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1996 (10) TMI 11 - HC - Income Tax

Issues:
1. Challenge to assessment orders under s. 35 of the Agrl. IT Act, 1950.
2. Compliance with statutory requirements under s. 35(1) of the Act.
3. Validity of notice served under s. 35(1) and jurisdiction of the officer.
4. Allegation of "mere change of opinion" in assessment.

Analysis:
The petitioners, trustees of a family trust, challenged assessment orders under s. 35 of the Agrl. IT Act, 1950. The key contentions were twofold: first, the proceedings under s. 35 were vitiated due to non-compliance with statutory requirements specified under s. 35(1) of the Act, and second, the assessment involved a "mere change of opinion" by the assessing officer. The statutory requirement under s. 35(1) mandates serving a notice on the person concerned containing requirements similar to those under s. 17(2) of the Act, with a minimum period of 30 days for compliance. Failure to comply with these provisions renders the notice invalid, impacting the officer's jurisdiction to proceed under s. 35.

The court referred to precedents emphasizing the significance of a valid notice under s. 35 as a condition precedent for the officer to assume jurisdiction. Notably, inadequate time granted to the petitioners to respond to the notice rendered the notices invalid, making subsequent proceedings illegal and void. Despite arguments of substantial compliance, the court held that strict adherence to statutory provisions was necessary to confer jurisdiction on the officer under s. 35.

Regarding the allegation of a "mere change of opinion," the court noted a reliance on a second inspection report for invoking s. 35 powers in the assessment years 1981-82 and 1982-83. The Commissioner of Agrl. IT acknowledged irregularities in the assessments due to non-compliance with statutory provisions under s. 35, leading to the orders being set aside and remanded for fresh disposal. However, the court found the Commissioner's actions ineffective and erroneous, ultimately setting aside the impugned orders in both original petitions and quashing the assessment orders.

In conclusion, the court's decision centered on the importance of strict compliance with statutory requirements under s. 35(1) for initiating assessments and the necessity of valid notices to confer jurisdiction on the assessing officer. Additionally, the court highlighted the inadequacy of relying on a "mere change of opinion" without proper adherence to procedural and statutory mandates in assessments under the Agrl. IT Act.

 

 

 

 

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