TMI Blog1966 (10) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... , Rs. 56,886, was virtually accepted except for an addition of Rs. 200. During the course of the assessment proceedings for the assessment year 1950-51, the previous year whereof is the year ended March 31, 1950, the Income-tax Officer found certain cash credits in the accounts to be not genuine, and he held them to be the income of the assessee from undisclosed sources. Along with the inquiries made for the assessment year 1950-51, he made inquiries regarding the cash credits that appeared in the books for the assessment year 1948-49, which had not come to the notice of the Income-tax Officer who made the original assessment. The result of this investigation was that he came to the same conclusion, namely, that they were not genuine. In view of this he took proceedings for reopening the assessment under section 34 and, after obtaining the Commissioner's permission, notice was issued to the assessee under section 34 which was served on him on November 12, 1954. It may be noticed that the service of the notice was beyond four years and within eight years from the date of the assessment. The assessee challenged the jurisdiction of the Income-tax Officer to reopen the assessment a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as may be, apply accordingly as if the notice were a notice issued under that sub-section. " It may be stated that the term " within eight years " has been omitted by section 18 of the Finance Act with effect from April 1, 1956, and certain provisos were added prescribing the period of limitation to vary with the amount of escapement of income, namely, whether it is below one lakh of rupees or above. We are, however, not concerned with these provisions as the assessment year related to years prior to 1956. The above two provisions, while vesting the jurisdiction in the Income-tax Officer to reopen assessment, have prescribed two different periods of limitation depending on whether there has been a suppression of income by the assessee not fully or truly disclosing the material facts necessary for the assessment of that year or whether in spite of fully disclosing by the assessee the material facts necessary for the assessment, the income has escaped assessment. If the former is the case, the assessment can be reopened within eight years, and in the latter case within four years. The consequence of the presence of an omission to disclose material facts necessary in one case and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner becomes clear in that what he held was that the Income-tax Officer who made the original assessment did not suspect the genuineness of the credits though in fact they were not genuine. There is nothing to imply that he examined the books or that he accepted the accounts after a close scrutiny. The Tribunal did not accept the contention that the cash credits were genuine and once that fact went against the assessee, the assessee did not contest that the assessment could be reopened under section 34(1)(a) of the Act. The Tribunal has observed : " We have absolutely no doubt in our mind, as will be presently shown, that the Income-tax Officer had reasonable grounds to believe that cash credits in certain accounts did not purport to be what they prima facie appeared and as such the interest thereon was not an admissible deduction. Hence, the assessment in the present case has to be completed within a period of 8 years and, if this is so, then the assessee urged no other ground to challenge the validity of the assessment so far as the provisions of section 34 were concerned." Where the Income-tax Officer, in our view, after considering the cash credits accepted them and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... family and that as the family had ceased to exist and the partition was recognised, no valid notice could be issued to the respondent in his capacity as the karta of the family. In his counteraffidavit the Income-tax Officer stated that he had information that, notwithstanding the compromise decree, the members of the family were living together and had a joint mess and the business was run by the respondent and that, therefore, the compromise was a make-believe one and the family in fact continued to be a joint Hindu family. It was held by the High Court that the notice issued by the Income-tax Officer was invalid but, on appeal, the Supreme Court held that the provisions of section 34(1)(a) were justifiably invoked and that the notice was valid. Subba Rao J., as he then was observed at page 79 : " In short the case of the revenue was that the compromise was a make-believe one and the family in fact continued to be a joint Hindu family. If the case of the revenue was true-on which we do not express any opinion and the fact of the continuance of the joint Hindu -family was kept back from the knowledge of the Income-tax Officer, it would be a clear case of the said family escaping ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
