TMI Blog1964 (7) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... o examined. Assessee was married about 30 years ago and received certain gifts and presents in cash, which is customary. With that she did pawn-broking business. Accounts are not maintained properly. She has no bank account. Assessed under section 23(3) as below: Rs. Income from business estimated ... 3,000 Out of initial capital, in the absence of conclusive proof taken as income from other sources ... 2,000 Total ... 5,000 For the subsequent years, namely, assessment years 1954-55, and 1959-60, the same officer passed stereotyped assessment orders more or less on the lines indicated above and assessed the total income of the petitioner as hereinbelow indicated: Year Income Rs. 1954-55 ... 3,500 1955-56 ... 4,000 1956-57 ... 4,300 1957-58 ... 4,400 1958-59 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mitra Place, Calcutta. Such residence at the aforesaid place was during the months, January, 1961, to June 1961, both inclusive. The rent receipts in son's name are available and the same are forwarded herewith. With regard to the observation that the Income-tax Officer was not justified in accepting initial capital, etc., without any enquiry or evidence whatsoever, it is submitted that in this connection the Income-tax Officer did make enquiries and as required by him detailed explanation was also furnished by the assessee in writing. The initial capital which has been accepted by the Income-tax Officer was ₹ 9,400 most of which were received from father and other relations and had amounted to the aforesaid sum including interest earned during several years and further small gifts received in connection with various ceremonies as usual in the community. Such amounts are not unreasonable to be in the possession of ladies. Certain evidences were also produced before him which were also looked into and the assessment was completed thereafter. With regard to the assessment for 1961-62, it is submitted that the said assessment was made by the subsequent Income-tax Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... back of your petitioner without giving your petitioner an opportunity of being heard in rebuttal of those materials and has thus violated the principles of natural justice and also violated the express provisions of section 33B of the repealed Indian Income-tax Act, 1922, even assuming the said section applies. In elaboration of this ground, Mr. Mitra argued that the revision order, particularly paragraphs 3, 4 and 5 thereof contained an innuendo that the petitioner had got hold of an Income-tax Officer who was too much favourably disposed to the assessee-petitioner and who allowed her to file voluntary returns for several years at a time and, thereafter, grabbed jurisdiction over the returns and passed favourable assessment orders on her. Mr. Mitra argued that the aforesaid ground was not included in the notice and the petitioner had no opportunity of explaining how she came to file the voluntary returns before that particular Income-tax Officer, namely, Mr. H. Upadhaya, and how that officer made the assessment for all the years on one and the same date. Mr. Mitra further contended that the revision of assessment for all the years was made also on the ground that the Income-t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax*. To that judgment I shall have to refer later on. The argument advanced by Mr. Mitra requires careful consideration. No riddle is more difficult of solution, none has more persistently engaged the attention of thoughtful minds than the problems of natural justice. If one cares to examine the case law on the point, from the earliest times, he is sure to find flood tide of respect for natural justice, an ebb tide and a return of the flow tide. But in spite of all that, the term nature has never been wholly without its eternal fascination, possibly because it only can suggest absoluteness which man is after, but which the modern mind cannot find. Wherever the English system of jurisprudence has taken root, certain fundamental principles of justice are well recognised, loosely called rules of natural justice, because they fit in with all absolute principles of justice. They are: (i) notice of the charge or charges on which a man is sought to be proceeded against; (ii) opportunity to be heard; (iii) hearing before an impartial tribunal so that no man can be a judge of his own cause and that the decision can be made in good faith and without bias; (iv) an orderly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Just because the petitioner did not appear at the hearing, it did not mean that allegations of fraudulent conduct or the interpolation of record, etc., could be gone into and decided without any notice whatsoever to her that she was being charged with the same or that the order of assessment was being set aside on such grounds... (b) Apart from the enquiries mentioned in the notice, the Commissioner has relied on other enquiries not mentioned therein. In fact, the record does not show that some of the enquiries had at all been made. The Commissioner went upon the record and I do not see how it can be argued that there were enquiries not appearing in the record. In coming to the conclusion that the assessment made was erroneous and prejudicial to the revenue, the Commissioner had considered a number of grounds. Some of the grounds he was entitled to go into ex parte, as the petitioner, in spite of notice of such grounds, failed to appear and contest the same. He, however, did not confine himself to those grounds, but his order, which is a speaking order, discloses that he considered the case from various points of view not disclosed to the petitioner, took into consideration ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that she was not prejudiced by the order or that had she appeared at the hearing the further charges could have been communicated to her. I have deliberately quoted long extracts from the judgment of Sinha J. because I have to see how far the facts of the instant case attract the criticisms of the type made by Sinha J. which criticisms were adopted by Mr. Mitra as part of his argument. The first ground against the petitioner disclosed in the notice under section 33B was that she neither resided at No. 19, Purna Mitra Place, nor carried on any business from that address, although the returns or some of them were shown as submitted from that address. On that ground, the respondent-Commissioner recorded the following findings: A short stereotyped assessment order has been made for each of the succeeding assessment years 1954-55 to 1961-62, the income assessed for these years being ₹ 3,500, ₹ 4,000, ₹ 4,300, ₹ 4,400, ₹ 4,500, ₹ 4,500, ₹ 4,500 and ₹ 2,736 for the assessment years 1954-55, 1955- 56, 1956-57, 1957-58, 1958-59, 1959-60, 1960-61 and 1961-62 respectively. It is seen from the assessment records and from what is sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Commissioner of Income-tax [1962] 45 I.T.R. 206 (S.C.). In the case of Dhakeswari Cotton Mills* Mahajan C.J. observed: As regards the second contention, we are in entire agreement with the learned Solicitor-General when he says that the Income-tax Officer is not fettered by technical rules of evidence and pleadings, and that he is entitled to act on material which may not be accepted as evidence in a court of law, but there the agreement ends; because it is equally clear that, in making the assessment under sub-section (3) of section 23 of the Act, the Income-tax Officer is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all. There must be something more than bare suspicion to support the assessment under section 23(3)... In this case we are of the opinion that the Tribunal violated certain fundamental rules of justice in reaching its conclusions. Firstly, it did not disclose to the assessee what information had been supplied to it by the departmental representative. Next, he did not give any opportunity to the company to rebut the material furnished to it by him, and, lastly, it declined to take all the mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isciplinary tribunal, amongst other materials, by a letter written by Messrs. Barjorji. Barjorji was not examined on the letter and the Orissa High Court, which heard a writ petition against the order of dismissal passed on the officer, adversely commented on the use of the letter. Setting aside the judgment of the High Court, Gajendragadkar J. (as the C.J. he then was) observed: The High Court has also commented on the fact that the Tribunal should have examined Barjorji before relying upon the statements made by him in his letter addressed to Mr. Patnaik. There is some force in this argument; but the finding of the Tribunal in regard to the purchase of the Austin car is based on several other considerations all of which have been duly proved. In fact, about the main feature of this transaction, there was no serious controversy between the parties. The parties were at issue on the question as to the effect of these broad features but that, clearly, is a question of fact which fell within the jurisdiction of the Tribunal. We have carefully considered the reasons given by the High Court in its judgment under appeal but we are unable to accept the contention pressed before us by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd quoted one such order, namely, that for the assessment year 1953-54, to show that the Income-tax Officer arrived at his conclusion off-hand, in post haste and without enquiry. He, lastly, found that the assessee did not maintain proper books of account, could not produce any evidence of pawnbroking business, had not even taken licence for the pawn-broking business and merely fabricated a story to explain away large investments made by her in certain business of which her husband was either the managing director or a partner. The line of reasoning adopted by the respondentCommissioner, in this case, is different from the line of reasoning which prevailed with the Commissioner of Income-tax in Matter No. 158 of 1963 Rampiyari Khemka v. Commissioner of Income-tax [1966] 61 I.T.R. 600 decided by Sinha J. Here, the Commissioner of Income-tax did not find that the notices were not properly issued or served or that the records were interpolated in order to make a show of service. The ground relied on by the Commissioner of Income-tax was that the Income-tax Officer had passed the orders of assessments without enquiry and without supporting evidence. That ground was disclosed to the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mka v. Commissioner of Income-tax [1966] 61 I.T.R. 600 Sinha J. relied on the decision of the Supreme Court in Dhirajlal Girdharilal v. Commissioner of Income-tax [1954] 26 I.T.R. 736 (S.C.) and observed: If part of an order is good and another part bad, the whole order becomes defective, because where a finding is based on a material which is only partly irrelevant or inadmissible it was vitiated as a whole. His Lordship distinguished the judgment of the Supreme Court in S.N. Namasivayam Chettiar v. Commissioner of Income-tax*** on the ground that in that case the Supreme Court excused the use of materials undisclosed to the assessee on the theory that those materials did not form the basis of calculation. His Lordship held that where the undisclosed materials formed the basis of the order, the principle laid down by the Supreme Court in S.N. Namasivayam Chettiar's case [1960] 38 I.T.R. 579; [1960] 2 S.C.R. 885 would not apply. I have, therefore, to see whether the basis of the order of revision were the facts ascertained by the respondent-Commissioner himself, namely, the absence of pawn-broking business, the benami loan business and the investments made by the assessee-pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s we will presently set out, be sustained. If the order of dismissal was based on the findings on charges 1(a) and 1(e) alone the court would have jurisdiction to declare the order of dismissal illegal but when the findings of the Tribunal relating to the two out of five heads of the first charge and the second charge was found not liable to be interfered with by the High Court and those findings established that the respondent was, prima facie, guilty of grave delinquency, in our view the High Court had no power to direct the Governor of Orissa to reconsider the order of dismissal. In this rule I have not to deal with a disciplinary proceeding but with a proceeding for revision of assessment under section 33B of the Indian Income-tax Act, 1922, but the rules of natural justice do not differ with the nature of the proceedings. They are everywhere the same, unless controlled or modified by statutes or statutory rules. Therefore, if a ground is sought to be made out from different aspects and if such an attempt becomes bad for violation of the rules of natural justice in respect of only some aspects, it may be difficult to interfere with the ultimate order, under article 226 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riticism made by Mr. Mitra in this respect. The other materials undisclosed to the petitioner were used as supporting materials for his findings on the grounds disclosed and were not basic materials, a distinction which I have already pointed out. I do not, therefore, uphold the argument made by Mr. Mitra also on that aspect of the matter. The extent and limitations of the rules of natural justice applicable to a proceeding under section 33B may be tabulated as follows: (a) The Commissioner of Income-tax must disclose, in his notice to the assessee, the grounds on which he desires to revise. This is essential; otherwise the assessee may not be able to show any cause and the opportunity of being heard , which section 33B requires, may prove illusory to the assessee. If the assessee does not know on what point he is to be heard, he may not visualise what he has to say at the hearing at all. (b) The notice to show cause must be served upon the assessee reasonably ahead of the date fixed for hearing. A notice calling upon an assessee to show cause, why assessment orders for several years should not be revised, within an unreasonably short time should be condemned. What should ..... X X X X Extracts X X X X X X X X Extracts X X X X
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