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TMI Blog1965 (12) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... the year 1960-61, some time in February, 1961, pursuant to a notice under section 22(1) of the Income-tax Act, 1922 (hereinafter referred to as the Act). Thereupon the Income-tax Officer called for the returns of earlier years. The appellant filed such returns for the years 1953-54 to 1959-60. On February 18, 1961, the assessment orders were passed for the years 1953-61. On January 20, 1963, the Commissioner of Income-tax, the appellant No. 1, herein, issued a notice on the respondent under section 33B of the Act. The contents of this notice as set out in the judgment of the trial court are as follows : "On calling for and examining the records of your case for the assessment years 1953-54, 1954-55, 1955-56, 1956-57, 1957-58, 1958-59, 1959-60 and 1960-61 and other connected records, I consider that the orders of assessment passed by the Income-tax Officer, " D " Ward, Howrah, on 18-2-1961 are erroneous in so far as they are prejudicial to the interests of the revenue for the following reasons amongst others. 2. Enquiries made revealed that no business was carried on by you as alleged in the returns. Also the Income-tax Officer was not justified in accepting the initial capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the solicitor's letter to the delivery of the registered cover to the minor daughter. On February 7, 1963, appellant No. 1 passed an order under section 33B of the Act. At the time when this order was made appellant No. 1 was not aware of the solicitor's letter. The reason as explained in the affidavit affirmed by Krishna Rao Bhadra Narasimham on August 6, 1963, was that the solicitor's letter dated February 5, 1963, gave no reference to the particular income-tax assessment in connection with which the letter was addressed. The letter was received by the receiving section on February 5, 1963, and was placed before the assessment section on February 16, 1963. The said letter was brought to the Income-tax Officer in charge of the section who put up the letter before appellant No. 1. The matter was placed before appellant No. 1 on February 18, 1963, but the order under section 33B of the Act had already been made on February 7, 1963. As the solicitors did not file any authority with the department, authorising them to act on behalf of the respondent, the representation made by them on the respondent's behalf was not considered. On the question of the service of the notice, howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case which were pressed before us by the learned counsel for the parties. The trial court came to the conclusion that the impugned order under section 33B of the Act was made as appellant No. 1 came to the conclusion that the assessment orders were fraudulent. It has also been held that, although the word " fraudulent " had not been specifically used, the facts disclosed show that the charge against the respondent was one of collusion and fraud. It has further been held that the orders were not properly made, but there were interpolations in the record which were made for the purpose of showing that the order was properly made. The view taken by the trial court was that the assessment orders could have been made only with concert between the Income-tax Officer and the assessee. These, according to the trial court, were serious charges, " of which no inkling was given " to the respondent in the notice that was served upon her. The trial court further held that appellant No. 1 had held that there was conspiracy and collusion between the assessee and the Income-tax Officer. Mr. G. Mitter, learned counsel for the appellant, contended that no charge of fraud or collusion had b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax Officer, namely, February 10, 1961, the dates in the returns themselves, namely, February 13, 1961, and February 18, 1961, are all known to the respondent. These are matters with regard to which she could not claim any special notice as they were all within her knowledge. Appellant No. 1 in taking notice of these dates in the records and in coming to the conclusion that there had been interpolation in the records had acted on materials which were well known to the respondent. It cannot, therefore, be said that rules of natural justice have been violated by the appellant in relying upon the assessment records, and in drawing his own inference on the materials on the records. In our opinion the trial court was in error in holding that the charge of fraud had been made against the respondent or that the appellant set aside the assessment orders on the ground that they were all fraudulent. The next charge against the respondent in the notice was that she did not carry on any business and that the Income-tax Officer was not justified in accepting her statements regarding initial capital, the income from business, acquisition and sale of jewellery, etc., without any enquiry or evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent orders, in exercise of the powers under section 33B of the Act, appellant No. 1 acted in violation of the rules of natural justice, as he came to the conclusion that there was no evidence to support the claims and contentions of the respondent, regarding initial capital, income from business, interest, etc., advanced before the Income-tax Officers. With regard to these claims and contentions by the respondent, the position is not that the appellant acted on materials collected behind the back of the respondent or on the result of enquiries made by the department, but that he held that there was no evidence at all to support the assessment orders of the Income-tax Officers. Some criticism of the impugned order was advanced by Mr. Khaitan, learned advocate for the respondent, on the ground that it was held that the Income-tax Officer, " D " Ward, Howrah, had no jurisdiction to deal with the respondent's case, as his jurisdiction over cases of new assessees was confined to those assessees whose names started with any of the letters from " S " to "Z "; it was held that the assessee's name being Rampiyari Khemka, the said Income-tax Officer had no jurisdiction to deal with her cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, and in that case the assessee did not produce books of account and other papers to rebut the allegations made in the report of an inspector, nor did he adduce any oral or documentary evidence for that purpose. After observing " that the concept of 'natural justice' could not be imprisoned within the straight jacket of any fixed formula ", it was held that there was no violation of the principles of ' audi alteram partem', as at the appellate stage the assessee had an opportunity of showing cause against the inspector's report and of producing evidence to rebut the allegations made in the report. Ramaswami C.J. (as he then was) quoted with approval an earlier Bench decision of the same High Court, which is as follows : " But as a matter of law it is not correct to state that the party adversely affected should be heard at each and every stage of the administrative process. There is no such general requirement in the principle of audi alteram partem. On the contrary, the principle is satisfied if the party adversely affected is given sufficient opportunity to know the case he has to meet and to answer that case at some stage and not at all the stages of the administrative proc ..... 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