1968 (3) TMI 18 - HC - Income Tax

Whether the ITO was justified in initiating action u/s 34(1)(a) or he should have taken recourse to section 34(1)(b) of the Act - held that it makes no difference whether action is taken u/s 34(1)(a) or u/s 34(1A) - action of ITO is justified

Summary

Issues:
1. Jurisdiction of the Income-tax Officer to initiate proceedings under section 34(1)(a) for assessment years 1946-47, 1947-48, and 1948-49.
2. Whether the Income-tax Officer should have used section 34(1A) instead of section 34(1)(a) for the assessment year 1946-47.

Analysis:

Issue 1:
The case involved the jurisdiction of the Income-tax Officer to initiate proceedings under section 34(1)(a) for the assessment years 1946-47, 1947-48, and 1948-49. The assessee, a partnership firm, challenged the reassessment orders before the Appellate Assistant Commissioner, which led to appeals before the Income-tax Appellate Tribunal. The Tribunal partially allowed the assessee's appeals and dismissed those filed by the Income-tax Officer. The main contention of the assessee was that all necessary material for assessment had been disclosed during the original assessment proceedings. However, the Tribunal held that the disclosures made by the assessee were not sufficient to cover all material facts. The court agreed with the Tribunal's findings, stating that the Income-tax Officer was justified in initiating proceedings and completing assessments under section 34(1)(a) for all three years.

Issue 2:
Regarding whether the Income-tax Officer should have used section 34(1A) instead of section 34(1)(a) for the assessment year 1946-47, the assessee argued that section 34(1A) was a special provision for cases where the escaped income was significant. The doctrine of implied repeal was invoked by the assessee, claiming that section 34(1A) should exclude the application of section 34(1)(a) for the relevant year. However, the court analyzed the provisions of both sections and concluded that they operated in the same field for the assessment year 1946-47. The court highlighted that the two provisions were not so inconsistent or repugnant to warrant the doctrine of implied repeal. Therefore, the Income-tax Officer had the authority to proceed under section 34(1)(a) for the assessment year in question.

In conclusion, the court answered both questions in favor of the Income-tax Officer, affirming the validity of the assessments made under section 34(1)(a) for the mentioned assessment years. The Commissioner of Income-tax was awarded costs, and the fee of counsel was also assessed.