The Commissioner of Income-tax, Madhya Pradesh v. Seth Khushal Chand Daga

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. _**Buldana**_ _**District**_ _**Main Cloth**_ _**Importers Group**_ _Kapur_ _1_ _**March**_ **7.** _Appeals allowed._ ##### THE COMMISSIONER OF INCOME-TAX, MAD HY A PRADESH _v._ SETH KHUSHAL CHAND DAGA (J. L. KAPUR, M. HIDAYATULLAH and #### J. c. SHAH, JJ.) _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 assessee 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 determined 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 # • I S.C.R. SUPREME COURT REPORTS 187 the loss redetermined in a sub•equent year though he had not _x96x_ ##### filed an appeal against the determination of _the lo_ss but no --. . . appeal could be filed in the absence of an order in wnt1ng. _The Commissionef_ _Seth ]amnadas_ _Daga_ _v._ _The Commissioner_ _of_ _Income-tax,_ _0_ _!_ _Income-tax,_ [rg6r] 3 S.C.R. r74, applied. _Madhya_ _Pradesh_ v. CIVIL APPELLATE JURISDICTION: Civil Appeals _Stth_ _Khushal_ Nos. 148 to 150 of 1960. _Chand_ _Daga_ 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 property 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 reopen 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 188 SUPREME COURT REPORTS [1962] (',. _r96r_ his share in the unregistered firm, Rs. 1,82,773 and _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 circumstances 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 unregistered 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· **L** S.C.R. SUPREME COURT REPORTS 189 have become final, because no appeal was filed against _z96r_ ##### that determination. But it appears that the proce. - d ure 1 a1 ['d ][d ] own b y s. . 24(3) un er w d h' IC h th e ncome-I The / [1 ] c. mmi.<Sion" 0 1 tax Officer has to notify to the assessee by order in ~:adh~·~ ";~;.~:;h 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 appeals fail, and are dismissed with costs. One hearing fee. _.A.Ji:peals dismissed._ BAWA HARIGIR _v._ ASSISTANT CUSTODIAN, EVACUEE _**I96I**_ _**March**_ **7.** 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)._