8. In this case the final particularisation of the exact sum which the assessee had to pay came only with the order passed in revision. The rule enunciated in S. 13 is virtually the same as that contained in Section 6 of the General Clauses Act that normally the repeal of an enactment shall not affect any liability incurred under the repealed enactment. With reference to the assessment proceedings of any year prior to the assessment for 1950-1951 the Cochin Act shall govern the assessment made or to be made in the Cochin area. Even for the assessment for 1950-1951 chargeability arose under the old. State law though assessment and recovery had to be under the new Central Law. An assessment does not become final until all the proceedings provided in respect thereof are exhausted or the time limit prescribed for such-proceedings expired. The scope and amplitude of Section 13 of the Finance Act, 1950, is, if we may say so with respect, clearly explained in — ‘Mandangooal Kabra v. The Union of India’, AIR 1951 Raj 94 (2) (A).

9. The first proviso to S. 13 quoted above-makes it clear that after 1-4-1950 the authority to institute revision proceedings in respect of an assessment made prior to 1950 in the Cochin area is the officer who functioned in that behalf in this case. The Commissioner's view therefore that he had authority to initiate proceedings under Section 43 of the Cochin Act is plainly right and we do not consider we should in the exercise of the jurisdiction vested in us under S. 109(3) require the Commissioner to state a case and refer it for our answer. The word “may” in S. 109(2) or 109(3) does not mean “shall”. See — ‘Alcock Ashdown & Co. Ltd. v. Chief Revenue Authority, Bombay’, AIR 1923 PC 138 “(B).

10. In — ‘Kripaldas Motandas v. Commissioner of Income-tax, Bombay Presidency, Sind and Baluchistan’, AIR 1943 Sind 64 (C) which is a Sind case, Davis, C.J and Weston J. held that the Commissioner could not be directed to make a reference on a question of law the answer to which was very evident. The same view is seen held in a Calcutta decision reported as — ‘Tarak Nath v. Commissioner of Income-tax, Bengal’, AIR 1947 Cal 347 (D), where Gentle J. (Ormond J. concurring) said as follows:

“It is only when this Court is not satisfied of the correctness of the decision of the Appellate Tribunal that it should be required to state a case. I am of opinion that the decision of that Tribunal was correct. Even if any point of law arose upon which the Tribunal refused to state the case nevertheless the Tribunal's decision being correct, no direction should be given for stating a case. That is the position, in my view, which arises here.”

11. Under the Cochin Act there was no Income-tax Tribunal and the authority to make a reference to the High Court was the Commissioner of Income-tax.

12. We have indicated earlier that the question whether there were materials to sustain the order impugned would amount to a question of law within the meaning of S. 109, but we regret we cannot accede to the contention that there were really no materials for the Commissioner to revise the order of the Appellate Assistant Commissioner in a manner prejudicial to the assessee. As pointed out by the Commissioner, the Appellate Assistant Commissioner's order did not deal with the appeal before him on the merits or consider the grounds mentioned by the Income-tax Officer to reject the accounts and to fix the Income at a higher figure than that admitted by the assessee.

13. The Income-tax Officer, the Appellate Assistant Commissioner and the Commissioner of Income-tax were all agreed that the account books had to be rejected and that a best judgment assessment alone was possible in the case. Before the Appellate Assistant Commissioner or before the Commissioner of Income-tax the assessee had no complaint in their adopting that method of assessment. Before the former he agreed to have the income estimated that way and all the subsequent controversy was about the quantum. The order in the revision proceedings and the order refusing to make the reference show that the assessee's representative had no explanation to give with regard to the several credits brought into the assessee's personal accounts as for capital invested during the account year, and that he had to concede that they would and could lead to the inference that they represented concealed profits from undisclosed sources.

14. In — ‘Ganga Prasad v. Commissioner Of Income-Tax, U.P, U.P’, 1941-9 ITR 373 (All) (E) the Allahabad High Court took the view that where the Income-tax authorities had, on the account books of the assessee himself and on the statements made by him, come to the conclusion that a particular sum entered in the books represented the profits of the assessee for the year in question, no question of law was involved. See also — ‘Lal Mohan Krishna Lal Paul v. Commissioner of Income-tax, Bengal’, AIR 1945 Cal 62 (F) and — ‘Mahabir Prasad Munna Lal…(Applicant); v. Income-Tax Officer, Cawnpore…(Opposite-Party).*, Allahabad’, AIR 1947 All 414 (G). The credit entries in the account books of the assessee for which there was no explanation — much less acceptable explanation — amounted to Rs. 11,700. Further, amounts to the tune of Rs. 17,800 odd were seen credited to the account of the assessee's father-in-law and the assessee was not prepared to show that they were genuine entries by getting his father-in-law to produce his account books or by other proof.

15. As to the question of the productive capacity of the factory and the output, the assessee's representative had to contend before the Commissioner that the closing stock position relating to clay was wrongly entered in the account books. While the books showed that the clay consumed was 7566 candies, the contention raised was that only 3201 candies were used and that a quantity of 4365 candies was omitted to be included in the closing stock. The opening stock for the subsequent year agreed with the closing stock for the preceding year and the Commissioner had therefore sufficient materials to infer that the production was understated in the account books. In the circumstances there is no basis for the complaint that the order made in revision has no materials on the records to sustain it. It is true that the word “judgment” in the expression “to the best of his judgment” should be given a rational meaning and that a best judgment assessment should accord with fair play and justice, but the Income-tax authorities' findings of fact are not open to review by this Court unless there is no evidence to support them. In this case there existed materials for the finding and those materials are all set out in the assessment order, as also in the order passed in revision. As pointed out earlier the complaint really is only about the quantum of the estimated income. The circumstances of the case do not warrant that being brought to the Scrutiny of this Court.

16. In the result the application fails and we dismiss it with costs. Advocate's fee Rs. 75/-. The assessee will forfeit the deposit he has made under Cl. (2) of S. 109.

B/V.R.B

17. Order accordingly.