Case: Commissioner of Income Tax, M. P., Nagpur and Bhandara Vs. Paluram Dhanania

e was resident and ordinarily resident in the former ruling State of Raigarh. On July 31, 1944, the Ruler of Raigarh issued a notification in the following terms "It is notified for the general information of the assessees of the Raigarh State that the Indianx Act (XI of 1922) of British India (mutatis mutandis) is in full force in this State with itse amendments. All future amendments will be applicable automatically in Raigarh State."e was assessed tox for the accounting years 1945 and 1946, under the Indianx Act, 1922, applied to the State by virtue of this notification. The State later merged in IndiaOn March 15, 1952, and March 26, 1954, thex Officer, Nagpur, took action under section 34 of the Indianx Act as applied to the State by virtue of the aforesaid notification to reopen the earlier assessments. It was contended on behalf of the respondent that the proceedings under section 34 were irregular as the sanction of the Commissioner ofx had not been taken without which the proceedings could not be taken in view of the amendment of that section by thex and Business Profits Tax (Amendment) Act, 1948, which applied to the area of the former Raigarh State by virtue of the notification of July 31, 1944. It was not in dispute that the sanction had not been taken. This contention was rejected by thex Officer and his decision was upheld on appeal by the Appellate Assistant Commissioner. On further appeal to thex Appellate Tribunal, the Tribunal upheld that contention and allowed the appeal. The Tribunal held that the amendment made in section 34 by the Amending Act of 1948 applied to the area covered by the Raigarh State which, as the parties agreed before it, merged in India prior theretoAt the request of the revenue authorities the Tribunal referred the following question for the decision of the High Court"Whether on a true construction of the Raigarh Darbar Notification No. 89/44/D/Raigarh dated July 31, 1944, section 34 of the Indianx Act, 1922, as amended by thex and Business Profits Tax (Amendment) Act, 1948, was applicable to the proceedings taken in the present case ?"It appears from the statement of the case submitted by the Tribunal that the revenue authorities had sought to raise another question basing themselves on the fact that Raigarh State had merged in India on January 1, 1948, and not on April 1, 1949, as had been wrongly conceded by them at the hearing of the appeal before the Tribunal and, therefore, on a proper interpretation of the notification the amended section did not apply to the areas of the former Raigarh State. What that question was does not appear on the record. The Tribunal refused to refer the question as that would be changing the basis of the appellate decision. The revenue authorities did not take up this matter further for compelling the Tribunal to refer that question to the High CourtIn the High Court, however, the revenue authorities again sought to contend that on December 31, 1947, Raigarh State ceased to exist and merged in India from January 1, 1948, and so the amendment made to section 34 of the Indianx Act, 1922, by the amending Act of 1948 was not applicable to the territories covered by that State. The High Court did not permit them to raise this point as the question referred assumed that the amending Act of 1948 applied to those areas and further that in essence the revenue authorities were raising a question of fact as to when Raigarh State merged in India and this the Tribunal had rightly refused them permission to do, particularly as they had all along proceeded on the basis that the State had merged in India on January 1, 1948

Court's reasoning:
It is not contended that if the date of merger was January 1, 1948, the question framed can be answered to the advantage of the revenue authorities. In fact we were not asked to answer that question on the basis that the merger took place on January 1, 1948. The question must, therefore, be answered in the affirmative