1970 (3) TMI 16 - HC - Income Tax

Whether the Income-tax Appellate Tribunal was right in holding that the order of the Commissioner of Income-tax under section 33B was vitiated as it was passed on an erroneous finding that the Income-tax Officer had no jurisdiction over the assessee - since finding of the Commissioner that the ITO had no jurisdiction over the assessee was correct Tribunal was wrong in holding that the order of the Commissioner under section 33B was vitiated

Summary

Issues Involved:
1. Jurisdiction of the Income-tax Officer over the assessee.
2. Violation of principles of natural justice.
3. Validity of the Tribunal's order in setting aside the Commissioner's order under section 33B.

Detailed Analysis:

1. Jurisdiction of the Income-tax Officer over the Assessee:
The first issue concerns whether the Income-tax Officer had jurisdiction over the assessee. The court found that the Income-tax Officer had no jurisdiction over the assessee. This was based on the fact that the name "Panna Devi Saraogi" begins with "P," and the Income-tax Officer had jurisdiction over cases with names beginning from "S" to "Z." The Tribunal's reliance on the G.I.R. No. and the case of Rampyari Khemka v. Commissioner of Income-tax was misplaced, as that case was overruled by a Division Bench. The correct allocation of jurisdiction is determined by the Commissioner of Income-tax under section 5(5) of the Income-tax Act, 1922. The court thus answered the first question in the negative, holding that the Tribunal was wrong in its finding and that the Commissioner's determination of jurisdiction was correct.

2. Violation of Principles of Natural Justice:
The second issue was whether the Commissioner used materials against the assessee without giving her an opportunity to rebut the same, thus violating principles of natural justice. The Tribunal had observed that the Commissioner did not allow the assessee to rebut the materials used against her. However, the court noted that the Commissioner had given the assessee an opportunity to present evidence, which she failed to do. The court emphasized that natural justice is not an abstract concept but must be considered in the context of the case. The Supreme Court's decision in Rampyari Devi Saraogi v. Commissioner of Income-tax was cited, which stated that the assessee would have another opportunity to present her case during the fresh assessment. Therefore, the court answered the second question in the negative, finding no violation of natural justice principles.

3. Validity of the Tribunal's Order in Setting Aside the Commissioner's Order:
The third issue was whether the Tribunal was right in setting aside the Commissioner's order under section 33B. The court found that the Tribunal was wrong. The "basic ground" for the Commissioner's order was that the Income-tax Officer's assessments were erroneous and prejudicial to the interests of the revenue. This was clearly stated in the notice dated December 19, 1962, and the assessee was given reasonable opportunity to present evidence. The court highlighted that the Commissioner's power under section 33B includes calling for records, examining them, and making necessary enquiries. The Commissioner had demonstrated that the assessments were prejudicial to the revenue, as the income from undisclosed sources should have been taxed in a single year rather than spread over multiple years. The court thus answered the third question in the negative and in favor of the Commissioner.

Conclusion:
All three questions were answered in the negative and in favor of the revenue. The Tribunal's order setting aside the Commissioner's order under section 33B was found to be incorrect. The assessee was ordered to pay the costs of the reference.