Law:

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Section 7 of the Companies (Profits) Surtax Act, 1964 - Provisional assessment -Whether, while passing order of provisional assessment under section 7, it is permissible for ITO to ignore contents of return filed by assessee and determine disputed questions of facts or law - Held, no - Whether while passing an order of provisional assessment, it is permissible for ITO to ignore position of law declared by High Courts and pass adverse order against assessee - Held, no Article 226 of the Constitution, read with section 17 of the Companies (Profits) Surtax Act, 1964 - Writ - Maintainability of - Whether against an order of provisional assessment under section 7, remedy under section 17 which provides discretionary power of revision to Commissioner, cannot be said to confer any substantive right upon assessee and, therefore, is not alternative remedy so as to bar a writ petition - Held, yes Facts The assessee-company, in its return for the assessment year 1974-75, showed its chargeable profits, its capital and the statutory deduction, and, had calculated therein the excess of the chargeable profits over the statutory deduction as well as the surtax on such excess at the applicable rate of 25 per cent. The ITO served notice under section 7(2) declaring the intention to make a provisional assessment and attached a statement showing his own figures as against the figures returned by the assessee in respect of computation of capital as well as statutory deduction. The assessee objected to the proposed provisional assessment, but the ITO overruled the objection and made the provisional assessment in accordance with the statement attached to the notice, without disclosing the reason for reducing the capital computation made by the assessee in the return. The assessee filed a writ petition under article 226, on the ground that the provisional assessment under section 7 must be made only on the basis of the return and it was not permissible for the ITO to examine disputed questions of facts and law. The single Judge, accepting the assessee's contention, held that while passing an order of provisional assessment under section 7, the powers of the ITO were not different from…

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