9911796707
TMI Blog1968 (2) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... were requisitioned under the Defence of India Rule No. 75(1) for the purposes of the military in December, 1942. Later on, the requisitioning was continued under the Bombay Land Requisition Act, 1948, for the purposes of the Home Department of the Government of Bombay. The owner of these plots (Tankwalla) had mortgaged them with the ABC Bank Ltd. but that bank went into liquidation and the plots were acquired by the assessee from the liquidator of the bank. This was on the 6th September, 1949, during the accounting year 1st April, 1949, to 31st March, 1950, the assessment year being 1950-51. In his return for that year, the assessee did not show any income from property and when questioned before the Income-tax Officer, the assessee had stated that the Government was considering the question of payment of compensation in respect of these properties which had been requisitioned and, therefore, the assessee " could not be sure of the amount that he would receive as rent for the properties ". The assessee did not deny that he was the owner of the property. The Income-tax Officer thereupon estimated the income from the properties requisitioned by the Government at Rs. 1,600 for that y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee was accepted by the department and in consequence notices came to be issued under section 34(1)(a) for the reopening of the assessment for the assessment years 1950-51 to 1954-55 both inclusive. Now the assessee on his part says that the notices under section 34(1)(a) could not be issued because the requirements of clause (a) of section 34(1) have not been fulfilled. He, however, does not dispute that the notices could be issued under section 34(1)(b), that is to say, for the assessment years 1955-56 to 1958-59. If notices could not be issued under section 34(1)(a), then obviously the assessments for the earlier years which are the years in dispute before us would be barred by time. Thus the question resolves itself into a question whether the grounds under section 34(1)(a) have been made out in the order to enable the department to assess the assessee under section 34(1)(a). Now the main order of the Income-tax Officer was passed in the assessment year 1950-51 and the view which the Income-tax Officer took is clear from paragraph 3 of that order. In response to the notices under section 34(1)(a), the assessee had filed a return showing the same income as was originally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated the 20th December, 1954. The only relevant fact which appears to have been disclosed by the appellant to the Income-tax Officer was that certain military hutments at Worli had been purchased by the appellant at a cost of about Rs. 2,80,000 and that these hutments had been occupied by the police department. It was also stated that the matter of the rent was pending before the Government who were considering the question of payment of a lump sum by way of compensation.. . It is clear that the appellant had not furnished all the material facts to the Income-tax Officer. If the question of the rent was pending before the Government at the time the assessments were made, there must have been some correspondence between the appellant and the Government which would have indicated the rent which could have been reasonably expected by the appellant. The nature and dimensions of the hutments, the rent, if any, which had been previously realised from the hutments before the appellant purchased them and similar facts which would have helped the Income-tax Officer to frame a reasonable estimate, had apparently not been furnished. In fact, I find that the Income-tax Officer had not even b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the order of the Tribunal suggests something quite different from the point raised before it. It is difficult to know what the Tribunal meant by suggesting that all that the Income-tax Officer is doing is to substitute the true figure of the income in place of the one taken by him on estimate basis and agreed to by the assessee. It suggests the mere correction of an arithmetical error. It was never the case of the department that the order was being merely rectified or corrected nor was any other provision of the law invoked on their behalf and we find absolutely no warrant for such a remark in the order of the Tribunal. Apart from it, there appears to have been no consideration of what are the requirements of section 34(1)(a), which is precisely the point which the assessee was making in the appeal before them. The only authority, therefore, which considered this question was, as we have said, the Appellate Assistant Commissioner. The ground upon which action under section 34(1)(a) can be taken, is stated by the section in the following words : " 34. (1) If- (a) the Income-tax Officer has reason to believe that by reason of the omission or failure on the part of an asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) had arisen. Now in the present case the original order of the Income-tax Officer for the year 1950-51, shows what was the material before him at that time and all that he had before him was a statement made by a representative of the assessee, Mr. Ganpati Iyer. As appears from paragraph 3 of the Income-tax Officer's order, this representative had stated that as the assessee was not receiving any rent from the hutments which were occupied by the police department, the assessee could not declare the income. Then there is the following remark of the Income-tax Officer which shows what was the enquiry which the Income-tax Officer made : " In this behalf Mr. Iyer was asked whether any attempts were made by the assessee to recover the rent from the police department and he stated that the entire matter was still pending before the Government who are considering the question of payment of a lump sum by way of compensation." This passage shows that the assessee had stated before the Income-tax Officer two things : (1) that he was not receiving any rent from the hutments, and (2) that as regards any attempt to recover rent the matter was still pending before the Government who were con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this reference. He made three grounds in the passage which we have already reproduced. First of all, he stated that there must have been some correspondence between the appellant and the Government which would have indicated the rent which could have been reasonably expected by the appellant. This ground is purely imaginary, because upon the record as it stands, except the two letters to which we have already referred, there is no fact brought out that there was other correspondence. The second ground was that the assessee failed to give the nature and dimensions of the hutments, and the third ground was that, " the rent, if any, which had been previously realised from the hutments ", had not been stated. So far as the nature and dimensions of the hutments are concerned, it cannot possibly be said that these were material facts necessary to be stated for the assessment of the assessee in respect of his income, profits or gains chargeable to income-tax. The nature and dimensions of a property are merely one out of the several pieces of evidence upon which an estimate or inference could be made as to what would be the income from the property. They are not material facts necessar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure on the part of the assessee to disclose fully and truly all the material facts necessary for his assessment. It failed to decide this question because of the incorrect view it took of the proceedings before it. Obviously and admittedly the proceedings were under section 34(1)(a), yet somehow the Tribunal felt that all that the Income-tax Officer was doing was to substitute the true figure of the income in place of the figures taken by him in the original assessment on an estimate basis which figures were agreed to by the assessee. For this view, as we have already said, there is absolutely no warrant. As to the real question which arises between the assessee and the department it is clear that the Tribunal did not consider it at all. That the question was raised, there can be no doubt. It was expressly dealt with by the Appellate Assistant Commissioner whose reasoning we have not been able to accept. Before the Tribunal also the question was raised along with the other question whether the proceedings were within limitation. In order to consider the question of limitation the Tribunal of necessity had to decide whether the case fell under section 34(1)(a) or under section 34(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner on facts. He has said that what the Appellate Assistant Commissioner was referring to as the revised returns of income by the assessee for those years was not in pursuance of the notices issued but in the case of the assessee there were proceedings taken more than once under section 34 and what the Appellate Assistant Commissioner is referring to is another independent proceeding under section 34 taken against the assessee. The paragraph in the order of the Appellate Assistant Commissioner does not show what proceeding he is referring to as the proceeding in which the assessee had not declared the income from the property correctly. After all, if the assessee is to be charged with omission or failure to disclose material facts, we must know what was the nature of those proceedings before a charge can be brought home to the assessee and the paragraph we have quoted from the order of the Appellate Assistant Commissioner does not indicate what proceeding he is referring to. It may be a proceeding for the reassessment of quite a different item which would hardly put the assessee on notice that his income from property was in question and he could not be blamed for stating i ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
