Law: Income Tax Act, 1922

Section: 34(1)(b)

ACT: Income-tax Act, 1922 (11 of 1922), ss. 34(1)(b), 66-Finance Act, 1956, proviso 2, Paragraph D-Notice to reopen assessment on the ground of "excessive relief" but reduction of rebate on super tax on the ground "assessed at too low a rate"-Duty to enquire whether proceedings validly initiated- "Rate" in s. 34(1) if means fraction of total income- Reference-Duty to decide all aspects of the question of law referred even though not specifically argued before the Tribunal. HEADNOTE: The Income-tax Officer issued a notice to the assessee for reopening the assessment for the year 1956-57 on the ground that "excessive relief" within the meaning of s. 34(1)(b) of the Income-tax Act, 1922 had been granted to the assessee. Rejecting the contention of the assessee that the income had not been the subject of "excessive relief" and therefore the proceedings were unauthorised and that the amount deemed to have been distributed under orders under s. 23A could not be taken into consideration for the purpose of reducing the rebate of super-tax admissible under proviso 2 to paragraph D of the Finance Act, 1956, the Income-tax Officer ordered that the rebate of super-tax granted be reduced. The Appellate Assistant Commissioner held that only a part of the amount of dividend deemed to have been declared by the assessee could be taken into consideration in withdrawing the rebate of super-tax. On appeal by the Commissioner, the Tribunal held that the case of the assessee did not fall within any of the situations contemplated by s. 34(1)(b), but confirmed the order of the Appellant Assistant Commissioner. On the question "whether the setting aside of the assessment under s. 34(1)(b) was correct in law" the High Court was of the opinion that the claim of the department to initiate proceedings under s. 34(1)(b) on the ground that excessive relief was allowed could not be sustained, but held that the proceedings under the section could be initiated on the ground that the income profits and gains of the asses-see were " assessed at too low a rate". The High Court did not record its decision on the plea of the assessee that in a proceeding to re-assess income initiated on a notice…

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