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TMI Blog1958 (10) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax Officer who issued the notice. The facts which were then present before the Income-tax Officer appear to me as follows: The petitioner belonged to a family consisting of about 18 members at the relevant period. The genealogy of the family as appearing from the analysis of the list exhibit A to the petition is as follows: Laxminarayan Jagannath Kedarnath Badriprasad Dwarka- nath Radhakant (P) Ramakant (P) Ramnath Ramesh- chandra Kailash- nath(P) Baikunth- nath Prabhadevi Rajeshwari Brijeshwri Vishwa nath (P) Shrinath Shivnath Krishna-devi It appears that one Laxminarayan had four sons, Jagannath, Kedarnath, Badriprasad and Dwarkanath. These four brothers in their turn had their children whose names appear in the genealogy ment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner's income for the year 1950-51 and that the petitioner's income had escaped assessment. The income-tax Officer was not satisfied with the explanation of the petitioner and had to resort to such provisions in the Income-tax Act as were available for ascertaining the true facts regarding these three bank accounts relating to the aggregate sum of ₹ 60,000. The Income-tax Officer accordingly acting under section 34 in the first instance issued a notice dated February 28, 1957. This notice was issued by mistake in connection with the wrong year. The Income-tax Officer issued another notice dated April 2, 1957, in pursuance of the provisions of section 34 of the Act. The relevant part of this notice runs as under: Notice under section 34 of the Indian Income-tax Act, 1923 (XI of 1922). I0-r (ii)/57-58 Income-tax Office CCC-Ward Date April 2, 1957. **** Whereas I have reason to believe that your income assessable to income-tax for the year ending 31st March, 1952, Asst. Year 1951-52 has (a) escaped assessment. I therefore, propose to assess the said income that has escaped assessment. I hereby require you to deliver to me not later than...or w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounts. Three of these accounts were the accounts of the petitioner and his minor daughter. The Income-tax Officer was not bound to accept the statements made by Kedarnath as true. What this sum of ₹ 4,50,000 was and why and how the same was in equal sums deposited in the names of the members of the petitioner's family was a mystery which remained to be investigated. The first respondent had to gather details for ascertaining the nature of the three amounts of ₹ 20,000 deposited in the three bank accounts with which the petitioner was directly concerned. To prevent further investigations the petitioner served two notices, one dated April 9, 1958, and another dated April 15, 1958, on the first respondent, copies of both of which are exhibit D to the petition. By the first notice the petitioner challenged the validity of the notice dated April 2, 1957, and by the second notice the petitioner called upon the first respondent to appoint time for giving inspection to the petitioner of the record showing the reasons recorded by the income-tax Officer in writing for enabling him to proceed under section 34 of the Act. On these facts the first contention urged before m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urces of income. His argument was that since these were his only two sources of income and since he had already made his returns previously, the Income-tax Officer could not make any case that the petitioner had failed to disclose truly the material facts necessary for his assessment for the relevant year. It is relevant to point out that the Income-tax Officer is entitled to proceed to issue notice for reassessment proceedings under sub-clause (a) of section 34(1) in all cases where he believes that the income of the assessee has escaped assessment by reason of failure to disclose truly or fully material facts I cannot accept the contentions made by Mr. Nariman. I cannot understand why, because the petitioner had only two sources of income, it was not possible for the Income-tax officer having regard to the facts before him to believe that the petitioner had not disclosed fully and truly the material facts necessary for his assessment for the relevant year. The Income-tax Officer had with him information relating to the three accounts where in deposits were made and which three accounts stood in the name of the petitioner and/or his minor daughter. If explanation given to the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ace of the record. The only argument Mr. Nariman advanced to discharge the Burden which was on him to prove want to jurisdiction was reliance on the allegation contained in paragraph 5 of the petition, viz., that the petitioner had only two sources of income and that the allegation had not been denied. As I have pointed out these facts are altogether insufficient to discharge that burden. There is nothing apparent on the notice in question to show that the Income-tax Officer was proceeding under sub-clause (b) of that section. On the contrary if one refers to the statement in that notice, viz., this notice is being issued after obtaining the necessary satisfaction of the Commissioner of Income-tax, Bombay City II. It is apparent that the Income-tax Officer was proceedings under sub-clause (a) of the section. If one looks at the third proviso to section 34(1) of the Act, the Income-tax Officer is bound not to issue a notice under sub-clause (a) of section 34(1) unless he has recorded his reasons for doing so and unless the Commissioner is satisfied on such reasons recorded that it was fit case for the issue of such a notice. The impugned notice on the face of it makes mention of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... my view in a disputed matter it would be impossible for a court of a law to come to a conclusion that the Income-tax Officer whilst issuing a notice was intending only to proceed under sub-clause (b) and not under sub-clause (a) at any stage before findings of facts are made in reassessment proceedings. It is relevant to point out that an attempt to analysis the subjective satisfaction of the Income-tax Officer and to hold that in fact in the matter of the issue of a particular notice under section 34(1) he was proceeding under sub-clause (b) would require a detailed investigation of facts. It would not be competent or correct for the court to determine such complicated and detailed facts in a petition under article 226 of the constitution. In any view of the matter I am of the opinion that the petitioner is not entitled to relief in this case on a mere allegation or assumption that the notice dated April 2, 1957, was issued under sub-clause (b) of section 34(1) of the Act. The next contention which Mr. Nariman made arises out of ground (c) in paragraph 18 of the petition. He contends that the conditions precedent to the issue of notice under section 34(1)(a) have not been co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l not investigate into the fact unless compelled to do so for some compelling reasons. On the record it appears that the Income-tax Officer had recorded the reasons and the Commissioner was satisfied. There is also before me an affidavit in reply stating that these conditions precedent have been satisfied. The allegation of the petitioner in this connection is apparently frivolous. I am of the opinion that there is complete proof that the conditions precedent have been satisfied and nothing further need be investigated as regards the allegation that these have not been satisfied. I, therefore, negative the contention of the petitioner as contained in ground (c) of paragraph 18 of the petition. The next contention of the petitioner arises from the ground (g) in paragraph 18 of the petition. The petitioner contends that the notice dated April 2, 1957, is vague and indefinite and the respondent has not at all applied his mind to the facts and circumstances of the case. Mr. Nariman contends that any notice under section 34 must make a reference to the source or sources from which the escaped income according to the Income-tax Officer has arisen. Relying upon the language of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the source of escaped income. That was the form in which notice was served on the assessee in that case. The contention of the assessee in that case was that in the notice served on him the blanks in the form for filling in the particulars as to the source of the escaped income had not been filled, the requirement of the prescribed form was not complied with and accordingly the notice was invalid. In that case the question before the court was Whether in the circumstances of this case the notice of reassessment issued to the applicant under section 34 of the Income-tax act was invalid or illegal for failure to specify the particular source of income that had escaped assessment? It is necessary before referring to the judgment of Beaumont, C.J., in that case to observe that in 1939 section 34 of the Income-tax Act was amended and that there is now no prescribed form containing the word source with reference to the escaped income. There is in existence only a printed form which is in practice used for issuing notice under section 34. The notice in this case is admittedly issued in that printed form. There is nothing that is contained in this form which is not complied with. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case and the question which arose before him the learned Chief Justice made an observation which was not at all directed towards the construction of the provisions of section 34. The learned Chief Justice referred to section 34 because the notice was issued under that section and required mention of the source of escaped income. I am therefore unable to agree that the ratio of decision in that case was that a notice under section 34 must draw the attention of the assessee to the case which he has to meet. Before I hold that a notice under section 34 must draw the attention of the assessee to the case which he has to meet, I must scrutinize in detail the language of that section and come to a finding that the assessee was entitled to such notice. I however find that in the provisions of section 34 there is nothing entitling an assessee to a notice of the case which he has to meet. After a return is made for reassessment purposes under section 34 the assessee would get information as to the case of the Department in connection with the alleged escaped income. It is not at the initial state of the notice that he is entitled to get the information. Such information could easily be go ..... X X X X Extracts X X X X X X X X Extracts X X X X
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