1974 (8) TMI 9 - HC - Income Tax

Summary

Issues: Reopening of assessment orders under section 33B of the Indian Income-tax Act, 1922 without compliance with section 5(7C) of the Act.

Analysis:
The case involved a reference under section 256(2) of the Income-tax Act, 1961, regarding the validity of the Commissioner of Income-tax passing an order under section 33B of the Indian Income-tax Act, 1922, without complying with the provisions of section 5(7C) of the Act. The impugned assessment orders were passed on September 2, 1963, following a notice issued on August 8, 1963. The assessee raised contentions disputing the jurisdiction and rights of the Commissioner to reopen the assessment. The jurisdiction of the Commissioner changed before the order under section 33B was passed, leading to the question of compliance with section 5(7C) of the Act. The Tribunal rejected the contention that there was non-compliance with the said section, leading to the reference to the High Court.

The assessee contended that there was non-compliance with section 5(7C) as no fresh hearing was granted. However, the High Court noted that the Tribunal did not have the opportunity to address this specific contention. The order under section 33B was passed on September 2, 1963, and the assessment order was from September 4, 1961, making compliance with the Act's provisions crucial. The Court analyzed the requirements of section 5(7C) and the necessity for a fresh hearing or reopening of proceedings, emphasizing the right of the assessee to demand rehearing before the proceeding is continued.

The Court highlighted that the assessee did not request a personal hearing before the officer, but rather an extension to furnish additional evidence, which was seen as an attempt to delay the order. The Court referred to previous decisions supporting the view that a fresh hearing by the succeeding officer was not necessary in this case. The Court differentiated the facts from a Punjab and Haryana High Court decision where a fresh hearing was deemed necessary for penalty proceedings due to specific circumstances. Ultimately, the Court upheld the Tribunal's decision, ruling in favor of the revenue, and concluded that there was no non-compliance with section 5(7C) of the Indian Income-tax Act, 1922.

In conclusion, the High Court held that the Tribunal's decision was correct, and there was no non-compliance with section 5(7C) of the Indian Income-tax Act, 1922, in the given circumstances. The question was answered in favor of the revenue, with each party bearing its own costs.