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TMI Blog1936 (3) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... its or gains not escaped assessment or full assessment, as the case may be. 2. The question is not happily framed and is too wide, the substance of it having regard to the matter in controversy being whether there were any materials upon which the Income-tax Officer or the Assistant Commissioner could find that the income, profits and gains which were the subject of the assessment under S. 34 had escaped assessment in the year 1931-32. 3. The material facts lie within a narrow compass. Up till January 1932, the business of a chemist and druggist in Mogul Street, Rangoon, was carried on in partnership by the Dey brothers, a manager appointed by the elder brother, Dr. Dey, being in charge of the business. After January 1932, the younger brother, L.M. Dey, who is the assesses, became the sole proprietor and employed a different manager to carry on the business for him. The assessment order of the Income-tax Officer in respect of the year 1931-32, was passed on 16th June 1931, in the following terms : The books have been scrutinized, and the return checked and found in order. I accept the return of income, viz. ₹ 8,267. Tax thereon at 9 pies in the rupee is ₹ 387-8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee that the reason for the gross profit being only 14.1 per cent, is said to be due to keen competition between the assessee firm and the Grand Pharmacy which is stated as having commenced business about this year (1930-31), and merely because the figures in the latter years showed a larger profit on a smaller turn-over the Income-tax Officer arbitrarily estimated that 30 per cent, of the figure for sales in 1930-31 must have represented the gross profit, and he assessed the income, profits and gains of the assessee upon that footing. On appeal the Assistant Commissioner reduced the assessment from ₹ 59,130 to ₹ 40,180, but otherwise affirmed the assessment, stating that the main ground for the rejection of the accounts remains, namely, that the analysis of the trading account shows a rate of gross profits which is substantially below the rates shown in subsequent accounts. And it is this Department's case that this result is due to an under-statement of the closing stock for the year. The following table sets out the trading results for the relevant years, as shown in the firm's accounts : Assessment year Opening ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income, profits and gains had escaped assessment, the effect of so holding would be that in every case in which proceedings are taken under S. 34, the assessee would have an appeal upon the facts. That in my opinion, was neither intended nor provided; and I apprehend that under S. 34, if the income-tax authorities have not misdirected themselves in law, and there were any materials before the income-tax authorities upon which they could find that income, profits and gains had in fact escaped assessment the Court will not interfere or disturb the finding of fact at which the income-tax authorities have arrived. 9. Further, I am of opinion that the animadversions passed by the Bombay High Court in 59 Bom 626 Commissioner of Income-tax, Bombay v. Gopal Vaijinath, 1935 Bom 410 = 158 I C 757 = 59 Bom 626 = 37 Bom L R 697, upon certain observations of a Bench of this High Court in 12 Rang 118 Commissioner of Income-tax v. U Lu Nyo, 198S Rang 350 = 146 I C 300 = 12 Rang 118 (S B), were not justified. The learned Judges who decided 59 Bom 626 Commissioner of Income-tax, Bombay v. Gopal Vaijinath, 1935 Bom 410 = 158 I C 757 = 59 Bom 626 = 37 Bom L R 697, while agreeing with the actual de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that S. 34 requires a notice to be served calling for a return of income which has escaped assessment strongly suggests that income which has already been duly returned for assessment cannot be said to have escaped assessment within the statutory meaning. 11. It may be necessary, of course, in certain cases to examine income A, which has already been duly assessed, in order to ascertain whether income B has escaped assessment, but that does not mean that income A is liable to be reassessed under S. 34, and we are firmly of opinion that income, profits and gains that have already been duly assessed and the assessment in respect of which has become binding and conclusive cannot be subjected to a revised assessment under S. 34 except where the rate originally charged was too low. On the. other hand, we are equally clearly of opinion, and as we understand the judgment in that case there is nothing to the contrary in 12 Rang 118 Commissioner of Income-tax v. U Lu Nyo, 198S Rang 350 = 146 I C 300 = 12 Rang 118 (S B) that income, profits and gains liable to assessment but which have not been assessed in the year of assessment in which they are chargeable, whether or not they are derive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax Officer, namely, that because from the figures for later years it is clear that a larger gross profit was therein made on a smaller turnover than in the accounting year, I am not satisfied that it follows that in the accounting year the gross profit must have been greater than the profit returned by the assessee. It appears to me that this conclusion cannot be drawn from the premises, and that the argument involves a non sequitur. It is at least equally probable that the larger profit accruing in the later years was due to the absence of trade competition or to better management-for it must be remembered that in the subsequent years the assessee was the sole proprietor of the business and that it was under new management-as that there was no increase in the profits of the later years, and, in my opinion in such circumstances there were no materials from which the Income-tax Officer could have found that in the accounting year there were profits from the business which had escaped assessment. 13. On the other hand, if the figures returned by the assessee were rejected in toto there were ex necessitate rei no material from which the inference drawn by the income-tax author ..... X X X X Extracts X X X X X X X X Extracts X X X X
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