TMI Blog1968 (11) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax Act, 1922, for the assessment year 1949-50 and was assessed to income-tax accordingly. For the assessment year 1950-51, however, it was assessed as an unregistered firm. The firm was assessed at Bombay. On February 26, 1958, a notice under section 34 was served upon the second and third petitioners as partners of the dissolved firm stating that the income of the firm for the assessment year 1949-50 had been under-assessed and that the several partners were jointly and severally liable to assessment under section 44 of the Income-tax Act in respect of the income of the firm and called upon them to furnish a return of the income of the firm. It was also recited that the Commissioner of Income-tax, Bombay, was satisfied that the notice should be issued. It appears that the Central Board of Revenue considered it desirable to transfer the case of the firm from Bombay to Kanpur and the Commissioner of Income-tax, U.P., and the Commissioner of Income-tax, Bombay, were directed to submit a report as to any objections which the firm could have against the proposal. Accordingly, the Commissioner of Income-tax, U.P., issued a notice to the members of the firm, stating that the Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer, A-B Ward, Bombay, to the second and the third petitioners " for and on behalf of the association of persons M/s. Sidh Gopal Gajanand " and recited that it was issued after obtaining the necessary sanction of the Central Board of Revenue, New Delhi. On March 27, 1962, a notice in the same terms addressed to 18 persons, including the second and third petitioners, was published in the Times of India. While the proceedings in respect of the association of persons were pending, the Central Board of Revenue on July 30, 1963, issued a notice under section 5(7A) to the second petitioner and other members of the association of persons informing them of a proposal to transfer the case of the association of persons from the Income-tax Officer, A-B Ward, Bombay, to the Income-tax Officer, Special Circle-C, Kanpur, and invited objections to the proposal. Objections were filed. On October 22, 1963, the Central Board of Revenue made an order under section 5(7A) transferring the case of the aforesaid association of persons to the Income-tax Officer, Special Investigation Circle-C, Kanpur. Assessment proceedings were not taken by the Income-tax Officer, Special Investigation Circle-C, Ka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , C-Ward, Kanpur. This case also, it appears, was later on transferred to the Income-tax Officer, Central Circle III, Kanpur. Finally, a third set of proceedings was commenced. On March 16, 1966, notices under section 148 of the Income-tax Act, 1961, were issued by the Income-tax Officer, A-B Ward, Bombay, to the second and the third petitioners respectively for and on behalf of an association of persons, M/s. Sidh Gopal Gajanand, in respect of the assessment year 1949-50. The notice recited that the necessary sanction of the Central Board of Revenue had been obtained. The petitioners pray for the quashing of the notices dated January 5, 1962, the notices dated February 28, 1962, the notices dated March 27, 1962, all being notices under section 34 of the Indian Income-tax Act, 1922, and the notices dated March 16, 1966, under section 148 of the Income-tax Act, 1961, and for prohibiting the proceedings taken consequent to these notices. The connected writ petition No. 3339 of 1966 has been filed by the dissolved firm, M/s, Sidh Gopal Gajanand, and the aforesaid Budhoolal Mehrotra and Sidh Gopal Kapur. The allegations contained in the petition correspond substantially to those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presentation. Whether the opportunity should be given by written representation or by personal hearing depends upon the facts of each case and ordinarily that is a matter in the discretion of the Tribunal Madhya Pradesh Industries v. Union of India. So far as the order transferring the case of the dissolved firm is concerned, paragraph 11 of the counter-affidavit of P. C. Gandhi states that an oral hearing was given to the petitioners by the Commissioner of Income-tax, Bombay, when he invited objections to the proposed transfer. As regards the order transferring the case of the association of persons, in paragraph 9 of the said counter-affidavit it is stated that no oral hearing was necessary as the written objections submitted by the petitioners were not relevant to the question of transfer. Nothing has been shown to us to indicate that the circumstances of the case rendered it necessary to give an oral hearing to the petitioners before the transfers were effected. The argument that no proceeding was pending when the transfers were made is clearly incorrect because, as is evident from the foregoing, proceedings under section 34 had been initiated in respect of the income of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. In Chhotalal Haridas v. M. D. Karnik a notice under section 34 issued against Chhotalal was impugned on the ground that an assessment proceeding was already pending in respect of the same income against his brother, Lalji Haridas. The Supreme Court, accepting the plea of the income-tax department that, until the question of liability to pay tax in respect of the income in question is finally determined, it may not be possible to safely predicate that it is the income of the one and not of the other, observed : " In cases where it appears to the income-tax authorities that certain income has been received during the relevant assessment year but it is not clear who has received that income and, prima facie, it appears that the income may have been received either by A or B or by both together, it would be open to the relevant income-tax authorities to determine the said question by taking appropriate proceedings both against A and B. " The validity of the notice initiating reassessment proceedings in respect of the dissolved firm and the association of persons cannot, therefore, be successfully assailed on the ground urged by the petitioners. But we would, while disposing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n any event, there is no averment in the writ petitions that the individuals upon whom the notices were served were not the principal officers of the association. We, therefore, decline to entertain that contention. In the result, all the contentions raised in respect of Writ Petitions Nos. 3338 of 1966 and 3339 of 1966 are rejected. In Civil Misc. Writ Petition No. 39 of 1967, the petitioners are the dissolved firm, Sidh Gopal Gajanand, the alleged association of persons by the same name, and Pooran Chand Kapur. Pooran Chand Kapur, the third petitioner was a member of the dissolved firm and is said to be a member of the association of persons to which reference has already been made when considering the earlier two writ petitions. The allegations are that notices similar to those served upon Budhoolal Mehrotra and Sidh Gopal Kapur were also served upon Pooran Chand Kapur and the case set out in the petition is substantially the same as in the previous two petitions. What is stated further in this petition is that no income had escaped assessment because the amount had already been assessed at Bombay in the hands of the India United Mills Ltd. and in the hands of its managing a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Income-tax Officer when he issued the notice. The discovery of fresh facts during the course of subsequent investigation will not invalidate the notice which when issued was a good notice. If the discovery of fresh facts discloses that the income in question was not earned by the entity against whom the notice for reassessment has been issued, the Income-tax officer will at the stage of making the assessment order determine whether he will assess any income in the hands of the entity at all. Moreover, we are not satisfied that the matters respecting which the impugned assessment proceedings are being taken refer to the very transactions taxed in the hands of M/s. India United Mills Ltd. or M/s. Agarwal Co. It is urged that all the material upon which the assessment proceedings are being taken against the petitioner was available to the Income-tax Officer when he made the original assessment against the dissolved firm or could have made an original assessment in respect of the association of persons and that the period of limitation of four years prescribed under section 34(1)(b) applies. That is a matter which the petitioners can more appropriately agitate before the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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