M/S. Soorajmull Nagarmull v. Commissioner of Income-tax, Calcutta (and Connected Appeal)

SHAH, J.-The assessees and the Commis­ sioner have preferred appeals against the order of the Tribunal passed under s. 33( 4) of the Indian In­ come-tax Act, after their applications of the High Court of Calcutta for orders requiring the Tri­ bunal to state a case under s. 66(2) Wtlre dismis­ sed. Counsel for the :1Ssessees contends that everi if his appeal against the order of tbe High Court under s. 66(2) fails on the merits, this Court has 1962 M/s. Soorajmull Nagarmull v. OommiJsiontr of lncome·tax, Calcuttr Shch J, 1962 /&Ifs. Sootajrn-l!i Nag«rmull •• Com'ninion~r rJ Jncom~tat, Ca/c1t' Sh2h J, 308 SUPREME COURT REPORTS [l!l62] SUPJ'. power to consider their appeal against the order of the Tribunal. This Court in Chandi Prawd Chho­ khani v. The State of Bihm·,(') in dealing with cirnes where against the order passed by a Tax Tribunal, without appealing against the order of the High Court refusing tr, call for the statement of the case set out the practice as follows: (a) When• the aggrieved party approaches the High Court under a taxing Stntute for an order cnlling for a statement of the caso and the High Court r<·jects the appiication, this Court in exercise of itll powers under Art. 136 will not ordinarily allow the order of tho High Court to be by-passed by entertaining an appeal direc­ tly against the order of the Tribunal. Such exercise of power wou Id be parti­ cularly inadvisable where the result may be conflict of decisions of two Courtil of competent jurisdiction. The schemo of tho taxing statutes is to avoid such a con­ flict by making the derision of the taxing authorities on questions of fact final sub­ ject to appeal, revision or review 118 pro­ vided by the statutes and the decision of tho High Court subject to appeal lo this Court final on questions of law. (b) This rule does not Lar the Court from granting special leave where circumstan­ ces are exceptional, such as, in Dlwkes­ wari Cotton Mills Dd. v. Commissioner of Income 'Ia;r,, IV e.st Bengal, (') ll'herc the Tribunal had violated fundame11tal rul<'s of justice or as in Srudnr Ba/Jiev Singh v .. Commissioner of hmmze·tax, Delhi & Ajmer ('), where on uccount of special circumstances over which the aggrieved party has no control the High Court was (I) [1962] 2 S.C.R. 2;6. (2: [19551 I. S.C.R. 94:. (:J) [1%1) I SC.R.48!. 3 S.C.R. SUPREME COURT REPORTS 309 unable to consider the application for 196S calling for a statement of the case on the .M /s. &moJmu/l merits, and the right of the party to N,garmutl approach the High Court was thereby Cammi~;-, • ., of lost. _Income-tax, Calcuua Counsel for the assesses contended that in Ghhokha.ni's case(') no appeal at all was filed by the assessees against the order of the High Court and the principle of that case is inapplicable in a case where the aggrieved party has appealed against the order of the High Court as well as against the order of the Tribunal. It is true that in the case before us appeals have been filed against the order of the Tribunal deciding the appeal under s. 33(4) of the Indian Income-tax Act as well as the order of the High Court under s. 66(2) refusing to require the Tribunal to state a case: but we fail to see any distinction in principle between a case in which in appealing against the order of the Tribunal no appeal is filed against the order of the High Court and a case in which an appeal is filed against the order of the Tribunal as well as against the order of the High Court and the latter appeal is dismissed because it has no merit. Counsel has not invited our attention to any special or exceptional circumstances in this case. We have heard elaborate arguments on behalf of the assessees and the Commissioner on their respective contentions and for reasons already set out are of opinion that no case is made out for calling for a statement of the case from the Tribunal. If we proceed to hear the appeal against the order of the Tribunal after upholding the order of the High Court that no question of law arose out of the order of the Tribuna I, it would be a departure from the well-settled rule that ordinarily we do not exercise of our jurisdiction under Art. 136, enter upon a reappraisal of the evidence·on which the order of (l) [!961] 2. S.C.R. 276. JY62. M /s~ SooraJmull .Nagai mull v. . Commi.s.fiontr pf lncome-ta.t, Calcutt..i Shah J. 1962 FebruaT)' 191 ' ' SlO SUPREME COURT REPORTS (1962] SUPP. ,, . the Oovrt or Tribunal is founded. The Legi.slature has expressly entrusted th~ powei:- of appraisal of f!Vidence to the T.axing authorities, and the decision of those authorities would orqinarily be regarded as final. This is not to say that in a proper case this Court m;i.y not, in the interest of justice. when occasion demands it, review the evidence. "Tli:e" power of this Court unde~ Art. 136 is not restricted; but it is only in very exceptional cases that this Court enters upon appraisal of evidence in appeals filed with special leave and this case does not dis­ close any such exceptional circumstances. ' On this ground the appeals Nos. 238 and 239 of 1961 filed by the assessees and the Commissioner against the order of the Tribunal must fail and are dismissed with costs. One hearing fee. Appeals dismissed. INDORE MALWA UNITED MILLS LTD. v. THE COMMISSIONER OF INCOME-TAX (CEN'J."'RAL) BOMBAY , ... (S. K. DAS, M. HIDAYATULLAH and J.C. SHAH, JJ.) 1 Income Tax-Propeedings under s. 24 of the Indian Income-ta:& Act,-Scope and effect of section and its proviso- I Set-off of loss-Indian Income-ta:& Act, 1922 (11 of 1922). as 24(1), (2), 14(2) (c), 4(1) (a); (c)l . ' The assessce company carried on a business of manufac­ ture and sale of textile goods. The manufacture was·111ade ac its mills in Indore which was an Indian State before integra• tion and had its own law as to income-tax known as the Indore Industrial 'rax R,;les, 1927. The sales of textile goods so manufacttlred wer~ made 'at various places, some inside and some outside the taxable territories of the then British India. For and tipfo assessment' year 1949-50 the assessee company was treated as a pon-resident. Indore became a part of the taxable territories within the meaning of the Indian