9911796707
TMI Blog1970 (3) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... gative, then, (3) Whether, on the facts and in the circumstances of the case, the Tribunal was right in setting aside the order of the Commissioner under section 33B ?" These questions arise out of nine applications under section 66(1) of the Income-tax Act, 1922, of the Commissioner of Income-tax requiring the Tribunal to refer as many as nine common questions of law said to arise on the Tribunal's consolidated order in I.T.A. Nos. 11728 to 11736 of 1962-63 dated the 22nd December, 1965. The facts are briefly as follows: The assessee is Smt. Panna Devi Saraogi, wife of Shri Narsingdas Saraogi, an employee of M/s. Thakurdas Sureka Iron Foundry Ltd. The assessee filed voluntary returns of income all dated 14th December, 1960, for the assessment years 1953-54 to 1960-61 before the Income-tax Officer, D-Ward, Howrah, giving her address as 37, Bazalpara Lane, Salka, Howrah. The Income-tax Officer took cognizance of the returns on the 19th December, 1960, when he purported to serve notices under section 23(2) of the Income-tax Act, 1922, in respect of these years on the assessee's authorised representative, Shri D. R. Saboo, who was present before him. The Income-tax Officer made the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax called for the records of the assessment for the relevant years and upon an examination thereof he considered that the assessment orders passed by the Income-tax Officer on the 29th December, 1960, and the 28th August, 1961, for the assessment years 1953-54 to 1961-62, were erroneous in so far as they were prejudicial to the interest of the revenue. He, therefore, issued a consolidated notice to the assessee by his letter dated 19th December, 1962, stating that he considered the assessment orders as erroneous in so far as they were prejudicial to the interest of the revenue. In that notice he further stated that he considered the assessment orders of the Income-tax Officer as erroneous in so far as they are prejudicial to the interest of revenue " for the following reasons amongst others ". " 2. The Income-tax Officer was not justified in accepting the initial capital, the income from business, etc., without any enquiry or evidence whatsoever. Also the said Income-tax Officer did not have jurisdiction over your case. 3. I therefore propose to pass such orders thereon as the circumstances of the case justify after giving you an opportunity of being heard under the powers veste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s discretion along with income from investments, as disclosed in the statements filed at the time of assessment, the same should not be assailed as erroneous or prejudicial to the interest of revenue. 10. That your petitioner carried on business and had income from other sources are matters of record. " It will be clear from the above that this reply does deal with the question of the petitioner carrying on business and asserts that she had income from other sources and although she says they are matters of record before the Income-tax Officer, she did not comply with paragraph 3 of the notice of the Commissioner dated the 19th December, 1962, quoted above, namely, " objections in writing accompanied by necessary evidence, if any, on or before the appointment for personal hearing, will also be duly considered. " No evidence was enclosed with the answer of the assessee. It will be seen also from her answer that she also asserted that she had received money from her grand mother-in-law and father-in-law and others at the time of her marriage, but there is no evidence. On the 26th December, 1962, the Commissioner gave Shri C.R. Banerjee, advocate for the assessee, the opportunity t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same. But, fundamentally, the third question remains, which raises the real controversy in this proceeding, namely, whether the Tribunal was right in setting aside the order of the Commissioner under section 33B, no matter whether on this reason or on that reason. We shall first deal with the first question about jurisdiction of the Income-tax Officer over the assessee. On a perusal of the records we are satisfied that the Income-tax Officer in this case had no jurisdiction whatever over the assessee and he arrogated to himself a jurisdiction which was not vested in him under the law. This question of jurisdiction has been argued on two foundations, one alphabetical and the other geographical. It is said on behalf of the assessee that the name " Panna Devi Saraogi " is a name with " S ". On behalf of the Commissioner of Income-tax it has been argued that the name " Panna Devi Saraogi " as it is begins with " P ". The controversy is between " S " and " P ". For if it is " S " then the Income-tax Officer had jurisdiction, but if it was " P " then the Income-tax Officer had no jurisdiction. The Income-tax Officer felt this difficulty and therefore the name of the assessee in the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessees in respect of particular areas. In our view, the method of filekeeping or a G.I.R. record, therefore, cannot override the order of the Commissioner of Income-tax. In this respect the Tribunal, in our view, was misled by relying on the decision in Rampyari Khemka v. Commissioner of Income-tax. The Tribunal's decision is dated December 22, 1965. But, unfortunately, immediately thereafter on December 23, 1965, the Division Bench in Commissioner of Income-tax v. Rampyari Khemka set aside on appeal the previous judgment on which the Tribunal relied. In this view of the matter, the Income-tax Officer was clearly beyond jurisdiction in dealing with this assessee. This answers the alphabetical point on the issue of jurisdiction raising the controversy between " P" and " S ". The next part of the issue of jurisdiction relates to geographical confusion. The Commissioner came to the finding that the assessee never resided nor carried on any business there at 37, Bajalpara Lane, Salkia, Howrah, but, in fact, she resides with her husband, Shri Narsingdas Saraogi, at 37, Matrumal Lohia Lane, Salkia, Howrah. On this question, the answer is that in these days of fast changing names of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an opportunity to meet this aspect of the case which appears to have influenced the mind of the Commissioner very considerably. As already noted, nothing was said in the show cause notice about these investments with the result that the assessee could not say anything in rebuttal in her written submission to the Commissioner dated 24th December, 1962. " In paragraph 2 of the Commissioner's notice dated 19th December, 1962, the Commissioner expressly stated, " the Income-tax Officer was not justified in accepting the initial capital, the income from business, etc., without any enquiry or evidence whatsoever " and he also asked for necessary evidence to accompany objections in writing to this notice under section 33B of the Income-tax Act. Nothing was done by the assessee. In fact, the finding is that the assessee does not maintain any bank account, nor any proper books of account. The undisclosed income, to begin with, is an admitted fact so far as this assessee is concerned and in the notice given by the Income-tax Officer. In the facts of this case this question of the principles of natural justice has to be decided. As the Division Bench of this High Court in Commissioner of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rampyari's case is also important from another point of view because it points out the distinction between the " supporting material " and the " basic ground ". At page 88 of that report of Rampyari Devi Saraogi v. Commissioner of Income-tax, the following observations were made by the Supreme Court : " We agree with the High Court that all this material was supporting material and did not constitute the basic grounds on which the orders under section 33B were passed by the Commissioner. There was ample material to show that the Income-tax Officer made the assessments in undue hurry. " We are satisfied on the records of this case that the "basic grounds" of the order of the Commissioner under section 33B in the instant reference are sound and unassailable and are also contained in the notice that he gave dated the 19th December 1962. In the facts and circumstances of this case and in the light of the principles laid down by the Supreme Court we must answer the second question also in the negative in favour of the Commissioner. In view of our conclusion it is therefore not necessary to discuss the case of Bagsu Devi Bafna v. Commissioner of Income-tax. That authority lays down t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such enquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment." The following features of this power of revision in the Commissioner of Income-tax must be emphasised. In the first place, the Commissioner may call for and examine the records of any proceeding under this Act. For this purpose, he does not need to show any reason. It is a part of his administrative control to call for records and examine them. As administrative authority, he has this power in the interest of administration to call for and examine the records of any proceeding under the Income-tax Act. The second feature is that he may consider that any order passed under this Act by the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the revenue. This consideration, having regard to the language of section 33B, apparently is a consideration which he exercises by calling for and examining the records as indicated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 33B. The Commissioner can enhance or modify the assessment. He has not done it in the sense that he has not made any assessment himself. He has also the power to cancel the assessment and directing fresh assessment as provided in section 33B. That he has done. That means the assessee will again get the fullest opportunity of making her case at that stage, when a " fresh assessment " as directed will be made. We are, therefore, satisfied that there has been no violation of any principle of natural justice in the instant reference. The central problem is the basic ground about the prejudice to the revenue. Mr. Roy for the assessee drew our attention to the meaning of the expression "prejudicial to the interest of the revenue" as laid down in Dawjee Dadabhoy & Co. v. S. P. Jain, the decision of a learned single judge, where, at page 881, it has been said: " The words ' prejudicial to the interests of the revenue ' have not been defined, but it must mean that the orders of assessment challenged are such as are not in accordance with law, in consequence whereof the lawful revenue due to the State has not been realised or cannot be realised. It can mean nothing else. " At ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim by the assessee and made the assessments from 1953-54 to 1961-62, but she should have made the assessment for one year only, i.e., 1960-61 and brought to tax the entire sum of Rs. 50,000 in that year as income from undisclosed sources and the tax in that event would have been about Rs. 16,000 as against Rs. 475 ". If this is not prejudicial to the interests of the revenue, then one fails to understand what it is. The Commissioner then proceeds to say that " in the absence of any evidence with regard to the acquisition of initial capital and carrying on of money-lending and speculation business, a valid and justifiable presumption can be drawn that the investment made in the name of the assessee really pertained to the moneys of her husband, Narsingdas Saraogi, who has got various sources of income as stated above and who himself has made a disclosure in the petition and had assessments made on him for the assessment years 1951-52 to 1959-60 ". The Commissioner also finds that "the assessee's husband has invested in M/s. Thakurdas Sureka Iron Foundry Ltd. and M/s.United Syndicate in which the assessee has also made investments ". The total assets of her husband aggregate to over ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
