1971 (1) TMI 38 - HC - Income Tax

Commissioner gave a consolidated notice u/s 33B -Commissioner had passed a consolidated order in respect of all the assessment years - validity of order of Commissioner setting aside assessments for 1957-58 to 1961-62 and directing the Income-tax Officer to make fresh assessments

Summary

Issues:
1. Validity of the Commissioner's order setting aside assessments and directing fresh assessments.
2. Validity of the return filed by the assessee for a specific assessment year.

Issue 1: Validity of Commissioner's Order:
The High Court of Calcutta was tasked with determining the validity of the Commissioner's order under section 33B of the Indian Income-tax Act, 1922, setting aside assessments for the years 1957-58 to 1961-62 and directing fresh assessments. The court addressed the contention that the Commissioner's order was invalid due to a consolidated notice and order covering multiple assessment years. The court referred to the Supreme Court's interpretation of section 33B(1), emphasizing that the purpose of the section is to provide the assessee with an opportunity to be heard before the Commissioner's decision. The court held that a consolidated notice and order were valid, as they allowed the assessee to defend themselves for each assessment year. The absence of specific procedures for the Commissioner under section 33B meant that the Commissioner could adopt his own procedure as long as it did not violate the rights of the parties or natural justice principles. The court dismissed the argument that the Commissioner's order was invalid due to the absence of a direct call for records by the Commissioner, as long as relevant records were examined before issuing the notice.

Issue 2: Validity of Return for a Specific Assessment Year:
Regarding the validity of the return filed by the assessee for the assessment year 1956-57, the court noted that the second question was referred by the Commissioner. The court acknowledged that the return for that year was invalid based on previous court decisions. The court cited a specific case to support this conclusion. Additionally, the court addressed the argument that the Commissioner's order was based on a ground not available to him, specifically related to the introduction of initial capital by the assessee in the business of speculation. The court highlighted that recent judgments indicated a Commissioner's order under section 33B could have a basic ground along with supporting grounds. The court analyzed the basic and supporting grounds provided by the Commissioner in the consolidated notice and order, finding them applicable to all subsequent assessment years. Consequently, the court rejected the argument that the Commissioner's order was invalid due to the disappearance of the basic ground.

In conclusion, the High Court of Calcutta ruled in favor of the revenue for both issues raised in the reference. The court answered the questions in the affirmative, supporting the validity of the Commissioner's order and the invalidity of the return for the specific assessment year. The judgment was delivered by Sankar Prasad Mitra J., with agreement from A. N. Sen J. The assessee was directed to pay one-half of the costs of the reference to the department.