1971 (9) TMI 10 - SC - Income Tax

Whether notice should be given while revising the assessment by the Commissioner - Appeals are dismissed as being not maintainable, as the certificates on the basis of which those appeals were brought to this court are not in accordance with law

Summary

Issues:
Validity of notice under section 33B of the Indian Income-tax Act, 1922 and jurisdiction of the Commissioner to proceed under section 33B.

Detailed Analysis:

The judgment delivered by the Supreme Court involved appeals arising from the decision of the Calcutta High Court in certain tax references. The High Court was considering questions referred by the Tribunal under section 66(1) and 66(2) of the Indian Income-tax Act, 1922. The primary question referred under section 66(1) was regarding the validity of a notice issued under section 33B of the Act and whether the Commissioner of Income-tax validly exercised jurisdiction under section 33B.

The case revolved around the assessment years 1959-60 and 1960-61 of M/s. Electro House, a firm constituted under a partnership deed. The Commissioner of Income-tax found errors in the registration granted to the firm and issued a notice under section 33B to cancel the registration orders. The validity of this notice was a crucial point of contention.

The Tribunal concluded that the notice issued was valid, while the High Court held it to be invalid, thereby questioning the jurisdiction of the Commissioner to proceed under section 33B. The Supreme Court analyzed the provisions of section 33B(1) which empower the Commissioner to examine orders prejudicial to revenue without specifying the requirement of a notice. It emphasized that unlike section 34, section 33B does not mandate a notice as a condition precedent for the Commissioner to act.

The Supreme Court clarified that the jurisdiction of the Commissioner under section 33B is not dependent on issuing a notice, but only on providing the assessee an opportunity to be heard and conducting necessary inquiries. The Court highlighted that breach of natural justice principles may affect the legality of an order but not the Commissioner's jurisdiction. It cited precedent to support the view that section 33B does not explicitly require a notice like section 34.

Ultimately, the Supreme Court allowed the appeals by special leave, setting aside the High Court's decision on the notice's validity. It held that the notice issued under section 33B was not in contravention of the Act, and the Commissioner validly exercised jurisdiction under section 33B. The Court directed the remaining questions referred to the High Court to be reconsidered. Additionally, appeals by certificate were dismissed for not being maintainable.

In conclusion, the Supreme Court's judgment clarified the requirements under section 33B of the Income-tax Act, emphasizing that the Commissioner's jurisdiction is not contingent on issuing a notice. The decision provided clarity on the procedural aspects of initiating proceedings under section 33B and highlighted the distinction between sections 33B and 34 concerning notice requirements.