1951 (1) TMI 38 - HC - Income Tax

Issues Involved:

1. Whether the Income-tax Officer is debarred from taking action under Section 34 if fresh information about income from a known source comes to his knowledge.
2. Necessity for the Income-tax Officer to provide a detailed list of income that has escaped assessment in the notice under Section 22(2) read with Section 34.
3. Whether Rs. 79,532 was rightly assessed as the income for the assessment year 1939-40.
4. Whether Rs. 5,249 was rightly assessed in the hands of the assessee when no tax was levied or recovered from the Receiver.

Issue-wise Detailed Analysis:

1. Whether the Income-tax Officer is debarred from taking action under Section 34 if fresh information about income from a known source comes to his knowledge:

The court did not directly address this issue as it was deemed hypothetical and unnecessary in light of the conclusions reached on other issues. It was conceded that this question did not require an answer.

2. Necessity for the Income-tax Officer to provide a detailed list of income that has escaped assessment in the notice under Section 22(2) read with Section 34:

Similar to the first issue, this question did not arise due to the court's answer to the third question. It was also conceded that this question need not be answered in these proceedings.

3. Whether Rs. 79,532 was rightly assessed as the income for the assessment year 1939-40:

The court found that the income sought to be assessed as having escaped assessment was income received by the assessee in the years 1928, 1929, and 1930. The assessment under Section 34 was made on 3rd March 1944, and the court held that the income received more than eight years before the assessment could not be assessed under Section 34. The court detailed the specific amounts received by the assessee:

- Rs. 22,372 shown as interest received in the plaint filed in the mortgage suit dated 31st March 1922.
- Rs. 11,133 found by the learned Subordinate Judge in his judgment of 31st July 1928 as interest received before that judgment.
- Rs. 65,027 made up of two payments, Rs. 24,394-8-0 and Rs. 40,632-14-9, paid by the Receiver to the assessee on 16th January 1929 and 18th January 1930, respectively.

The court concluded that these amounts were received as interest and should have been assessed in the years they were received. Since they were received more than eight years before the proceedings under Section 34, the assessment of Rs. 79,532 was deemed illegal. Therefore, the answer to question (3) was in the negative.

4. Whether Rs. 5,249 was rightly assessed in the hands of the assessee when no tax was levied or recovered from the Receiver:

No arguments were addressed on this matter, and it was agreed that the question should be answered in the affirmative.

Conclusion:

The court concluded that the assessment of Rs. 79,532 under Section 34 for the assessment year 1939-40 was illegal as the income was received more than eight years before the assessment. Consequently, questions (1) and (2) were deemed unnecessary to answer, and question (4) was answered in the affirmative.

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