Judgment :- VEERASWAMI J. This is a consolidated reference relating to assessment years 1953-54 and 1954-55. The assessee has been described to be a public limited company, carrying on business in general insurance. In respect of the said years, the Income-tax Officer originally allowed rears in the sum of Rs. 4, 089.44 and of Rs. 7, 708-11 at the rate of one anna in the rupee on the undistributed profits of the company. On March 8, 1958, the Income-tax Officer, however, passed orders under section 23A(1) by which the entire undistributed profits were deemed to have been distributed as dividends to the shareholders. As a consequence, the assessment orders were reopened under section 34 with the result the rebates granted earlier were withdraw. The assessee was unsuccessful before the revenue as well as the Tribunal in his challenge as to the property of the order. The Tribunal's view was that section 23A created a fiction in respect of distribution of deemed dividends and it was, therefore, clear that the order passed under section 23A on March 8, 1958, related back to the anterior period and that further a logical extension of this view would be that, at the time of the original assessment, an order under section 23A(1) had been passed and so the grant of rebate was improper. The assessee had moved for this reference under section 66 (1) of the Indian Income-tax Act, on the following question : "Whether, by reason of an order passed on March 8, 1985, under section 23A (1) on the assessee-company subsequent to the original assessment made on the company for the years 1953-54 and 1954-55, the rebate of one anna in the rupee on the undistributed profits granted in the original assessment in accordance with Schedule, I Part B, proviso (1) of the Finance Act, 1951, could be withdrawn by a revised assessment ?" * We may at the outset state that we do not accept the correctness of the reasoning of the Tribunal above referred to. Nevertheless, we are of opinion that its conclusion should be sustained, though entirely for different reasons. Nevertheless, we are of opinion that its conclusion should be sustained, though entirely for different reasons. In arriving at that decision, out minds have to a certain extent oscillated from one end to the other, but at the end, a certain extent oscillated from one end to the other, but at the end, we are firmly of the view that the order of the Income-tax Officer reopening the assessment and withdrawing the rebate was competent and in order. Mr. Swaminathan's argument which undoubtedly has been persuasive, is that grant of rebate under proviso (1) to Part B in Schedule I of the Finance Act postulated that the requisite conditions therefore have, in the opinion of the Income-tax Officer, been satisfied and that if, therefore, he proceeded on the basis that there has been no order made under section 23A, it was to that extent conclusive and could not be reopened or reviewed in exercise of his power under section 34. Learned counsel urges that section 23A does not belong, to the realm of assessment, unlike section 34, and it followed, therefor, that when rebate was granted, the decision of the Income-tax Officer that there has been no order under section 23A should stay, whatever may be the validity of an order under section 23A should stay, whatever may be the validity of an order passed subsequently under section 23A. He adds that such a subsequent order will be entirely innocuous for purposes of re-opening the assessments under section 34 and will be futile in withdrawing the rebate. On the other hand, the revenue, equally persuasively, contends that the application of the proviso, in Part B of Schedule I entirely covers the realm of assessment and, therefore, the whole range of it is within the purview of section 34. On that basis, Mr. Balasurbrahmanyan contends that, if the Income-tax Officer on a wrong view of the proviso proceeded merely on the physical fact of there being no order under section 23A when he passed the assessment order, and later on he found that he was wrong in doing so and actually made an order under section 23A, that is a matter which could be reopened under section 34. In applying section 34 to such a situation, the Income-tax Officer is not to be taken as interfering with any order passed under section 23A.In order to assessee the rival contentions, it is first necessary to notice what precisely is that scope of the proviso. Its particular objective appears to be to encourage retention with the company of the amount that remains of the total income as reduced by the outgoing in the nature of taxes and dividends, by granting a rebate of one anna in the rupee. Where, however, such amount has also been distributed as dividend, the second clause of the proviso charges additional tax subject to certain limits. In our view, this objective should be kept in mind in delimiting the scope and applicability of the proviso. The body of the proviso visuyalises that before the question of allowance of rebate is considered, the company concerned has made the prescribed arrangements for the declaration and payment of dividends payable out of the relative profits and has deducted super-tax from the dividends in accordance with the provisions of sub-sections (3D) or (3E) of section 18 of the Act. It is then one can examine whether the conditions for allowance of rebate in clause (1) of the proviso have been satisfied. The conditions are two-fold : (1) The total income as reduced by seven annas in the rupee and the amount exempt from income-tax exceeds the amount of dividends declared in respect of the whole or part of the previous year; and (2) no order has been made under sub-section (1) of section 23A of the Income-tax Act. It is one the second condition, the argument on either side has centered. It seems to us to be obvious that this conditions really bears on the quantum of the total income with reference to which rebate is allowed. Whether or not sixty per cent. of the total income as reduced but the reductions permissible under section 23A has been distributed as dividends, the absence of an order under the provisions in the particular circumstance leads to precise date by which the amount eligible for rebate is fixed. It stand, to reason, therefore, that a rebate may be allowed only after the Income-tax Officer has considered the applicability of section 23A and of the propriety of making an order under that section. It stand, to reason, therefore, that a rebate may be allowed only after the Income-tax Officer has considered the applicability of section 23A and of the propriety of making an order under that section. The word "no order has been made under sub-section (1) of section 23A" do not merely mean the physical fact of there being no order that provision in existence.In Commissioner of Income-tax v. Afco (Private) Ltd., the Supreme Court in considering the proviso has made certain observtions which appear to support our view. "The right to rebate arose under those Finance Acts if no order under section 23A was made. The Income-tax Officer had therefore to decide even before completing the assessment of the company whether the circumstances justified the making of an order under section 23A and unless an order under section 23A was made the assessee became entitled automatically to the rebate of one anna in the rupee. Such a provision led to delay in the disposal of the assessment proceedings and caused administrative inconvenience. It appears that the legislature modified the scheme of granting rebate in enacting the Finance Act of 1955, with a view to simplify the procedure and avoid delays..." * Pitching himself on that position, Mr. Swaminathan urged that ones rebated has been granted, it pre-supposes that a decision has been arrived at by the Income-tax Officer earlier or simultaneously under section 23A of the Income-tax Act and if that be so, there is no power vested in him under the Act to go back upon that view. The assessment order for the assessment year 1953-54 began by stating that the assessee was a public limited company carrying on business of accident insurance. It was evidently on this view, which is business of accident insurance. It is evidently on this view, which is now now maintained, the Income-tax Officer though that section 23A was inapplicable and, therefore, took it for grant that no order has been passed under that proviso. We are inclined to think that if the Income-tax Officer made a mistake in assuming that the physical fact of there being not order will sufficient or because of the character of the company as he though it to be that provision would be inapplicable, it would be disentitle him from reopening the assessment on the view that it had been made at too low rate. As been held by the Super Court in Sundaram Co. (P.) Ltd. v. Commerce of Income-tax, where by reason of wrong allowance of rebate, there has been escarpment of tax, it may be considered that the assessment had been at too low a rate and section 34 would be available in such a case. But Mr. Swaminathan invited our attention to P. S. Subramanyan, Income-tax Officer, Bombay v. Simplex Mills Ltd. and contends that the order made under section 23A subsequent to the assessment orders, would not and could not relate back to the time when the assessment orders, would not and could not relate back to the time when the assessment were made and lead to an assumption that dividends had been declared to the extent of the amount with reference to which not be attracted to the situation. We do not think that the authority cited supports him. All that was held in that case was that excess interest paid by the revenue could not be recovered by an order under section 34, on the strength of an amendment with retrospetive effect because it did not relate to a charge of the income and, therefore, to an assessment of the income. We do not think that the analogy has application to the instant case. Section 34 is invoked in the present case not to reopen or reconsider an order under section 23A but to set right an assessment which has been made at too low a rate. If the Income-tax Officer has applied his mind to the conditions necessary for making or not making an order under section 23A and then allowed a rebate, whether the position would be different, we are not called upon to consider in this case. There is nothing in the record to show that the Income-tax Officer, before or at the time of making the assessment order, applied his mind to the provisions of section 23A in order to make an order under that provision. It is no doubt true that he proceeded on the basis that the assessee was a public limited company which possibly weighed with him in taking it for granted for purpose of the proviso that there has been no order under section 23A. It is no doubt true that he proceeded on the basis that the assessee was a public limited company which possibly weighed with him in taking it for granted for purpose of the proviso that there has been no order under section 23A. But so long as the Income-tax Officer had not applied his mind to the question whether it would not be unreasonable to call upon the company to dealer further dividend, but nevertheless he granted rebate under the proviso, it would be a case where he wrongly understood the scope of the proviso in relation to that matter or ignored the requirement of his applying his mind and took it merely for granted that there has been no order under section 23A in a physical sense, and this resulted in assessing the income at too low a rate. Such a case will, in our opinion, squarely fall within the ambit of section 34.We may add that in view of the decision in Commissioner of Income-tax v. Jubilee Mills Ltd. There is no substance in the preliminary objection raised by the revenue to the competence or validity of the reference. In this view, we answer the question against the assessee with costs. Counsel's fee, Rs. 250.