1965 (12) TMI 11 - HC - Income Tax

Order made by CIT u/s 33B - CIT acted on evidence or materials collected by the income-tax department behind the back of the respondent. The order made by CIT cannot be held to be bad on the ground that it had been made in violation of the principles of natural justice - revenue s appeal is allowed

Issues Involved:
1. Validity of the order under section 33B of the Income-tax Act, 1922.
2. Alleged violation of the principles of natural justice.
3. Jurisdiction of the Income-tax Officer.
4. Allegations of fraud and collusion in the assessment orders.

Issue-wise Detailed Analysis:

1. Validity of the order under section 33B of the Income-tax Act, 1922:
The appellant filed a return for the year 1960-61, and subsequently, the Income-tax Officer called for returns for the years 1953-54 to 1959-60. Assessment orders were passed on February 18, 1961. On January 20, 1963, the Commissioner of Income-tax issued a notice under section 33B of the Act, proposing to pass orders after giving the appellant an opportunity to be heard. The trial court held that the order under section 33B was made in violation of the principles of natural justice and was therefore invalid. However, the appellate court found that the appellant had acted on the evidence on record and that the order was not made in violation of natural justice principles.

2. Alleged violation of the principles of natural justice:
The trial court held that the order under section 33B was made without giving the respondent a fair opportunity to present her case, thereby violating the principles of natural justice. The appellate court disagreed, stating that the respondent was aware of the dates and materials on record, and there was no evidence collected behind her back. The court concluded that the appellant acted on the materials available and that the principles of natural justice were not violated.

3. Jurisdiction of the Income-tax Officer:
The trial court found that the Income-tax Officer had no jurisdiction to deal with the respondent's case as his jurisdiction was limited to assessees whose names started with letters from "S" to "Z". The appellate court held that the allocation of work to Income-tax Officers is made by the Commissioner of Income-tax under statutory direction, and the appellant did not violate natural justice principles in holding that the Income-tax Officer had no jurisdiction.

4. Allegations of fraud and collusion in the assessment orders:
The trial court concluded that the assessment orders were fraudulent, involving collusion between the Income-tax Officer and the assessee. The appellate court found no charge of fraud or collusion in the impugned order and held that the appellant's conclusions were based on the lack of evidence to support the respondent's claims. The court stated that the appellant's views on the assessment process were based on the materials on record and did not involve any violation of natural justice.

Conclusion:
The appellate court allowed the appeal, setting aside the trial court's judgment and order. The court held that the order under section 33B was not made in violation of natural justice principles and that the Income-tax Officer's jurisdiction was properly determined. The allegations of fraud and collusion were not sustained, and the rule was discharged. The appeal was allowed with costs for both the appellate and trial courts.

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