TMI Blog1935 (3) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 34 of the Act requires particulars to be stated in the notice and that the notice is the basis of the proceedings under the said section, the Income Tax Officer was competent in law to go behind the particulars as specified in the notice under Section 34 in the present case? (ii) Whether in view of the fact that admittedly the previous assessment did not give the details of the estimate on which the assessment was made, and in view of the nature of the business carried on by the assessee, the Income Tax Officer was entitled to assume that income from dividends had not and could not have been included in the previous assessment? or, was it not open to the assessee to rebut the said assumption by reference to his books of account and other evidence and claim to reopen the said previous assessment accordingly? (iii) Whether or not in the circumstances of the case, the Income Tax Officer was justified in law in holding that he was precluded from entering into the merits of the former assessment? The Commissioner of Income Tax was required to show cause why he should not state a case raising those three questions for the opinion of this Court. In the proceedings now ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the revised return which was made on the 27th of June, 1929, the assessee had put the return in such a form as would indicate that he had given close attention to the various headings under which he might be chargeable to income-tax. The importance of this return is that against heading 7 Dividends he had put nil . The Income Tax Officer was then of opinion that even this second return did not properly or fully disclose the whole of the taxable income of the assessee and accordingly the Income Tax Officer served a notice upon the assessee under the provisions of Sections 22 (4) and 23 (2) calling upon him to furnish such evidence as was available to substantiate the return which he had made and also calling upon to produce accounts and other documents in support of it. In pursuance of that notice the assessee did produce certain accounts in the form of a daily purchases and sales book sowda book, and as a result of the enquiry that ensured, on the 10th of December, 1929, an assessment was made under the provisions of Section 23 (3) of the Act which provides that the Income Tax Officer after hearing such evidence as such person, i.e., the assessee, may produce and such ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tated that the income of the Calcutta business was ₹ 38,000 and the income of the Agra business ₹ 12,000 making a total of ₹ 50,000. A month later on the 21st of May, 1930, an assessment was duly made upon the basis of that return with the addition of a sum of ₹ 100 on account of certain house property owned by the assessee in Agra whereby the total income was brought up to a sum of ₹ 50,100. The assessment was in these terms: In this case notice under Section 22 (2) read with Section 34 was issued as per orders dated 20th March, 1930. The assessees filed a duly verified return on 23rd April 1930. They have failed to comply with the terms of the notice under Section 23 (2). It has been alleged that no accounts are kept by them. This is unthinkable. A business firm like theirs cannot do without accounts and I am of opinion that the books are being intentionally withheld. They are thus liable for assessment under Section 23 (4). I assess them accordingly under Section 23 (4) for 1929-30 read with Section 34 on a total income of ₹ 60,100. Income tax now due ₹ 1,156-4-0. After that there was an interval of some five months and on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the accounts disclosed in these documents were under examination by the income tax authorities for a considerable period of time; and ultimately on the 28th of April, 1933, an assessment was made which is the assessment now called in question in these proceedings. The relevant part of the order of the 28th of April, 1933 is in these terms: I compute assessee's income as under:- Property at Agra ... 100 Business at Calcutta and Agra ... 50,000 There may or may not have been a loss as disclosed by The books, but I am precluded from entering into the merits of the former assessment made on ₹ 50,000 for business as I am of opinion that no income from business escaped assessment. Then comes the heading Dividends. Net ... ₹ 81,758 plus 3 29ths ... ₹ 8,457 Total ₹ 90,215 That added to 50,100 made a grand total ₹ 1,40,315. Then follows a calculation for super-tax. Super-tax on ₹ 50,000 @ 0-1-0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned Advocate for the appellant has urged that the Income Tax Officer is wrong in having assessed income from dividends only under Section 34 and that he should have determined all the sources of income for which he gave notice and that the Income Tax Officer assessed all the dividends but he should have assessed part of them only as in the notice under Section 34 it was said that dividends partially escaped assessment. It has also been urged that the income from business is intermixed with income from dividends and that the Income Tax Officer should have considered the business loss shown in the return last submitted . We have also been referred to the order dated the 26th of May, 1932, in which the Income Tax Officer said as follows:- No income excepting dividends appears to have escaped assessment. The proceedings under Section 34 will be disposed of afterwards . From the above order of the Income Tax Officer the learned Advocate wants me to hold that the findings above have been arrived at after the Income Tax Officer had examined the accounts in respect of all the sources of income and that he should therefore have made the assessment of all the sources. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lawyer, Babu H.L. Banerji, appeared and stated that no accounts were kept. The Income Tax Officer refused to believe this allegation and accordingly made an assessment under S. 23 (4) though on the figure of income returned by the assessee adding merely ₹ 100 as his value of his property in Agra. Later again it came to the notice of the Income Tax Officer that the assessee had a substantial income from dividends, the actual amount of dividends received in the year of account being ₹ 90,215, a sum which is not questioned by the assessee; I underline that last sentence and on receipt of information to this effect the Income Tax Officer issued another notice under S. 34 calling for return of income and incompliance with that notice the assessee submitted a return showing profits of ₹ 5,544 under the head business and against that item a sum of ₹ 8,457-11-0 tax already charged. Then the Commissioner makes reference to the foot note in the return dated the 27th of November, 1930, and with regard to it he says The Income Tax Officer refused to accept this contention and on the ground that this income from dividends had escaped assessment, he again made an assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er under the head 'business'. The learned Commissioner accordingly records that No reference will be made to the High Court and this application is disposed of accordingly. The latter part of this order seems to be a finding of fact and Mr. Biswas was also disposed to agree that if that is so, then he cannot ask this Court to require the learned Commissioner to state a case. I mentioned at the outset the three questions which at the suggestion or with the assistance of the Court were finally put forward in the application for the Rule. Mr. Biswas has not seriously argued with regard to the first two of those questions. The first question deals with the form of notice. It is admitted that notice under Section 34 is not to be in any prescribed or any statutory form. Therefore, so long as it brings to the attention of the person to whom it is served the matters required to be answered or dealt with or the things required to be furnished it is sufficient. The second question as finally settled is very much the same as question 3, only in a different form. Put quite shortly, the whole matter resolves itself into this-whether in the circumstances it was incumbent on the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich I have already read, the passage which is in these terms: The assessee in this case did not and could not show that the income which was alleged to have escaped assessment was in the previous assessment assessed by the Income Tax Officer under the head 'business' amounts to a clear finding of fact. In the course of the very lengthy investigation which took place after those various books which I have enumerated were produced, it must have been made clear that the sum chargeable under the head 'dividends' had not been included in the sum chargeable under the head 'business'. The reason given is that that examination and investigation into the accounts must have been sufficient to have disclosed these dividends, if in fact they were included in business and if the dividends had then come to light the result would have been that the assessee would have been required to amend his return so as to put the dividends under the proper head. As that has not been done it must be assumed that the investigation did not disclose the fact that the assessee had received this large sum of ₹ 90,215 as dividends on securities. In my judgment the findings of fact ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
