1983 (9) TMI 69 - HC - Income Tax

Summary

Issues Involved:
1. Legality of the assessment order for the assessment year 1961-62.
2. Validity of the settlement under s. 41 of the I.T. Act.
3. Jurisdiction of the authorities to assess income under s. 41(1) of the Act.
4. Allegations of coercion and duress in the settlement process.
5. Availability and adequacy of alternative remedies.

Summary:

1. Legality of the Assessment Order for the Assessment Year 1961-62:
The petitioner, a dealer and broker in shares, was assessed to income-tax for the assessment year 1961-62. The ITO added a sum of Rs. 11,84,062 as the petitioner's income from undisclosed sources and Rs. 1,67,145 under "estimated dividend income on shares purchased from the Rana" due to the petitioner's failure to prove the credit balance. The petitioner filed an appeal against this assessment order.

2. Validity of the Settlement under s. 41 of the I.T. Act:
During recovery proceedings, the petitioner offered a settlement under s. 41 of the Act, admitting certain amounts as income due to cessation of liability. The Commissioner accepted the offer for taxation of Rs. 28,51,593, Rs. 4,27,168, and Rs. 2,57,500 under s. 41 for the assessment years 1965-66, 1966-67, and 1967-68, respectively. The petitioner filed revised returns accordingly, and the assessments were made based on the settlement.

3. Jurisdiction of the Authorities to Assess Income under s. 41(1) of the Act:
The petitioner contended that the authorities had no jurisdiction to assess income under s. 41(1) as the twin requirements of allowance or deduction in previous assessments and subsequent remission or cessation of liability were not met. The court held that these were pure questions of fact, and the petitioner had admitted the existence of these facts in his settlement application. The court found no evidence to show that the trading liability was not allowed in previous assessments.

4. Allegations of Coercion and Duress in the Settlement Process:
The petitioner alleged that he was forced into the settlement under duress and coercion due to the attachment of his property and bank accounts. The court noted that the petitioner did not resile from the settlement before the ITO, AAC, or the Appellate Tribunal and acted upon the settlement by filing revised returns. The court found no merit in the allegations of coercion and duress.

5. Availability and Adequacy of Alternative Remedies:
The court emphasized that the Income-tax Act provides a complete machinery for assessment and relief against improper actions by the authorities. The petitioner had the right to move an application u/s 256 of the Act to refer any question of law to the High Court, which he did not avail. The court cited precedents stating that a writ of certiorari is discretionary and not issued merely because it is lawful to do so, especially when an adequate alternative remedy exists.

Conclusion:
The court dismissed the petition with costs, holding that the petitioner failed to prove that the impugned settlement or assessment order for the assessment year 1965-66 suffered from a patent lack of jurisdiction. The court found no merit in the petitioner's claims and upheld the validity of the settlement and the assessment orders based on it.