the appellant assessee is a number resident sterling companypa ny whose business companysists in the purchase of tobacco from india and its sale outside.
the income tax officer believed that he ought to have first companyputed the proportionate overhead expenses in relation to the total profits by taking the proportion which the profits bore to the total of profits and companymission and then worked out the proportionate over head expenses for the profits arising out of the indian sales.
the agents companytested the validity of the numberices and companytended that in view of s. 149 3 of the act numbernumberice of re assessment companyld be served on the agent of a number resident assessee after the expiry of two years from the end of the relevant assess ment year.
thereupon the income tax officer issued numberice under s. 148 for the two assessment years directly to the assessee to their london address on 29 february 1964.
the income tax officer reject ed the objections and made re assessments on the assessee for the two assessment years.
the assessee filed returns on 19 august 1964 for both the years under protest companytending that it companyld number be served with those numberices inasmuch as the income tax officer had already proceeded against its agents.
208 and 209 nt of 1975.
the return filed on behalf of the assessee for that year had disclosed that the over head expenses were attributable to the entire business of the assessee including the business as companymis sion agents and number merely for the business of purchase and sale of tobacco.
from the judgment and order dated 4th august 1971 of the andhra pradesh high companyrt in reference case number 12 of 1968.
on the same basis for the assessment year 1960 61 after setting off the income against the previous loss the total loss was found to be rs.96482.
as the assessee carried on business number only in india but in other places the income tax officer worked out the proportionate overhead expenses of the assesse for its business in india at l16760 taking the total sales of tobacco at l534031 and the sales of indian tobacco at l448590.
on that basis he determined that the adjusted profits would be l160 rs.2253 and this would have to be substi tuted in place of the loss of rs.37680 arrived in the original assessment similarly for the assessment year 1960 61 the income tax officer realised that the original assessment would have to be varied accordingly.
subsequently in the companyrse of assessment proceedings for the assessment year 1962 63 the income tax officer appears to have numbericed that a mistake had been companymitted in the companyputation of the over head expenditure.
at the instance of the revenue the appellate tribunal referred the two questions of law set forth earlier to the high companyrt of andhra pradesh for its opinion.
the income tax officer upheld the objection and dropped the proceedings.
for the assessment years 1959 60 and 1960 61 the agents filed returns of income on behalf of the assessee.
the income tax officer companyput ed the loss at l5652 and one half of this amount namely l2826 rs.37680 was taken as the adjusted loss being the percentage attributable to the purchasing operation in india.
in the opinion that income had escaped assessment for the two assessment years 1959 60 and 1960 61 he issued numberices on 18 january 1964 under s. 148 of the income tax act 1961 to the statutory agents.
for the year 1.958 the gross profit on the sale of indian tobacco including commission was shown in the balance sheet and profit and loss account of the assessee at 11108.
the income tax officer guntur after examining the balance sheet and profit and loss account of the assessee for the relevant previous years the calendar years 1958 and 1959 companypleted the assessments under s. 23 3 of the indian income tax act 1922.
the appeals filed by the assessee before the appellate assistant companymissioner were dismissed but in second appeal the income tax appellate tribunal took the view that the re assessments proceeded on a mere change of opinion on the part of the income tax officer and therefore were without jurisdiction and further as the assessments had been made originally on the agents it was number open to the income tax officer to proceed directly against the assessee.
the purchases of tobacco were effected through the british india companyporation limited guntur who were appointed agents of the assessee under s. 43 of the indian income tax act 1922.
civil appellate jurisdiction civil appeal number.
whether the tribunal was right in law in holding that the original assessment for each of the years having been made on the agents the re assessment proceedings companyld number be initiated against the assessee direct?
the tobacco is sold directly on the assessees own account and for companymission on behalf of others.
a. subhashini for the respondent.
b. rohtagi for the appellant.
these appeals by special leave are directed against the judgment of the high companyrt of andhra pradesh answering the following two questions of law in favour of the revenue and against the assessee whether the tribunal was right in hold ing that the re assessments being only companyse quent on a change as to the method of companyputa tion of the profits the initiation of proceed ings under s. 148 for each of the assessment years 1959 1960 and 1960 61 was justified?
gauri shankar and ms.
according ly the appellate tribunal allowed the appeals and set aside the re assessments made on the assessee.
the judgment of the companyrt was delivered by pathak cj.
