1971 (9) TMI 11 - SC - Income Tax

Reassessment Proceedings - assessing officer has no information as to fact or law after the original assessment - assessing officer had no jurisdiction to initiate proceedings under s. 34(1)(b) - question is answered in favour of the assessee

Summary

Issues:
Assessment of income tax for a members' club, validity of re-assessment proceedings under section 34(1)(b), competence of Income-tax Officer to initiate proceedings, High Court's decision on re-assessment validity, appeal maintainability based on certificates issued by High Court.

Analysis:
The case involved appeals arising from the assessment of a members' club under the Indian Income-tax Act for the years 1956-57 to 1959-60. The club had filed "Nil" returns, claiming exemption as a members' club. The Income-tax Officer later assessed the club for income received from guest charges. The club appealed to the Appellate Assistant Commissioner, who upheld the assessment, leading to further appeal to the Income-tax Appellate Tribunal. The Tribunal ruled in favor of the club, stating the notices issued under section 34(1)(b) were invalid as no new information was received post the original assessments.

The department then appealed to the High Court, which answered questions regarding the validity of re-assessment proceedings in their favor. The High Court's decision was challenged in the Supreme Court. The Supreme Court emphasized that for section 34(1)(b) to apply, the Income-tax Officer must have received new information post the original assessment, which was not proven in this case. As no fresh material was presented to show the Income-tax Officer's awareness of new facts or legal positions post the original assessment, the Tribunal's decision was upheld.

Consequently, the Supreme Court allowed the club's appeals for the assessment years 1956-57 to 1959-60, setting aside the High Court's decision. The club was granted costs for these appeals. However, appeals filed based on certificates from the High Court were dismissed as non-maintainable, with no order as to costs. The Supreme Court allowed the appeals by special leave in part and dismissed the appeals by certificate.