TMI Blog1970 (4) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... 226 and 227 of the Constitution in the High Court of Judicature at Bombay (Nagpur Bench). Those petitions were summarily dismissed. The appellant, thereafter, appealed to this court after obtaining special leave from this court. This court allowed those appeals on April 8, 1965, holding that the High Court was not justified in summarily dismissing the writ petitions as the allegations made therein merited examination. Thereafter, the High Court issued rule nisi in those petitions. The respondent opposed those petitions. After hearing the parties, the High Court again dismissed those writ petitions. Hence, these appeals. The facts of the case material for deciding these appeals have been set out in detail in this court's order dated April 8, 1965, We shall briefly refer to them. The above appeals relate to proceedings under section 34 of the Act in respect of three assessment periods. It would be sufficient if we set out the facts relating to the assessment year 1953-54. There is no dispute that if the proceedings relating to that year are held to be invalid, similar would be the position regarding the proceedings relating to the other two assessment periods. On the other hand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax Officer from taking any action or proceeding in enforcement or implementation of the notice dated December 26, 1960. This petition, as mentioned earlier, was rejected in limine. In the writ petition, the plea taken by the company was that in issuing the notice under section 34(1)(a) of the Act, the Income-tax Officer acted without jurisdiction and for a colourable purpose. Its case as set out in the writ petition is as follows : In its return the company disclosed for the year ending March 31, 1953, Rs. 15,70,587 as its total profits according to its books of account. In the statement under section 38(3) of the Act filed with the return, the company disclosed that it had paid Rs. 1,13,052-8-9 as " commission sales " " on different dates " by cheques to Alloys and Rs. 6091-4-0 to J.S. Williams on October 4, 1952, by cheque as commission on sales. In the profit and loss account of the company filed with the return, the amount of Rs. 29,76,067-10-8 was disclosed as received by " sales less commission ". On December 7, 1953, R. K. Gupta, a director of the company, made a statement before the Income-tax Officer stating that the commission was paid to Williams on the sales ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany disputed that the Income-tax Officer had any reason before him to have the required belief. It also denied the fact that it had omitted or failed to disclose fully and trully all material facts necessary for the the assessment in question or that any income, profits or gains chargeable to income-tax have escaped assessment in that year. Section 34(1) of the Act, as at the relevant time, read : " IF--- (a) the Income-tax Officer has reason to believe that by reason of the omission or failure on the part of an assessee to make a return of his income under section 22 for any year or to disclose fully and truly all material facts necessary for his assessment for that year, income, profits or gains chargeable to income-tax have escaped assessment for that year, or have been under-assessed, or assessed at too low a rate, or have been made the subject of excessive relief under the Act, or excessive loss or depreciation allowance has been computed, or (b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Income-tax Officer has in consequence of information in his possession reason to believe that inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prima facie reasonable grounds for believing the there has been a non-disclosure of a primary material fact, that by itself gives him the jurisdiction to issue a notice under section 34 of the Act and the adequacy or otherwise of the grounds of such belief is not open to investigation by the court. It is for the assessee who wants to challenge such jurisdiction to establish that the Income-tax Officer had no material for such belief. Speaking for the majority, Das Gupta J. observed therein : " To confer jurisdiction under this section to issue notice in respect of assessments beyond the period of four years, but within a period of eight years, from the end of the relevant year two conditions have therefore to be satisfied. The first is that the Income-tax Officer must have reason to believe that income, profits or gains chargeable to income-tax have been under-assessed. The second is that he must have also reason to believe that such 'under-assessment' has occurred by reason of either, (i) omission or failure on the part of an assessee to make a return of his income under section 22, or (ii) omission or failure on the part of an assessee to disclose fully and truly all material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of four years, but within a period of eight years, from the end of the relevant year, viz., (i) the Income-tax Officer must have reason to believe that income, profits or gains chargeable to income-tax had been under-assessed, and (ii) he must have reason to believe that such " under-assessment " had occurred by reason of either (a) omission or failure on the part of the assessee to make a return of his income under section 22, or (b) omission or failure on the part of the assessee to disclose fully and truly all the material facts necessary for his assessment for that year. Both these conditions are conditions precedent to be satisfied before the Income-tax Officer acquires jurisdiction to issue a notice under the section. If there are in fact some reasonable grounds for the Income-tax Officer to believe that there had been any non-disclosure as regards any fact, which could have a material bearing on the question of under-assessment, that would be sufficient to give jurisdiction to the Income-tax Officer to issue the notice under section 34. Whether these grounds are adequate or not is not a matter for the court to investigate. In other words, the sufficiency of the grounds w ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
