TMI Blog1944 (1) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty imposed on the assessee under Section 28(1)(c) of the Act is also referred, whether in the facts and circumstances there is any material for the finding that the assessee had deliberately furnished inaccurate particulars of income of ₹ 50,000. The two references may be dealt with in one judgment. The assessees are a Hindu undivided family who carry on business in ganji and than cloth. The assessment was made on March 2, 1938, in respect of the financial year 1937-38. The assessees in their return showed a sum of ₹ 50,000 as capital which was said to have been obtained from the sale of gold ornaments. The Income-tax Officer accepted this item as capital pending enquiry and the assessment was made. On May 3, 1938, the Income-tax Officer issued a notice under Section 34 of the Act and called for a further return. A return was made in the same form as previously. Section 34 provides: If for any reason income, profits or gains chargeable to income-tax has escaped assessment in any year or has been assessed at too low a rate, the. Income-tax Officer may, at any time within one year of the end of that year serve on the person liable to pay tax on such income, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in this instance directed that the maximum penalty should be imposed. The assessees appealed to the Appellate Assistant Commissioner of Income- tax, Dacca Range, who on February 21, 1941, confirmed the orders of the Income-tax Officer. This order of February 21, 1941, was confirmed by the Appellate Tribunal on September 9, 1941. The facts appear to be that this sum of ₹ 50,000 was credited in the accounts of the business as capital. The assessee stated that it was the sale proceeds of gold ornaments which bad been sold by the members of the family, and in the accounts of the business each of the five members of the family is shown to have contributed a sum of ₹ 10,000. In support of this story five vouchers were filed. Those vouchers were received by the Income-tax Officer, who then started making enquiries. On scrutinising the vouchers it appeared that the entries on those vouchers were entries which had been made after other entries bad been deleted. The story of the assessees was that this business and this transaction for sale of gold ornaments had been conducted by Sudharam Pal, son of Krishna Lal Pal, the senior member of the family and, as we are informed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ude in arriving at the proper figure of assessment. This is the case both under Section 22 and Section 34. There was in this case originally a notice under Section 22, then under Section 34, and under Section 23, (to which I have already referred), sub-section (2), the assessee is called upon to produce or cause to be produced any evidence on which he may rely in support of his return. Section 23(3) empowers the Income-tax Officer after hearing such evidence to determine the sum payable by the assessee on the basis of such assessment. In the case,The Commissioner of Income-tax v. Kameshwar Singh [1933] 60 I.A. 146; 1 I.T.R. 94 the Board in considering the question whether the assessing officer was right in making a certain estimate referred to the judgment of the Chief justice of the Patna High Court where Sir Courtney Terrell said: Learned counsel for the assessee has argued that the officer is not entitled to make a guess without evidence and I agree with that contention. But in this case the state of affairs in the previous years coupled with the fact that the assessee had a large mortgage loan busi- ness and must have enforced mortgages by sale on many occasions, afford ample ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax Officer to disclose to the assessee the material on which he proposes to act or to refer to it in his order, but natural justice demands that he should draw the assessee's attention to it before making the order. Information which the Income-tax Officer has received may not always be accurate and it is only fair when he proposes to act on material which he has obtained from an outside source that he should give the assessee an opportunity of showing if he can, that the Income-tax Officer has been misinformed, but the Income-tax Officer is obviously not bound to disclose the source of his information. In the present case the Income-tax Officer appears to me to have disclosed to the assessee the material which lie had before him, and even the source of his information, and he has invited the assessee to give him any further information in support of his contention that this sum of ₹ 50,000 was capital and to explain how it is that the Poddars denied all knowledge of the transaction. His only reply appears to be that the gentleman who was dealing with this transaction is now dead. The question as framed for the opinion of this Court is whether there is any th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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