JUDGMENT C.S.P. Singh, J.
1. The Income-tax Appellate Tribunal, Bombay Bench, has referred the following four questions for our opinion :
"1. Whether, on the facts and in the circumstances of the case, the applicant-company was a company in which the public were not substantially interested for the purpose of section 23A of the Indian Income-tax Act, 1922 ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the applicant-company could not be allowed to re-agitate the question that it was not a public company in view of the admission by the applicant-company in other proceedings as the applicant-company was fully aware of its implications ?
3. Whether the sum of Rs. 19,43,322 was not available to the assessee-company for the purpose of distribution under section 23A of the Indian Income-tax Act, 1922 ?
4. Whether, on the facts and circumstances of the case, the assessee-company was liable to distribute 100% of the distributable profits or only 60% ?"
2. The assessment year involved is 1956-57, the relevant previous year being the year ending 30th September, 1955. The net profit as per accounts was Rs. 8,25,008. The company declared a dividend to the extent of Rs. 16,200. The assessment was completed on a total income of Rs. 9,39,411 on which the tax payable was Rs. 4,04,791, thus leaving a balance of Rs. 5,34,620. The assessee had before the completion of the assessment made an application under Section 23A(3) of the 1922 Act for exempting the company from the operation of Section 23A. In the application dated February 20, 1956, the company had admitted that it was not a company in which the public were substantially interested. The Commissioner rejected that application by his order dated November 30, 1956, and directed the company to distribute Rs. 3,25,000 as dividend, and further directed that in case the company's accounts had omitted to disclose the income fully, the aforesaid amount of Rs. 3,25,000 would be increased by the amount omitted. The order directed the company to distribute the dividend by February 28, 1967. The assessee took up the matter to the Board of Revenue under Section 23A(4), but the application was rejected. Civil Appeal No. 247 of 1961 was filed before the Supreme Court of India. On March 6, 1962, the Supreme Court dismissed the appeal. Thereafter, on September 5, 1964, the ITO served a notice on the company directing it to show cause as to why an order imposing additional super-tax at the rate of 37 1/2% on the undistributed dividend income may not be passed against the company. The assessee-company raised various contentions, but they were overruled. By order dated November 30, 1964, the company was directed to pay an additional amount of super-tax amounting to Rs. 1,29,605. Appeals filed by the company before the AAC and the Tribunal failed.
3. We propose to answer the first two questions together.
4. It is necessary for answering these two questions, and in fact the remaining also, to refer to the findings recorded in the proceedings, which took place when the assessee moved the application under Section 23A(3). The case of the assessee was referred to the Income-tax Investigation Commission for the assessment years 1941-42 to 1948-49, under the Taxation an Income (Investigation Commission) Act, 1947. The Commission found in its report dated June 28, 1952, that the escaped income of the assessee amounted to Rs. 20,97,696. The assessee accepted the correctness of this sum, and requested that their case be dealt with under Section 8A of that Act, A settlement was arrived at, and the appellant was assessed to a tax of Rs. 15,99,040-12-0 which included an amount of Rs. 1,00,000 as penalty. In the assessment year in question the assessee moved an application under Section 23A(3) before the Commissioner. In that application it admitted that the assessee was not a company in which the public were substantially interested as the shares of the appellant carrying more than fifty per cent. of the total voting power were held by less than six persons. In this application the assessee prayed that in view of the current requirement of its business, and for maintenance and development of their business, it was necessary that the Commissioner should exempt the appellant from the operation of Section 23A. It was prayed that the minimum distribution of dividend required by Section 23A(1) be reduced to nil. This application was dealt with by the Commissioner by the order dated November 30, 1956. The Commissioner referred to the assets and liabilities of the assessee, and held that the appellant had in their hands concealed profits to the tune of Rs. 20,97,696, which should be added to the reserves and the accumulated profits of the assessee as shown in the balance-sheet. Taking this fact into consideration and the liability of the assessee for the tax liability of Rs. 8,50,000 and the requirement of Rs. 25,00,000 for a development scheme, the Commissioner came to the conclusion that though under Section 23A(1) the assessees were required to distribute as dividend, 100% of their total profits, the minimum distribution required under Section 23A(1) should be reduced to Rs. 3,25,000, 'which represented the net increase in the liquid assets of the assessee in the relevant year. He also directed that in case the ITO found that in the assessment year in question the assessee had omitted to disclose its income fully and truly the amount of Rs. 3,25,000, which the assessee was directed to distribute as dividend, should be enhanced by the amount of such omission. Time for distributing the dividend was extended up to February 28, 1957. The assessee was not satisfied with this order and the matter was referred to the Board of Revenue under Section 23A(4) of the Act. The Board by its order dated April 24, 1959, agreed with the decision of the Commissioner and rejected the application of the assessee except with regard to a sum of Rs. 1,54,474 out of the concealed profit of Rs. 20,97,696, which, it found, had been disbursed. The concealed profit available with the assessee was thus reduced to Rs. 19,43,222. The assessee appealed to the Supreme Court. One of the contentions raised before the Supreme Court was that the Commissioner and the Board of Revenue were in error in treating the sum of Rs. 20,97,696 as the accumulated profits and reserves of the appellant, inasmuch as this amount did not go into the coffers of the company. This argument was rejected by the Supreme Court. It referred to the finding of the Commissioner, which held that the amount of Rs. 20,97,696 represented a false deduction from the income of the company, which had already been received by it. It also referred to the finding of the Commissioner that an amount of Rs. 24,16,410, which represented the sup-pressed production of yarn, did not go into the coffers of the company and as such was not included in the accumulated reserves. Taking these findings of the Commissioner into account the Supreme Court held that the amount of Rs. 20,97,696 had gone to the coffers of the company and that in the assessment year, after making a deduction of Rs. 1,54,474, the concealed profit in the hands of the company was Rs. 19,43,222. It also found that the total accumulated profits and reserves of the assessee exceeded the paid-up capital or the actual cost of the fixed assets of the company, and this being so, the assessee was under an obligation, in view of Section 23A(1), to distribute as dividend the whole of the total income, subject to such reduction as has been accepted by the Commissioner.
5. The decision of the Supreme Court has become final between the parties, and has been given in proceedings initiated under Section 23A of the Act, and relates to this very assessment year. Inasmuch as the assessee had in its application moved before the Commissioner under Section 23A(3) clearly admitted that the assessee was not a company in which the public were substantially interested, the Tribunal was right in relying on this admission of the company, and holding that it was not open to the assessee to contend that the assessee was a company in which the public were substantially interested. We also do not find any material on the record on the basis of which it can be held that the assessee was a company in which the public were substantially interested.
6. Coming to the third question. We have already adverted to the findings of the Supreme Court to the effect that the amount of concealed profits available to the assessee in the assessment year was Rs. 20,97,696 minus Rs. 1,54,474, i. e., Rs. 19,43,222. This finding binds the assessee. It has, as such, to be held that the aforesaid amount was available to the assessee for purpose of distribution under Section 23A.
7. Coming now to the fourth question. That too, in our view, stands concluded by the decision of the Supreme Court in the case under Section 23A(3), already referred to earlier. We have noticed that the Supreme Court has found, after a consideration of relevant material that the assessee was liable to distribute as dividend the whole of the total income, i.e., 100% of the profits. The judgment being inter partes and in proceedings under Section 23A and for the assessment year in question precludes a re-investigation of the question by us. The Advocate-General, appearing on behalf of the assessee, contended that the concealed profits could not be treated as reserves. For this contention he relied on a decision of the Supreme Court in the case of CIT v. Century Spinning and Manufacturing Co. Ltd. [1953] 24 ITR 499. He also contended that while calculating the available profits for distribution, and for purposes of determining whether 100% have to be distributed as dividend or only 60%, the amount of tax liability on the concealed profits has to be taken into account. He referred to the order of the Commissioner where the Commissioner has held that the liability for tax on the concealed profits had to be taken into consideration. It was contended that in case the secret profits were not treated as reserves of the tax (sic) liability on the concealed profits was taken into account the assessee would be liable to distribute dividend only to the extent of 60%. The argument appeared to us to be plausible, but we feel that our hands are tied by the decision of the Supreme Court given in the matter in proceedings under Section 23A(3) of the Act. We are, therefore, of the view that the assessee-company was liable to distribute 100% of the distributable profits.
8. We accordingly answer the first question by saying that the assessee-company was not a company in which the public were substantially interested. The second question is answered in the affirmative, the third question is answered by saying that the amount of Rs. 19,43,222 was available to the assessee-company for purposes of distribution under Section 23A. So far as the fourth question is concerned, our answer is that the company was liable to distribute 100% of the distributable profits, and not 60%. The Department is entitled to its costs, which is assessed at Rs. 250.