9911796707
TMI Blog1971 (8) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... her purchased interest in Associated Hotels of India Limited and Hotels (1938) Ltd. in association with M. S. Oberoi. In 1944, M. S. Oberoi purchased from the assessee his shareholding in the Associated Hotels of India Limited for an amount of Rs. 20,65,705-13-0. Similarly, in or about 1949, the holding in Hotels (1938)Limited was purchased by the said M.S. Oberoi. It was maintained by the assessee that he had filed returns of his income in respect of the relevant assessment years and that during the assessment for the year 1945-46, the assessee had disclosed to the Income-tax Officer, District II(2), Calcutta, that he had received the aforesaid amount for the sale of the shares of the Associated Hotels. That amount was held to be a capital receipt on which no income-tax was payable. During the subsequent years, the assessee continued to show in his returns the interest received on the amount of Rs. 20,65,705-13-0. It appears that the case of M S. Oberoi was referred to the Investigation Commission set up under the Taxation on Income (Investigation Commission) Act, 1947. The assessee was also served a notice by the Commission on or about 18th August, 1951, under section 5(4) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made the original assessment relating to the year 1945-46 and he had held that the said amount was a capital receipt. There was merely a denial in the affidavit in reply with reference to paragraph 22(v), that the conditions precedent to the exercise of power under section 34(1A) had not been fulfilled. An objection was also taken that it was not open to the assessee to urge the said ground in a petition under article 226 when he had already invoked the remedy available under the Act against the assessment order pursuant to the notice under section 34(1A) of the Act. In paragraph (29) it was stated that all necessary information regarding the reasons for which the proceedings were started under section 34 was available from the records of the income-tax department relating to the assessment of the assessee. The High Court dealt with several points which were raised on behalf of the assessee which included the question whether the Income-tax Officer had the jurisdiction to make an assessment under the provisions of section 34 unless the conditions contained in section 34(1A) were satisfied. In other words, unless he had "reason to believe" that income, profits or gains chargeabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Appellate Assistant Commissioner had looked at all the material, he had expressed some difficulty in coming to a conclusion without further material on the question as to what fresh evidence was available before the Income-tax Officer to convince him that the sum of Rs. 20,00,000 which was previously treated as capital should be treated as income. It was finally held that the assessee had failed to establish that the preconditions contained in section 34(1A) had not been fulfilled, and, consequently, there was an initial lack of jurisdiction. Section 34(1A), to the extent it is necessary, may be reproduced: "34. (1A) If, in the case of any assessee, the Income-tax Officer has reason to believe-- (i) that income, profits or gains chargeable to income-tax have escaped assessment for any year in respect of which the relevant previous year falls......; and (ii) that the income, profits or gains which have so escaped assessment for any such year or years amount, or are likely to amount, to one lakh of rupees or more; he may...... serve on the assessee...... a notice containing ...... and may proceed to assess or reassess the income, profits or gains of the assessee......; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P. Chaliha, which came up before this court, a similar situation had arisen and under the directions of the court, the department produced the records to show that the Income-tax Officer had complied with the conditions laid down in the statute for issuing a notice relating to escapement of income. There also, the report submitted by the Officer to the Commissioner and the latter's orders thereon were produced. In his report, the Income-tax Officer referred to some communications received by him from the Commissioner of Income-tax, Bihar and Orissa, from which it appeared that certain creditors of the assessee were mere name-lenders and the loan transactions were bogus and, therefore, proper investigation regarding the loans was necessary. It was observed that the Income-tax Officer had not set out any reason for coming to the conclusion that it was a fit case for issuing a notice under section 148 of the Income-tax Act, 1961. The material that he had before him for issuing notice had not been mentioned. The facts contained in the communications which had been received were only referred to vaguely and all that had been said was that from those communications, it appeared that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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