TMI Blog1955 (6) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... come of any individual for the purpose of assessment by virtue of the provisions of section 16(3)(a)( i) and (ii) of the Indian Income-tax Act. Shri Bandevar, however, overlooked the provisions of section 16(3)(a)( i) and (ii) of the Act when he assessed the assessee's income for the year 1946-47. He assessed the assessee, his wife and his minor sons separately. He did the same thing in the year 1947-48. In the year 1948-49 Shri Bandevar was succeeded by Shri Gahlot, who also assessed these persons in the same way. The Tribunal both while dismissing the assessee's appeal and while making a reference has accepted the position that Shri Bandevar as well as Shri Gahlot had overlooked the provisions of section 16(3)(a)( i) and (ii) of the Act. 3. While Shri Gahlot was making the assessment for the year 1949-50, he realised that an error had been committed in respect of the past assessment of the assessee inasmuch as in the income of the assessee the profits which fell to the share of his wife and minor sons were not included as required by section 16(3)(a)( i) and (ii) of the Act. Thereupon he made a report to the Commissioner for sanction as required by section 34, as amen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : 34. (1) If in consequence of definite information which has come into his possession the Income-tax Officer discovers that income, profits or gains chargeable to income-tax have escaped assessment in any year, or have been under-assessed, or have been assessed at too low a rate, or have been the subject of excessive relief under this Act the Income-tax Officer may, in any case in which he has reason to believe that the assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars thereof, at any time within eight years, and in any other case at any time within four years of the end of that year, serve on the person liable to pay tax on such income, profits or gains, or in the case of a company, on the principal officer thereof, 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 assess or re-assess such income, profits or gains, and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section... It was again amended by the Amending Act of 1948 and it stands thus: 34. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e him that there was ground for thinking that the income had escaped assessment or been under-assessed. It will be seen that the Amending Act of 1939 introduced two important changes in section 34. In the first place, it required that the Income-tax Officer must come into possession of a definite information and secondly that by reason of that he should discover that the income has escaped assessment for any year. The Amending Act of 1948 has split up sub-section (1) of section 34 into two clauses. Clause (a) deals with the omission or failure on the part of an assessee to make a return of his income or to disclose fully and truly all material facts necessary for his assessment and clause (b) relates to a belief entertained by the Income-tax Officer that the income, in consequence of information in his possession, has escaped assessment. The word discovers which found place in section 34 after its amendment by the Act of 1939, has been replaced now by the words reason to believe . 7. After the amendment of section 34 by the Amending Act of 1939, the Bombay High Court held in Commissioner of Income-tax, Bombay v. Sir Mohammad Yusuf [1944] 12 ITR 8 , that before the sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s which were raised before them in appeal, of which the second one is as follows : Under the amended section 34, even if that section applied, no notice could have been issued, inasmuch as Mr. Gahlot was only revising the opinion which Mr. Bandewar had formed while making the assessment on the assessee for the year 1946-47. This ground could obviously not apply to a case falling under clause ( a). We would, therefore, regard the question, though framed in wide terms, as being limited to clause (b) of sub-section (1) of section 34, and answer it accordingly. 9. It is clear from the appellate order of the Tribunal that in their opinion what the Income-tax Officer did was to revise an opinion because he realised that an error had been committed in respect of the past assessments of the assessee, inasmuch as in the income of the assessee were not included the shares of his wife and his minor sons, as provided in section 16(3)(a)(i ) and (ii) of the Act. Thus, according to the Tribunal the error in the past consisted in the fact that the provisions of section 16(3)(a)(i) and (ii) were overlooked by the Income-tax Officer concerned. According to the Tribunal it was on this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssession of the Income-tax Officer, he cannot issue a notice under section 34. The same view has been taken in the Patna case. In all these cases notice issued was under section 34 (1) as amended by the Act of 1939, but the principle laid down in those cases would equally apply to cases which after the Amending Act of 1948 would fall under clause (b) of sub-section (1) of section 34 of the Act. 12. We were also referred to the decision in Raja Benoy Kumar v. Commissioner of Income-tax, West Bengal [1953] 34 ITR 70. In that case the words definite information were interpreted to include information as to the true state of the law obtaining from outside the case and it was observed: Under the terms of the section, the information should be such as is capable of leading to a discovery that income has escaped assessment or has been under-assessed or has been assessed at too low a rate or has been the subject of excessive relief. Although it may be possible to construe the section by limiting the information to purely factual information in the first, second and fourth cases, the third case clearly suggests that the error may be an error in the application of the appropria ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
