THE COMMISSIONER OF INCOME-TAX, MADHYA PRADESH versus SETH KHUSHAL CHAND DAGA on 7 March 1961

186 SUPREME COURT REPORTS [1962]

r96r persons and was rightly so assessed to Income-tax -and Excess Profits Tax. The Commission" Th ] h c ]] d · h of Income-tax, e appea s are t ere1ore a owe wrt costs. One Poona hearing fee. v.

Appeals allowed.

Buldana District Main Cloth Importers Group Kapur 1

THE COMMISSIONER OF INCOME-TAX, MAD HY A PRADESH

March 7. v. (J. L. KAPUR, M. J. c. SHAH, JJ.)

SETH KHUSHAL CHAND DAGA (J. L. KAPUR, M. HIDAYATULLAH and Income Tax-Set-of! of loss-Amount computed not notified in writing-Effect-Income-tax Act, 1922 (XI of 1922), ss. 24, 24(3).

For the accounting year 1941 the assessee's profits from his share in an unregistered firm were set off against his losses in the individual business and the Income Tax Officer determined the loss to be carried forward at Rs. 53,840, but did not notify to the assessee by order in writing the amount of the Joss as computed by him as required by s. 24(3) of the Act. The asses-see appealed against the assessment but did not question the amount of the loss which had been determined. In the year 1942-43 the assessee claimed to re-open the question of the Joss to be carried forward stating that it was Rs. 2,u,760. This contention was rejected by the Tribunal. The contention was again raised by the assessee in the assessment years 1948-49 and 1949-50.

The question was whether the loss which had been deter-mined and ordered to be carried forward must be deemed to haye become final because no appeal was filed against that determination.

Held, that computation of the amount of loss under s. 24 of the Income-tax Act does not become final unless the Income-tax Officer notifies by order in writing, the amount of the loss as com-. puted by him to the assessee. The assessee was entitled to have •

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the loss redetermined in a sub•equent year though he had not filed an appeal against the determination of _the lo_ss but no appeal could be filed in the absence of an order in wnt1ng. Seth ]amnadas Daga v. The Commissioner of Income-tax, [rg6r] 3 S.C.R. r74, applied.

x96x --. . .

The Commissionef 0! Income-tax, Madhya Pradesh

v. Stth Khushal Chand Daga

CIVIL APPELLATE JURISDICTION: Nos. 148 to 150 of 1960.

Civil Appeals

Appeals by special leave from the judgment and order dated October 31, 1956, of the former Nagpur High Court in Misc. Civil Case ~o. 184 of 1953.

K. N. Rajagopala Sastri and D. Gupta, for the appellants.

J. M. Thakar, S. N. Andley, J. B. Dadachanji and Rameshwar Nath, for the respondents.

1961. March 7. The Judgment of the Court was delivered by HIDAYATULLAH, J.-These appeals, by special leave, flidayatullah J.

have been filed by the Commissioner of Income-tax, Madhya Pradesh, against the assessee, an individual, by name Seth Khushal Chand Daga. The assessee was a partner in a firm, Messrs. R. B. Bansilal Abir-chand of Nagpur. In the year of account ending Diwali, 1941, he received his share of assets and pro-perty from this firm, and started business of his own. In the same year, his sources of income were specula-tion, allowance from Government as treasurer, house property and dividends. The assessee had received some profits from his share in an unregistered firm against which were set off his losses in his individual business, and the Income-tax Officer, who made the assessmenL, determined the loss to be carried forward, at Rs. 53,840. The assessee appealed against the assessment, but did not question the loss which had been determined.

For the year, 1942-43, the assessee claimed to re-open the question of the loss to be carried forward, stating that it was Rs. 2,ll,760. This contention was not accepted by the Department, and on appeal, by the Tribunal. The contention was, however, raised again by him in the assessments for the years, 1948-49 and 1949-50. In these years, he had profits from

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his share in the unregistered firm, Rs. 1,82,773 and r96r

Th c --. . Rs. 1,39,922 respectively, against which were set off 0[~ ][r:::;'.;::~" ][his losses in his individual business, Rs. 1,18,913 and ]Madhya Pradesh Rs. 60,589 respectively. The contention of the as-v. sessee was that the profits which he had derived from Seth Khushal the unregistered firm could not be set off against the Chand naga loss in his individual business, as the profits of the HidayatuUah 1. unregistered firm had borne tax not in his hands but in those of the firm. This contention was rejected by the Department; but on appeal to the Tribunal, it was accepted. On the Tribunal being moved to make a reference, it referred four questions. Two of those questions dealt with matters also arising out of these assessments, but they have not been mentioned by us in this judgment. The two questions pertaining to these appeals were:

"(1) Whether the assessee was competent in law to raise a question with regard to the determination of loss for the assessment year 1941-42 as finally determined in appeal, in the course of proceedings for tb,e assessment year 1942-43 when the loss brought forward from 1941-42 was being set off?

(2) Whether, on the facts and in the circumstan- ces of the case, the Tribunal was right in holding that the loss suffered by the assessee from his per-sonal business (including his share of loss from another firm) cannot be set off under Section 24(1) against his taxed share income from an unregister-ed firm?"

These questions were answered by the High Court against the Commissioner, who has now appealed, with special leave.

It was conceded by the learned counsel for the Commissioner that the second question has now been decided by this Court in Seth Jamnadas Daga v. The Commissioner of Income Tax('), and that the answer must be against the Department. That, portion of the case was thus not argued.

As regards the first question, the only contention raised was that the loss which had been determined and ordered to be carried forward must be deemed to \11 (1961] 3 S,C.R. 174·

(',.

»

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have become final, because no appeal was filed against z96r that determination. But it appears that the proce. -d tax ure Officer has 1 a1 ['d ][d ]own to b y notify to s. . 24(3) un er w the d assessee by order in h' IC h th e ncome-I The ~:adh~·~/ [[1 ]]c. mmi.<Sion" 0";~;.~:;h 1 writing the amount of the loss as computed by him v. for the purposes of that section was not followed. No Seth Khushal doubt, under s. 30 an appeal lies, if the assessee ob-Chand Daga jects to the amount of loss computed and notified under s. 24; but inasmuch as the Income-tax Officer Hidayatullah f. had not notified the loss computed by him by order in writing, an appeal could not be taken on that point. In our opinion, the assessee was, therefore, entitled to have the loss re-determined in a subsequent year. Learned counsel for the Commissioner stated that the Department was not very anxious for the decision, because this particular assessee has had only losses in the years following, and no loss would be occasioned to the Revenue, if the losses brought forward be re-determined. But that is a matter, with which we are not concerned. In our opinion, the judgment of the High Court impugned before us was correct in the circumstances of the case.

-The c. mmi.<Sion" ~:adh~·~/ [[1 ]]0";~;.~:;h 1 v.

The appeals fail, and are dismissed with costs. One hearing fee.

.A.Ji:peals dismissed.

BAWA HARIGIR

v. ASSISTANT CUSTODIAN, EVACUEE PROPERTY, BHOPAL.

(B. P. SINHA, c. J., s. K. DAS, A. K. SARKAR,

N. RAJAGOPALA AYYANGAR and

J. R. MUDHOLKAR, JJ.)

Evacuee Property-Provisions regarding declaration of property •s evacuee property-Confirmation of sale-Power of Custodian to refuse-Constitutionality of-Administration of Evacuee Pro-perty Act. r950 (JI of r950), ss. 2(d). 40(4)(a)-Constitution of India, Arts. JI(Z), JI(S)(b)(iii).

I96I March 7.