9911796707
TMI Blog1976 (8) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... intained any books of account in respect of his business and sources of income except the excise registers in connection with the liquor business. Prior to the assessment year 1941-42, the income of the assessee did not reach the taxable limit. In the year 1941, money-lending business was started and the country liquor business was expanded. Assessments for the assessment years 1943-44 to 1946-47 were completed on total incomes of Rs. 14,884, Rs. 14,922, Rs. 33,592 and Rs. 25,155, respectively. Between April 1, 1942, and March 31, 1946, there was substantial and vast expansion of the assessee's business, his investments in properties, lands, sites and National Savings Certificates, etc. It was, therefore, suspected that the assessee had suppressed a lot of income from taxation. His case accordingly was referred to in the year 1950 by the Central Government to the Income-tax Investigation Commission under section 5(1) of the Taxation on Income (Investigation Commission) Act, 1947 (hereinafter referred to as "the Act"). The said Commission submitted its report on September 9, 1952. Pursuant to the said report of the Commission, consequential assessment orders were passed by the Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... according to which his total wealth as on March 31, 1940, was Rs. 2,59,313 and that as on March 31, 1947, was Rs. 4,81,436. Thus, according to the assessee, during this period there was an increase in his total wealth by Rs. 2,22,123. It was, however, submitted by the assessee that a sum of Rs. 3,59,538 was available to him from agricultural income, jagir income and also from the assessed income and that the total investments were fully explainable and that no income chargeable to tax had escaped assessments for those years. Before the Income-tax Officer he also raised objection to the validity of the initiation of reassessment proceedings. The said contentions of the assessee were rejected by the Income-tax Officer and he came to the conclusion that the increase in the wealth of the assessee during the said period was Rs. 3,27,705 and brought it to tax for the assessment years 1943-44 to 1946-47. The said assessment orders were passed on July 31, 1959. Aggrieved by the orders passed by the Income-tax Officer, the assessee filed separate appeals before the Appellate Assistant Commissioner. Before him, the assessee challenged the validity of reopening of the assessments on the gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssments made on that basis were also void. Such a contention of the assessee, however, was not accepted by the revenue and the Inspecting Assistant Commissioner intimated the assessee that the attachment levied pursuant to the said revised assessment orders will be kept in force, but further proceedings would be kept in abeyance till the final order was passed by the Supreme Court in the writ petition filed by the assessee. In view of these facts and circumstances the Tribunal held that it did not lie in the mouth of the revenue to contend that the reassessment proceedings were commenced against the assessee under a bona fide belief that the assessments made on the assessee were illegal and that the incomes which were brought to tax under those illegal assessments had really escaped assessments. The Tribunal, accordingly, came to the conclusion that no income which was chargeable to tax had escaped assessments on the date on which the assessments were reopened and that the Income-tax Officer had no jurisdiction to reopen the assessments. In view of these findings, the Tribunal dismissed the appeals that were filed on behalf of the revenue. The question referred to above arises from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of the report of the Investigation Commission. If pursuant to these revised assessment orders recovery proceedings were commenced and continued on the date when the notices were issued on March 28, 1956, it could not lie in the mouth of the Income-tax Officer to say that he entertained a reasonable belief that income had escaped assessment for the relevant years. The facts in this case are very clear. After the revised assessment orders were passed, the properties of the assessee were attached and even though the Supreme Court on December 20, 1955, in the case of M. CT. Muthiah v. Commissioner of Income-tax [1956] 29 ITR 390 took the view that the provisions of sections 5 and 8 of the Act were ultra vires, the proceedings which were commenced for enforcement of the revised orders were pursued. Actually, even after this date, as shown to us from the file by counsel for the revenue, on January 27, 1956, the Income-tax Officer, Ward "A", Nasik, wrote to the Collector of Nasik in regard to the recovery of tax from the assessee, that he had received instructions from the higher authorities that execution of certificate pertaining to the amount to be recovered be held in abe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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