TMI Blog1954 (4) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... to the best of his judgment. The turnover of the assessee was estimated to be ₹ 2,00,000 and the net income was assessed at ₹ 18,000. For the succeeding assessment year 1944-45 the assessee submitted his books and also filed returns but the books relating to the Samvat year 1998-99 were not produced on the allegation that they were lost. For the assessment year 1944-45 the Income-tax Officer made assessment on the 27th of February, 1946, under section 23(3) of the Act. In the account books which were produced by the assessee the Income-tax Officer found two sets of accounts, one in the name of Ramnivas Mahasukhram and another in the name of Ganeshnarain Jodhraj. These two accounts showed a debit balance of ₹ 431 at the en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... error of law in holding that section 34 proceeding was not validly started. As regards the quantum of assessment the Appellate Tribunal took the view that the case should be remanded to the Appellate Assistant Commissioner for considering the explanation of the assessee and finding what should be the amount which should be actually assessed under section 34 of the Act. At the instance of the assessee the High Court has required the Income-tax Appellate Tribunal to state the following question of law-- Whether in the circumstances of the case notice under section 34 of the Indian Income-tax Act was validly issued ? Mr. Dutt who appeared on behalf of the assessee commenced his argument by stating that there was no definite information b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Samvat year 1997-98 plus a sum of ₹ 14,000 (obtained from outside source, like sale of ornaments) plus a sum of ₹ 6,000 (which is profit of the business in the year 1998-99). As regards the amount of ₹ 30,276 contributed by Ganeshnarain Jodhraj the explanation is that it was made up of ₹ 16,359 (shown as balance in the accounts for the Samvat Year 1997-98) plus a sum of ₹ 8,000 (which is profit from the business in the year 1998-99) plus a sum of ₹ 6,000 (obtained from other sources, like shop rent etc.). It was argued by Mr. Dutt that this explanation was accepted by the Appellate Assistant Commissioner and therefore the Income-tax Officer had no jurisdiction to proceed under section 34 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 34 cannot obviously depend upon the ultimate result of the proceeding. Even if it is found ultimately upon enquiry that there has been no escapement of income, it is not a sound argument to advance that the Income- tax Officer had no jurisdiction to initiate the proceeding. The test of jurisdiction is not the ultimate result of the enquiry but the test is whether the Income-tax Officer entertained a bona fide belief upon the definite information presented before him that income has escaped. To give any other construction to section 34 would lead to a capricious method of determining jurisdiction. In our opinion the argument of Mr. Dutt on this point must be rejected as unsound. Mr. Dutt argued in the next place that there is no evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the Income-tax Officer runs as follows: The relevant 'previous year' for the assessment year 1943-44 is 1998-99 Dewali year. In course of a recent assessment proceeding, it was detected that capital accounts as on the close of 1997-98 Dewali year and as at the beginning of 1999-2000 Dewali year show a net increase (as against an assessment of ₹ 18,000) of ₹ 53,335. On this definite information of under-assessment action under section 34 was taken and assessee has filed a return declaring an approximate income of ₹ 16,000 with a claim for registration under section 26A . The Appellate Assistant Commissioner has also proceeded on the basis that the definite information which was present before the Income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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