Case: Commissioner of Income Tax, Bombay City I Vs. Bombay Dyeing and Manufacturing Company Limited

Now let us turn to the facts of the case. In the assessment yearthe assessee claimed deduction of two allowances, namely, a sum of Rs. 6, 000, paid as pension to the widow of anand another sum of Rs. 1, 65, 718 paid to a Swiss firm of consultants as consultation fees from its gross income. TheOfficer allowed both those allowances and assessed the assessee after giving deductions to those amounts from out of the total income of the assesseeIn the assessment yearthe assessee again claimed two allowances, namely, a sum of Rs. 6, 000, paid as pension to the widow of theand a sum of Rs. 33, 076 paid as consultation fees to the Swiss firm mentioned earlier. On this occasion theOfficer disallowed both the claims. He came to the conclusion that there was no evidence to show that the sum of Rs. 6, 000 paid as pension, was expended or laidfor the purpose of the business. So far as the second item is concerned, he came to the conclusion that it was a capitalax Officer issued a notice to the assessee under section 147(b) of theAct, 1961, proposing to reopen the previous years assessment. After overruling the objections of the assessee theOfficer reopened the assessment and reassessed the assessee after disallowing the claim of Rs. 6, 000 as well as of Rs. 1, 65, 718 which he had allowedassessee appealed against that order to the Appellate Assistant Commissioner. The Appellate Assistant Commissioner confirmed the order of theOfficer. Thereafter, the assessee took up the matter in second appeal to the Tribunal

Reasoning: 8. It is true that in the course of its order the Tribunal had remarked more than once that theOfficer had no jurisdiction to reopen the assessment in regard to the deduction of the amount paid to the Swis firm but those observations were made while considering whether a notice under section 147(b) could have been given in respect of that allowance. It appears from the order of the Tribunal that its final conclusion was that, though a notice under section 147(b) would have been invalid if the only question was whether the sum paid to the Swiss firm was a permissible allowance but the said notice has to be considered as valid in its entirety, as it was valid in respect of the deduction of the payment of pension. It appears to us that the view taken by the Tribunal at that stage was that if notice under section 147(b) is valid in one respect, the same is sufficient to reopen the entire, assessment, call for a fresh return and reassess the assessee, ignoring the earlier assessment. We express no opinion as to whether this view is correct or not. All that we need say is that from the order of the Tribunal, it appears, that that was the view taken by it9. After that order was made, the assessee moved the Tribunal to state a case and submit certain questions of law to the High Court of Bombay. We are told that that application is still pending. During the pendency of that application, the assessee moved the Tribunal to rectify its order. The plea taken by the assessee in its application to the Tribunal for rectification of the order was that the Tribunal having positively come to the that there was no ground for theOfficer to reopen the assessment in respect of the consultation fees paid to the Swiss firm by inadvertence, it has disallowed the claim of the in that regard and that was an obvious mistake; on the basis of that plea the Tribunal was requested to correct the alleged mistake. The Tribunal acceded to that prayer of the assessee and ordered that the assessment of the assessee for the assessment yearcannot be reopened in respect of the deduction given for the payment of consultation fees to the Swiss firm. Thereafter, the department moved the Tribunal to state the case and submit the question set out earlier for obtaining the opinion of the High Court of Bombay, on that questionIn our opinion the question of law sought to be raised by the department does arise from the order of the Tribunal and the Tribunal was wrong in not stating the case and submitting that question to the High Court. We are also of the opinion that the High Court erred in summarily dismissing the application of the department