1970 (9) TMI 32 - HC - Income Tax

Summary

Issues Involved:
1. Validity of the Commissioner's jurisdiction under section 33B of the Indian Income-tax Act, 1922, after its repeal.
2. Validity and propriety of the orders passed by the Commissioner for the assessment years 1956-57 to 1961-62 under section 33B.

Issue-wise Detailed Analysis:

1. Validity of the Commissioner's Jurisdiction Post-Repeal of the Indian Income-tax Act, 1922:
The primary question was whether the Commissioner of Income-tax could validly exercise jurisdiction under section 33B of the Indian Income-tax Act, 1922, after its repeal on April 1, 1962. The court referred to its previous judgment in Income-tax Reference No. 100 of 1967 (Smt. Aparna Roy v. Commissioner of Income-tax (Cal)), where it had answered this question in the affirmative. The court reiterated that the reasons for this conclusion were detailed in that judgment and should be referred to for a comprehensive understanding.

2. Validity and Propriety of the Orders Passed by the Commissioner:
The second issue was whether the orders for the assessment years 1956-57 to 1961-62 passed by the Commissioner under section 33B were valid and proper. The court examined the argument presented by Dr. Pal for the assessee, who contended that the order was illegal under section 5(7C) of the Indian Income-tax Act, 1922. The argument was based on the fact that the show-cause notice was issued by one Commissioner (Mr. Vallibhoy) and the order was passed by another Commissioner (Mr. Palekar) after the former ceased to have jurisdiction.

Facts and Arguments:
- The show-cause notice under section 33B was issued on August 8, 1963, by Mr. Vallibhoy.
- The assessee replied on August 29, 1963, without providing the necessary evidence.
- Mr. Vallibhoy was succeeded by Mr. Palekar, who assumed charge on September 2, 1963, and passed the order on September 3, 1963.
- The assessee requested a short adjournment for three days but did not appear on the hearing date (September 3, 1963).

Legal Provisions and Interpretation:
- Section 5(7C) of the Indian Income-tax Act, 1922, allows a succeeding authority to continue proceedings from the stage left by the predecessor, provided the assessee does not demand reopening or rehearing.
- The court noted that the assessee did not demand reopening or rehearing before the proceedings were continued by Mr. Palekar.
- The court emphasized that the primary mandate of section 5(7C) permits the succeeding authority to carry on the proceedings unless the assessee demands otherwise.

Case Law and Precedents:
- The court referred to several cases, including Calcutta Tanneries (1944) Ltd. v. Commissioner of Income-tax [1960] 40 ITR 178 (Cal), where it was held that the assessee loses the right to reopen proceedings if not demanded under section 5(7C).
- The court also cited decisions from the Punjab and Haryana High Court, Mysore High Court, and Rajasthan High Court, which supported the view that the succeeding officer could continue the proceedings without a fresh hearing if the assessee did not demand it.

Conclusion:
- The court concluded that the order under section 33B by Mr. Palekar was valid, legal, and proper.
- The court answered both questions in the affirmative and in favor of the revenue.
- The costs were to be paid by the assessee.

Final Judgment:
Both questions were answered in the affirmative, upholding the validity of the Commissioner's jurisdiction and the propriety of the orders passed under section 33B. The court emphasized that the assessee's failure to demand reopening or rehearing under section 5(7C) meant that the succeeding authority's actions were legitimate. The costs were awarded against the assessee.