1958 (10) TMI 10 - SC - Income Tax

Whether the proceedings taken under section 34 against each of the said firms were without jurisdiction and void?

Held that:- When the notice is issued under section 34(1)(a) the Income-tax Officer proceeds to act on the ground that the income, profits and gains of the firm which are chargeable to income-tax have been underassessed ; it is the income of the firm which is initially ascertained in the assessment proceedings under section 23 and it is in respect of the said income of the firm that the Income-tax Officer finds that a part of it has escaped assessment. We do not, therefore, think that the appellant's argument that the notice issued against the firm and served on the appellant was invalid under section 34(1)(a) can be accepted.

Rule 6B has been made to clarify this position and to confer on the Income-tax Officer in express and specific terms such authority to review his own decision in the matter of the registration of the firm when he discovers that his earlier decision proceeded on a wrong assumption about the existence of the firm. In our opinion, there is no difficulty in holding that rule 6B is obviously intended to carry out the purpose of the Act and since it is not inconsistent with any of the provisions of the Act its validity is not open to doubt.

Rules 2 and 6 of the rules framed under section 59 of the Indian Income-tax Act are not ultra vires the rule-making authority.

All that the appellants would be able to argue on this ground would be that the course adopted by the Income-tax Officer in making orders of fresh assessment is irregular and illogical and should be corrected. That is a matter concerning the merits of the orders of assessment and by no stretch of imagination can it be said to raise any question of jurisdiction under article 226. That is why we express no opinion on this point. Appeal dismissed.