TMI Blog1970 (9) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... and the relevant previous years are the financial years 1955-56 to 1960-61. The assessee was a new assessee who had not hitherto been assessed to income-tax and suo motu filed returns for the assessment years 1955-56 to 1961-62 before the Income-tax Officer, "B" Ward, 24-Parganas. All the returns were filed on the same date, i.e., the 18th September, 1961. The address of the assessee was given as 15, Basantalal Shah Road, Tollygunge. On the same day, i.e., the 18th September, 1961, the Income-tax Officer, "B" Ward, 24-Parganas, directed the issue of notices under section, 23(2) of the Income-tax Act, 1922, fixing the hearing on the 21st September, 1961. According to the notings in the record the notices were served on Shri P. C. Pande, income-tax practitioner, but no office copies thereof were in the records. The Income-tax Appellate Tribunal in hearing the appeal out of which the reference arises had recorded the fact that the originals of these notices were not produced before the Income-tax Appellate Tribunal at the time of the hearing of the appeals. To continue the narrative, on the 21st September, 1961, Mr. P. C. Pande attended and the Income-tax Officer completed the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will also be duly considered." In answer to this notice the assessee sent a lengthy reply running into several pages and containing as many as eighteen legal grounds including the question of the vires of some of the provisions of the Income-tax Act. It is significant, however, that no documentary evidence of any description whatsoever was annexed to or referred to in the reply to the notice to show cause issued by the Commissioner of Income-tax under section 33B of the Indian Income-tax Act, 1922. It is to be remembered that in the notice to show cause the Commissioner of Income-tax had specifically invited the assessee to produce such evidence, oral and documentary, which she desired to produce in support of her case. It would be appropriate to notice at this stage that the assessee at the time of the original assessments by the Income-tax Officer, "B" Ward, 24-Parganas, had filed a declaration. The declaration has been reproduced in the order of the Commissioner of Income-tax under section 33B of the Act and may be reproduced here in extenso : " 1, Shakuntala Devi, wife of Sardar Bahadur Singh, proprietor, Wedgwood Hotel, respectfully sheweth as follows : (1) That I was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nhance the income returned by Rs. 1,200 on estimate. Total thus comes to Rs. 5,500." As already observed and as has been noticed by the Commissioner of income-tax, a short stereo-typed assessment order had been passed for each of the succeeding assessment years from 1956-57 to 1961-62, the income assessed in these years being Rs. 5,500, Rs. 5,500, Rs. 5,500, Rs. 5,500, Rs. 5,500 and Rs. 5,603 for the assessment years 1956-57, 1957-58, 1958-59, 1959-60,,1960-61 and 1961-62, respectively. The Commissioner of Income-tax, West Bengal, Calcutta, Mr. F. H. Vallibhoy, passed the order under section 33B of the Indian Income tax Act, 1922, on August 27, 1963. By his order, the Commissioner of Income-tax found that having regard to all the facts and circumstances of the case, the assessments made by the Income-tax Officer, B-Ward, 24-Parganas, Shri A. K. Banerjee, by his orders dated 21st September, 1961, for the assessment years 1955-56 to 1961-62 were erroneous in so far as they were prejudicial to the interests of the revenue. The Commissioner of Income-tax cancelled the said assessments and directed the Income-tax Officer to do fresh assessments according to law after making proper e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce or cogent proofs have been noted or furnished to substantiate the assessee case. After setting out the declaration filed by the assessee before the original assessing authority and a specimen of the stereo-typed order of assessment, the Commissioner of Income-tax proceeds to observe as follows : " It is seen from the assessment records and from what is stated above that all the assessments were made by the Income-tax Officer in post-haste without making any enquiry or investigation into the antecedents of the assessee, whether the jurisdiction was correct, whether the story of possession and sale of ornaments was genuine, whether the assessee was actually carrying on money-lending, speculation and pawn-broking businesses as alleged and all other factors relevant for making correct and proper assessments. On enquiry, it has been ascertained that the Income-tax Officer, B-Ward, 24-parganas, had no jurisdiction over the assessee and hence all the assessments made by him are ab initio null and void. It has been learnt from spot enquiries made by the ward inspector of the department that the assessee never resided at nor carried on any business from the address given in the retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arge value and as to why the sale proceeds were kept unutilised for a span of eight years. Though the total value of the ornaments amounts to Rs. 1,69,895, the sales are stated to have been made by cash and not by cheques. There is no evidence made available as to who were the parties who really bought these ornaments through the said jewellers, M/s. Naba Kishore Dey Bros., who seems to be a got-up party for providing bogus sale vouchers so that they could be produced by unscrupulous assessees to falsely show that their concealed income had emanated from sale of old ornaments. Hence, the Income-tax Officer erred in believing the assessee's story about possession and sale of ornaments without getting any evidence about the assessee having received the said ornaments at the time of her marriage in 1948, and without summoning the said jewellers to verify whether the sale was genuine and who were the parties who had in turn bought these ornaments through that bullion merchant. With regard to the assessee's statement that she carries on business in money-lending, speculation and pawn-broking, the Commissioner of Incometax observes that the statements of accounts filed with returns of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 33B of the Indian Income-tax Act, 1922. Although the cases with regard to the reopening of assessments under section 33B of the Indian Income-tax Act, 1922, were heard and disposed of by the Commissioner of Income-tax by a, single order, different and altogether new contentions were advanced on behalf of the assessee before the Incometax Appellate Tribunal with regard to the assessment year 1955-56. With regard to that assessment year 1955-56 it was contended that voluntary returns having been filed beyond the expiry of four years from the relevant year of assessment, it was non est in the eye of law and hence no order of assessment could be passed on the basis thereof. Consequently, it was argued that the Commissioner of Income-tax had no jurisdiction to set aside an assessment which was null and void ab initio. The Tribunal allowed the assessee to raise this contention and disposed of the appeal with regard to the assessment year 1955-56 by a separate order. It was stated before us by learned counsel for both the parties that a separate reference has been directed from the order of the Income-tax Appellate Tribunal with regard to the assessment year 1955-56. This is, however, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out hereinabove comes before this court for its opinion. Mr. Pronob Pal, appearing on behalf of the assessee, contended in the first place that the Commissioner of Income-tax in passing the order under section 33B of the Indian Income-tax Act, 1922, had considered the results of Certain enquiries behind the back of the assessee. Consequently, the order of the Commissioner is in contravention of the principles of natural justice and should be held to be bad in law on that ground. There are several answers to this submission of Mr. Pal for the assessee. In the first place, it is to be remembered that the notice to show cause had been issued by the Commissioner of Income-tax under section 33B of the Indian Income-tax Act, 1922, containing certain specific allegations. We shall come to the question of what the allegations were and how they were made in some detail. But before we do that it is to be observed that it is now well settled that any action may be taken by a departmental authority or a Tribunal on the basis of certain preliminary enquiries and investigations. The assessee or the party aggrieved by the notice is not entitled to demand the details or the results of those en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allegation, and a very specific one, was that the Income-tax Officer was not justified in accepting the initial capital without any enquiry or evidence whatsoever. As will be seen from the declaration filed by the assessee at the time of the original assessment, as also from her written reply to the notice to "show cause", there are certain vital links in the chain of the assessee's story with regard to the initial capital. The first link in the chain is that she got marriage In 1948, and received large quantities of ornaments from her wealthy father at the time of her marriage. The second important link in the chain is that between the years 1949 and 1951 she sold some of these ornaments at different times and received a sum of Rs. 1,69,895-7-3 as the sale proceeds of these ornaments. The third link in the chain is that this amount, which represented the sale proceeds of her ornaments was invested by her in the business of speculation, money-lending and pawn-broking These respective items of business of the assessee yielded certain returns which was the subject-matter of the assessment in the years 1956-57 to 1961-62. Needless to say , the crucial link in this chain of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We hold that there were no basic materials which were considered behind the back of the assessee and of which the assessee and of which the assessee did not have due notice. Mr. Pronab Pal for the assessee next submitted that the Commissioner of Income-tax had proceeded on the basis that there was some kind of collusion between the assessee and the Income-tax Officer, B-Ward, 24-Parganas, and the original orders of assessment were procured as a result of such collusion. In support fo this contention, Mr. Pal relies on the following observation in the order of the Commissioner of Income-tax which is to be found at paragraph 5 : "As will be seen from the subsequent paragraphs, the Income-tax Officer has made the assessments without any enquiry and investigation and he has accepted the assessee's faked stories as gospel truth which could not have been done but with ulterior motive to oblige the assessee and which has resulted in erroneous assessment prejudicial to the interests of the revenue." In our view this does not amount to a finding by the Commissioner of Income-tax that there was any collusion between the assessee and the Income-tax Officer with regard to the orders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. It is also to be noted that the observations of the Commissioner of Income-tax have been made in the context of whether the orders of assessments were prejudicial to the revenue or not. The Commissioner had arrived at the prima facie conclusion that if these incomes were taxed in the hands of the husband on the basis that they were found to be belonging to the husband, the revenue would have gained much more. In that view of the matter the Commissioner of Income-tax observed that the revenue has suffered prejudice. It is further to be remembered that what has been set aside is the assessment of the assessee. There has been a direction also to reassess the assessee's income for the relevant assessment years. There has been no order of any kind whatsoever affecting the husband's assessments or his income-tax proceedings. For these reasons, we are of the view that the Commissioner of Income-tax acted within the powers conferred on him by law in passing the order that he did. Lastly, Mr. Pal for the assessee 'submitted that the question of initial capital was relevant only for the assessment 'year 1955-56, when the assessee is supposed to have sold the ornaments, received the s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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