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TMI Blog1971 (8) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... large block of shares. of Spence's Hotel Limited and also became its managing director. He was in charge of the management thereof at the material time. He further 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 Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to issue any notice under section 34(1A), the said officer proceeded to make assessment in respect of the assessment years 1942-43, 1943-44, 1944-45 and 1945-46. The assessee filed an appeal to the Appellate Assistant Commissioner of Income-tax who remanded the case to the Income-tax Officer to submit a report on various matters. One of such matters was that the Income-tax Officer should state as to what fresh material was before him to satisfy him that the sum of Rs. 20,000,00 which was previously treated as capital should be treated as income. In 1961, the assessee filed a petition under article 226 of the Constitution in the Calcutta High Court challenging the order of the Appellate Assistant Commissioner. This writ petition was dismisse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ords 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 chargeable to income-tax had escaped assessment, he could not have proceeded under the aforesaid provision. The High Court in the first place sustained a preliminary objection which had been raised on behalf of the revenue that because the assesee had filed appeals to the Appellate Assistant Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the record containing those reasons was sought to be produced before the court, an objection was raised on behalf of the assessee that the recorded reasons should not be looked into. The High Court felt that there was no necessity to travel beyond the order of the Appellate Assistant Commissioner read with the assessment orders which were under challenge. The Appellate Assistant Commissioner, it was felt, had looked into the records which included the statements and other materials filed with the Income-tax Investigation Commission by the petitioner. The High Court proceeded to say that, although the Appellate Assistant Commissioner had looked at all the material, he had expressed some difficulty in coming to a conclusion without further ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see chargeable to income-tax had escaped assessment, we gave an opportunity to the revenue to produce the records containing those reasons. All that have been found in the records are reports in Form "B" made in connection with starting of proceedings under section 34(1A), each report relating to a different assessment year. Items (7) and (8) of this Form relate to brief reasons for starting proceedings and whether the Central Board of Revenue wwas a fit case for issue of notice. Against item (7) it is stated "reasons as per separate sheet attached". Against item (8), the Secretary of the Central Board of Revenue signed after writing "yes, satisfied". The reasons for starting the proceedings given in the separate sheet may be fully reproduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso, 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 communicat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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