TMI Blog1966 (10) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... peal dismissed. - - - - - Dated:- 27-10-1966 - Judge(s) : V. RAMASWAMY., J. C. SHAH., V. BHARGAVA JUDGMENT The judgment of the court was delivered by SHAH J.-- Messrs. Kantamani Venkata Narayana Sons, hereinafter referred to as "the assessee", is a Hindu undivided family, which was assessed to tax on income derived principally from money-lending. In the course of proceedings for assessment of a private limited company styled " Motu Industries Ltd." the Income-tax Officer, Rajahmundry, discovered that there Was a large accretion to the wealth of the a sessee which had not been disclosed in proceedings for its assessment. On March 12, 1959, the Income-tax Officer issued a notice seeking to reopen the assessment for the year 1950-51. Th e assessee filed a return under protest. On March 14, 1960, the Income-tax Officer issued notice of reassessment for the year 1951-52, and on December 19, 1960, the Income-tax Officer intimated the reasons that had prompted him to issue the notices of reassessment. On March 24, 1962, the Income-tax Officer issued notices under section 34 for reassessment of the income of the assessee for the years 1940-41 to 1949-50. The assessee then pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at income, profits or gains chargeable to income-tax have escaped assessment for any year, or have been under-assessed, or assessed at too low a rate, . . . he may in cases falling under clause (a) at any time ... and in cases falling under clause (b) at any time within four years of the end of that year, serve on the assessee.... a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 22 and may proceed to assesss or reassess such income, profits or gains ... An Explanation was also added which states : " Explanation.-- Production before the Income-tax Officer of account books or other evidence from which material facts could with due diligence have been discovered by the Income-tax Officer will not necessarily amount to disclosure within the meaning of this section." Since on the matter canvassed in these appeals there is no material change in the section, we will only refer to the section as amended by Act 48 of 1948. This court in Calcutta Discount Co. Ltd. v. Income-tax Officer, Companies District I, Calcutta observed that before the Income-tax Officer may issue a notice under section 34(1)(a) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he had reason to believe that the assessee had not disclosed fully and truly all material facts necessary for the assessment and in consequence of non-disclosure of that information, income chargeable to tax had escaped assessment. In his affidavit, the Income-tax Officer stated : " A scrutiny of the money-lending 'statements' filed by the assessee for the years ended 31st March, 1950, and 31st March, 1951, revealed that there were large investments made by the assessee in his money-lending business in those two years. The assessee did not file balance-sheets for the said two years, or for the earlier assessment years and consequently it was not clear from the statements filed by him, how he could make heavy investments in money-lending business in those two years." The Income-tax Officer also stated that in the year of account 1949-50, the total investments in money-lending business had increased by Rs. 1,33,000 and in the following year by Rs. 49,000, and the plea of the assessee that growth in the investments of the assessee in those years was mainly due to the " cash balance " held by the manager out of his share received on partition between him and his brothers, and ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Officer was not seeking to reassess the income on a mere change of opinion. The increase in the wealth discovered was wholly disproportionate to the known sources of income of the assessee. That was, prima facie, evidence on which he had reason to believe that the assessee had omitted to disclose fully and truly all material facts and that in consequence of such non-disclosure income had escaped assessment. The Income-tax Officer has said that no attempt was made by the assessee to furnish some reasonable proof of the source of the additional wealth ; the partition deed was not produced; the books of account prior to 1948-49 were withheld on the plea that all the books were lost; no evidence was tendered to show that the father-in-law of the manager was possessed of sufficient means to give and did give any large cash amounts to him; and there was also no explanation why a large amount exceeding a lakh of rupees was not invested in the money-lending or other business. The Income-tax Officer had, therefore, prima facie, reason to believe that information material to the assessment had been withheld, and that on account of withholding of that information income liable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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