1972 (11) TMI 2 - SC - Income Tax

Revision order - validity - income assessed in assessee's hands was cancelled in revision on the ground that some other person was liable to tax on it - order was valid

Summary

Issues Involved:
1. Jurisdiction of the Commissioner of Income-tax under section 33B of the Indian Income-tax Act, 1922.
2. Consideration of records from previous assessment years (1955-56 to 1959-60) for the assessment year 1960-61.
3. Validity of the initiation of proceedings under section 33B after the repeal of the Indian Income-tax Act, 1922.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Commissioner of Income-tax under section 33B:
The Commissioner of Income-tax issued a notice under section 33B of the Indian Income-tax Act, 1922, to the assessee for the assessment year 1960-61, questioning the validity of the initial capital, sale of ornaments, income from business, and investments. The Commissioner found the assessment erroneous and prejudicial to the interests of the revenue, citing lack of jurisdiction by the Income-tax Officer and insufficient enquiry into the assessee's claims. The Tribunal initially ruled in favor of the assessee, stating that the Commissioner could not rely on previous years' assessments (1955-56 to 1959-60) to conclude that the 1960-61 assessment was erroneous. However, the Supreme Court upheld the Commissioner's jurisdiction under section 33B, emphasizing that the Commissioner could cancel an erroneous assessment even if the income was voluntarily returned by the assessee. The Court cited Rampyari Devi Saraogi v. Commissioner of Income-tax, supporting the view that the Commissioner has ample jurisdiction to cancel an assessment if it is prejudicial to the interests of the revenue.

2. Consideration of records from previous assessment years (1955-56 to 1959-60) for the assessment year 1960-61:
The Tribunal had held that the Commissioner could not consider the records of previous assessment years (1955-56 to 1959-60) while assessing the year 1960-61. The High Court, however, did not pronounce an opinion on whether the Commissioner could consider materials from previous years, focusing instead on the jurisdictional issue. The Supreme Court supported the High Court's view that the assessment order for 1960-61 was erroneous due to the Income-tax Officer's lack of jurisdiction, which was sufficient grounds for the Commissioner to set aside the assessment.

3. Validity of the initiation of proceedings under section 33B after the repeal of the Indian Income-tax Act, 1922:
A third question was whether the Commissioner could lawfully initiate proceedings under section 33B on June 25, 1963, after the repeal of the Indian Income-tax Act, 1922, by the Income-tax Act, 1961. The High Court declined to answer this question as it was not pressed by the assessee. The Supreme Court did not address this issue further, focusing on the jurisdictional and procedural aspects of the case.

Conclusion:
The Supreme Court upheld the Commissioner's jurisdiction under section 33B to cancel the assessment for the year 1960-61, finding the Income-tax Officer's assessment erroneous and prejudicial to the interests of the revenue. The Court dismissed the appeal, affirming the High Court's decision that the Commissioner had sufficient grounds to set aside the assessment due to jurisdictional errors and lack of proper enquiry by the Income-tax Officer. The appeal was dismissed with costs.