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TMI Blog1938 (2) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... ecember 23, 1932, the Income-tax officer assessed the firm as nil and renewed the firms registration under section 26A of the Act. The next return was made in November 1933, for the assessment year April 1, 1933, to March 31, 1934, in respect of the period November 1931 to October 1932 (Dewali to Dewali). This particular return showed a loss of two to three lakhs of rupees. No assessment was made in respect of the year April 1, 1933, to March 31, 1934, because of an attempt made by the Income tax Officer to reopen the assessment of the previous year the year now in question. This came about in this way. The Income-tax Officer, apparently at the beginning of January 1934, received information which made him suspicious as to the correctness of the previous return and thereupon he issued to the assessees on February 8, 1934, the following notice purporting to be given under sections 34 and 22(2) of the Act :- Whereas I have reason to believe that your income from business and other sources which should have been assessed in the financial year ending the 31st March 1923 has wholly escaped assessment, and I therefore propose to assess the said income that has escaped assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. There were further prayers for an injunction. Mr. Justice McNair heard that matter on March 6, 1925, when the assessees dropped their claims to relief other than the claim to write of prohibition their claims to relief other than the claim to write of prohibition. The case is reported in I.L. R. 62 Cal. 1011 (In re Ramjidas Mahaliram). McNair, J., held that he had power in a proper case to issue a writ was discretionary and that unless the want of jurisdiction complained of was based upon a breach of a fundamental principal of justice the write ought not to issue. He also was of opinion that the Income-tax act provided other remedies for the assessee. Accordingly he dismissed the application and there was no appeal from his decision. In the course of his judgment Mcnair J. said with reference to the words in Section 34 If income has escaped assessment..... The Legislature in may view has provided that if a certain state of facts exists and is shown to the Income-tax officer to exist before he proceeds to reopen the assessment under section 34 he shall have jurisdiction to take proceedings but not otherwise. It is not for him to decide whether the state of facts exists and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re assessment by reason of the judgment delivered by the Honble Mr. Justice McNair on the sixth day of March one thousand nine hundred and thirty-five, the parties appearing as aforesaid hereby agreeing that all questions of res judicata and estoppel be decided by the reference so to be made as aforesaid by the commissioner of Income-tax Bengal . Accordingly a further question was formulated by the Income-tax Officer as follows :- Question (1) : Whether the Income-tax officer is precluded from proceeding with the re assessment by reason of the judgment delivered by the Honble Mr. Justice McNair on the sixth day of March one thousand nine hundred and thirty-five. When the reference upon the one question No. 2 came before Panckridge, J., and myself the assessees stated they had acted honestly throughout and were willing to give the Income-tax authorities any information they desired if they would be specific. The Income-tax authorities said they had no desire to harass the assessees. Accordingly I suggested that the Income-tax authorities should be specific in their requests and should be given the information they asked for. I hoped that this would dispose of the whole m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon Section 34 were not necessary for his decision. In fact his decision against the assessees on the question of the issue of the write was given in spite of his views on Section 34 which were favorable to them. The legal effect of views so given is, I believe, correctly stated in Halsburys laws of England, 2nd Edition. Vol. 19 page 252; Statements which are not necessary to the decision, which go beyond the occasion and lay down a rule that is unnecessary for the purpose in hand have no binding authority on another Court, though they may have some merely persuasive efficacy. Consequently, I hold that the views of Mr. Justice McNair upon Section 34 of the Income-tax act do not operate as res judicata nor are they binding upon the Income-tax authorities on the dictum of Lord Reading in R. v. Speyer quoted above. I treat McNair, J.s views on Section 34 which were arrived at after considerable thought, with the respect they are undoubtedly entitled to, but arrived at a some what different conclusion which I state hereafter. The act itself by Sec. 66 and 66A gives the Commissioner a clear and unqualified right to state a case for the opinion of this court and to have it decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t decide the question. In my view, it is the Income-tax officer he is the person charged with the duty of taking action under Sec. 34 where such action ought to be taken. Apart from the assessee, at this stage no person other than the Income-tax officer can, by reason of Sec. 54 of the Act have any knowledge of the first assessment and upon what data it was based, and no one else is in a position to decide whether income has escaped assessment or not. In Harmukhrai Dunichands case (I.L.R. 56 Cal. p. 39) Rankin C.J., said : Fundamentally, no doubt the Income-tax officer must proceed in a judicial spirit and come to a judicial conclusion upon properly ascertained facts, though I would point out that the income tax officer is not a Court, has not the proceeding of a court, and he is, to some extent, a party or Judge in his own case . In deciding whether has escaped assessment the Income-tax Officer must not act a on suspicion or conjecture; he must decide the question upon a fair and reasonable consideration of such information and materials as are available to him. He need not hold a formal inquiry, but he should indicate to the assessee the nature of the alleged escarpment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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