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Issues Involved:
1. Whether the Income-tax Officer was justified in initiating reassessment proceedings under section 34(1) of the Indian Income-tax Act, 1922. 2. Whether the Tribunal erred in treating the sum of Rs. 3,00,000 as the concealed income of the assessee. Issue-wise Detailed Analysis: 1. Justification of Initiating Reassessment Proceedings under Section 34(1): The reference pertains to the assessment year 1947-48 of a deceased individual. The original assessment was made on March 19, 1952. On March 27, 1956, a notice was served under section 34(1A) of the Indian Income-tax Act, 1922, by the Income-tax Officer (ITO), Central, Bombay. The reassessment order was made on February 28, 1957, based on information received post the original assessment indicating an escapement of income. The ITO had information that securities worth Rs. 3,00,000 were purchased in the name of the assessee's father-in-law, who was merely an agriculturist. It was concluded that the investment was a benami transaction by the assessee. The Appellate Assistant Commissioner upheld the ITO's action under section 34(1A), noting that the securities belonged to the appellant and justified the reassessment. The Tribunal called for a remand report on the merits of the addition but did not address the validity of the action under section 34(1A). Upon further directions from the High Court, the Tribunal provided a supplemental statement indicating the ITO had sufficient material to justify the reassessment proceedings. However, the High Court found that the Revenue failed to produce the memorandum recording the ITO's reasons for reopening the assessment, which is obligatory under the first proviso to section 34(1A). Without this primary evidence, the High Court could not ascertain the material upon which the ITO formed his belief that the assessee's income had escaped assessment. The Tribunal's reliance on conjecture and post-remand information was deemed inappropriate. Thus, the High Court concluded that the ITO was not justified in initiating the reassessment proceedings under section 34(1A). 2. Treatment of Rs. 3,00,000 as Concealed Income: Given the High Court's decision on the first issue, it became unnecessary to address the second issue regarding the treatment of Rs. 3,00,000 as concealed income. The High Court's negative answer to the first question rendered the second question moot. Conclusion: The High Court answered the first question in the negative, in favor of the assessee, and did not proceed to answer the second question. The Revenue was directed to pay the costs of the reference to the assessee. Additionally, the Tribunal's compliance with the High Court's order dated September 19, 1983, was questioned, but the reference arising from this was not pressed by the assessee's counsel.
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