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TMI Blog1962 (3) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... ure of ₹ 40,000 in his return. The officer did not accept that estimate and said: I shall provisionally adopt ₹ 50,000 subject to revision later on production of the Cochin State assessment orders. During the investigation conducted by the Income-tax Officer, Trichur, in connection with the voluntary disclosure made by the assessee, he came across certain information. This was conveyed by him to the Income-tax Officer, Kozhikode, by a letter dated September 24, 1953, which is annexure B to the statement of the case and the former suggested and investigation regarding an entry in the books of account of the assessee in his Kozhikode branch on July 30, 1947, of ₹ 25,000. Actually, this was a credit entry in favour of the assessee's wife. This fact, however, was not evident from the entry because the assessee's wife was described as Trichur Nadakavukaran Ouseph Inasu's daughter Kunjanam . The Income-tax Officer, Kozhikode, issued a notice under section 34 of the Act to the assessee on November 1, 1956. Thereupon, the assessee moved this court by way of a writ application challenging the jurisdiction of the officer to issue a notice under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the matter, as far as the estimate of the foreign income of ₹ 1,02,511 was concerned, there was no justification whatever since an estimate of that income had already been made when the original assessment order was passed on February 26, 1949. Before dealing with these arguments, it is necessary to state what was done at the time of the reassessment proceedings. The explanation offered by the assessee that ₹ 25,000 entered in the account books at Kozhikode on July 30, 1947, represented money that really belonged to his wife was not accepted and a addition of that amount was, Therefore, made to the total taxable income that had originally been estimated at ₹ 90,169 when the order of assessment dated February 6, 1949, was passed. For the purpose of fixing the rate, the foreign income which had been estimated at ₹ 50,000 by the assessment order dated February 6, 1949, was enhanced to ₹ 1,02,511. The taxing authorities as well as the Income-tax Appellate Tribunal have dealt with the materials available with them and have drawn the inference that the sum of ₹ 25,000 really was the undisclosed income of the assessee. They rejected the explanat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not necessary or obligatory on the part of the assessee to point out the inference that could be drawn from those facts and if the Income-tax Officer had not drawn the proper inference, the assessee could not be blamed and it could not be said that he had disclosed any material facts fully and truly. Reliance was placed on two rulings of the Supreme Court in Calcutta Discount Company Limited v. Income-tax Officer, Companies District I, Calcutta [1961] 41 I.T.R. 191 ; [1961] 2 S.C.R. 241] and Commissioner of Income-tax v. Lakhiram Ramdas[1962] 44 I.T.R. 726 (S.C.).We do not think that the argument is well founded. In the first of the above cases, the assessee had purchased certain shares and had also sold them during the accounting period. Those transactions were reflected in the accounts books which were made available at the time of the assessment. The officer, in making the assessment, did not treat the profits made from those transactions as income. Proceedings, however, were initiated under section 34 and it was proposed to treat the profits derived by the purchase and sale of shares as if it was income from the business of dealing in shares. It was with reference to these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , according to the counsel for the assessee, the material fact referred to in that part must be a fact other than a statement relating to the income of the assessee. We do not see any reason to limit part two of the sub-clause as contended. If the return submitted by an assessee showed only a part of the income of the assessee for the year in question and it proceeded on the basis that, what was stated was the entire income of the assessee, there was an omission to truly and fully disclose a material fact. We are also unable to accept the contention that there were no grounds to induce a reasonable belief in the Income-tax Officer to entitle him to issue a notice under section 34. Material facts, such as that Kunjanam was the wife of the assessee, that there had been other credit entries in her favour for substantial amounts during other years and that it was doubtful whether the dowry said to have been received by her was sufficient to cover those credit entries, were all mentioned in the letter written by the Trichur Income-tax Officer on September 24, 1953, to the Kozhikode officer. These were available with the Income- tax Officer, Trichur, when he issued the notice on March ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been made out so far as the income relating to the Cochin business is concerned and that section 34(1)(b) cannot apply since the notice dated March 23, 1957, was issued long after the period of four years provided for action being taken under that sub-clause of the section. The enhancement of that income from ₹ 50,000 to ₹ 1,02,511 is, therefore, unwarranted. It was conceded before us and, we think rights, that the reservation contained in the order of assessment dated February 6, 1949, that the fixation of ₹ 50,000 was provisional and subject to revision later, would not entitle the department to reopen that assessment. There can be no piece-meal assessment. In the light of the above conclusions, we answer the first question in the affirmative and against the assessee so far as the addition of ₹ 25,000 is concerned. But we answer the same question in the negative and in favour for the assessee and hold that the enhancement of the income for the Cochin business from ₹ 50,000 to ₹ 1,02,511 is unwarranted. It is stated before us by the counsel for the assessee and the department that question No. 2 need not be answered. We, therefore, declin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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