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TMI Blog1970 (9) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... rganas. All the returns were filed on the same date, i.e., the 18th September, 1961. The address of the assessee was given as 15, Basantalal Shah Road, Tollygunge. On the same day, i.e., the 18th September, 1961, the Income-tax Officer, "B" Ward, 24-Parganas, directed the issue of notices under section, 23(2) of the Income-tax Act, 1922, fixing the hearing on the 21st September, 1961. According to the notings in the record the notices were served on Shri P. C. Pande, income-tax practitioner, but no office copies thereof were in the records. The Income-tax Appellate Tribunal in hearing the appeal out of which the reference arises had recorded the fact that the originals of these notices were not produced before the Income-tax Appellate Tribunal at the time of the hearing of the appeals. To continue the narrative, on the 21st September, 1961, Mr. P. C. Pande attended and the Income-tax Officer completed the assessments on the same date for the seven years from 1955-56 to 1961-62. The demand notices, challans and the assessment orders were served on. the assessee's representative on the very next date, i.e., 22nd September, 1961. The income returned by the assessee was Rs. 4,200 for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at no documentary evidence of any description whatsoever was annexed to or referred to in the reply to the notice to show cause issued by the Commissioner of Income-tax under section 33B of the Indian Income-tax Act, 1922. It is to be remembered that in the notice to show cause the Commissioner of Income-tax had specifically invited the assessee to produce such evidence, oral and documentary, which she desired to produce in support of her case. It would be appropriate to notice at this stage that the assessee at the time of the original assessments by the Income-tax Officer, "B" Ward, 24-Parganas, had filed a declaration. The declaration has been reproduced in the order of the Commissioner of Income-tax under section 33B of the Act and may be reproduced here in extenso : " 1, Shakuntala Devi, wife of Sardar Bahadur Singh, proprietor, Wedgwood Hotel, respectfully sheweth as follows : (1) That I was married in 1948 and at the time of marriage, my father Ram Saran Das, who was a wealthy man of West Punjab (now Pakistan) gave me valuable golden ornaments which I sold as follows with a view to doing business in money-lending, speculation, pawning on interest, etc. : Year Total Rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in these years being Rs. 5,500, Rs. 5,500, Rs. 5,500, Rs. 5,500, Rs. 5,500 and Rs. 5,603 for the assessment years 1956-57, 1957-58, 1958-59, 1959-60,,1960-61 and 1961-62, respectively. The Commissioner of Income-tax, West Bengal, Calcutta, Mr. F. H. Vallibhoy, passed the order under section 33B of the Indian Income tax Act, 1922, on August 27, 1963. By his order, the Commissioner of Income-tax found that having regard to all the facts and circumstances of the case, the assessments made by the Income-tax Officer, B-Ward, 24-Parganas, Shri A. K. Banerjee, by his orders dated 21st September, 1961, for the assessment years 1955-56 to 1961-62 were erroneous in so far as they were prejudicial to the interests of the revenue. The Commissioner of Income-tax cancelled the said assessments and directed the Income-tax Officer to do fresh assessments according to law after making proper enquiries and investigation with regard to the jurisdiction, possession of initial capital by sale of ornaments, carrying on of the business and the sources of the amount of Rs. 2 lakhs said to be possessed by her as on 31 st March, 1961. The Commissioner of Income-tax recorded in his order that a written rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een from the assessment records and from what is stated above that all the assessments were made by the Income-tax Officer in post-haste without making any enquiry or investigation into the antecedents of the assessee, whether the jurisdiction was correct, whether the story of possession and sale of ornaments was genuine, whether the assessee was actually carrying on money-lending, speculation and pawn-broking businesses as alleged and all other factors relevant for making correct and proper assessments. On enquiry, it has been ascertained that the Income-tax Officer, B-Ward, 24-parganas, had no jurisdiction over the assessee and hence all the assessments made by him are ab initio null and void. It has been learnt from spot enquiries made by the ward inspector of the department that the assessee never resided at nor carried on any business from the address given in the returns of income as 15, Basantalal Shah Rd., Tollygunge. The premises at 15, Basantalal Shah Rd., Tollygunge, are owned and occupied by one Shri Baijnath Prasad and he has declared in his written statement that he had never let out any portion of his house property to the assessee at any time. Local enquiries reveal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s through the said jewellers, M/s. Naba Kishore Dey Bros., who seems to be a got-up party for providing bogus sale vouchers so that they could be produced by unscrupulous assessees to falsely show that their concealed income had emanated from sale of old ornaments. Hence, the Income-tax Officer erred in believing the assessee's story about possession and sale of ornaments without getting any evidence about the assessee having received the said ornaments at the time of her marriage in 1948, and without summoning the said jewellers to verify whether the sale was genuine and who were the parties who had in turn bought these ornaments through that bullion merchant. With regard to the assessee's statement that she carries on business in money-lending, speculation and pawn-broking, the Commissioner of Incometax observes that the statements of accounts filed with returns of income contain only estimated receipts of profit without giving any details as to how much of the profits were derived from speculation business and how much was the interest income earned in money-lending and pawn-broking business. No details were made available by the assessee as to in which commodity and with which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Incometax Appellate Tribunal with regard to the assessment year 1955-56. With regard to that assessment year 1955-56 it was contended that voluntary returns having been filed beyond the expiry of four years from the relevant year of assessment, it was non est in the eye of law and hence no order of assessment could be passed on the basis thereof. Consequently, it was argued that the Commissioner of Income-tax had no jurisdiction to set aside an assessment which was null and void ab initio. The Tribunal allowed the assessee to raise this contention and disposed of the appeal with regard to the assessment year 1955-56 by a separate order. It was stated before us by learned counsel for both the parties that a separate reference has been directed from the order of the Income-tax Appellate Tribunal with regard to the assessment year 1955-56. This is, however, a contention with which we are not concerned in the present reference. With regard to the assessment years 1956-57 to 1961-62 the Income-tax Appellate Tribunal did not consider it necessary to deal with the appeals separately. It passed a consolidated order for all the assessment years 1956-57 to 1961-62. Having recorded the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sequently, the order of the Commissioner is in contravention of the principles of natural justice and should be held to be bad in law on that ground. There are several answers to this submission of Mr. Pal for the assessee. In the first place, it is to be remembered that the notice to show cause had been issued by the Commissioner of Income-tax under section 33B of the Indian Income-tax Act, 1922, containing certain specific allegations. We shall come to the question of what the allegations were and how they were made in some detail. But before we do that it is to be observed that it is now well settled that any action may be taken by a departmental authority or a Tribunal on the basis of certain preliminary enquiries and investigations. The assessee or the party aggrieved by the notice is not entitled to demand the details or the results of those enquiries. What is, however, definitely enjoined by the rules of natural justice is that the party concerned should be specifically informed of what the charges or the allegations are and that at the stage of the enquiry no material should be considered behind the back of the delinquent or the aggrieved party. In the present case, the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in vital links in the chain of the assessee's story with regard to the initial capital. The first link in the chain is that she got marriage In 1948, and received large quantities of ornaments from her wealthy father at the time of her marriage. The second important link in the chain is that between the years 1949 and 1951 she sold some of these ornaments at different times and received a sum of Rs. 1,69,895-7-3 as the sale proceeds of these ornaments. The third link in the chain is that this amount, which represented the sale proceeds of her ornaments was invested by her in the business of speculation, money-lending and pawn-broking These respective items of business of the assessee yielded certain returns which was the subject-matter of the assessment in the years 1956-57 to 1961-62. Needless to say , the crucial link in this chain of the assessee's story is the sale of ornaments her which produced the money which was subsequently invested by her in business. It has to be remembered that the Income-tax Officer making the original assessment records in the order of assessment that the original cash memos evidencing the sale of gold ornaments were produced before him. It is furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the Income-tax Officer, B-Ward, 24-Parganas, and the original orders of assessment were procured as a result of such collusion. In support fo this contention, Mr. Pal relies on the following observation in the order of the Commissioner of Income-tax which is to be found at paragraph 5 : "As will be seen from the subsequent paragraphs, the Income-tax Officer has made the assessments without any enquiry and investigation and he has accepted the assessee's faked stories as gospel truth which could not have been done but with ulterior motive to oblige the assessee and which has resulted in erroneous assessment prejudicial to the interests of the revenue." In our view this does not amount to a finding by the Commissioner of Income-tax that there was any collusion between the assessee and the Income-tax Officer with regard to the orders of assessment. The real point which the Commissioner of lncome-tax was seeking to emphasise in the portion of the order which his been quoted above is that as a result of the Income-tax Officer accepting the explanation offered by the assessee with regard to the possession of initial capital by her without proper enquiry and investigation the rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... longing to the husband, the revenue would have gained much more. In that view of the matter the Commissioner of Income-tax observed that the revenue has suffered prejudice. It is further to be remembered that what has been set aside is the assessment of the assessee. There has been a direction also to reassess the assessee's income for the relevant assessment years. There has been no order of any kind whatsoever affecting the husband's assessments or his income-tax proceedings. For these reasons, we are of the view that the Commissioner of Income-tax acted within the powers conferred on him by law in passing the order that he did. Lastly, Mr. Pal for the assessee 'submitted that the question of initial capital was relevant only for the assessment 'year 1955-56, when the assessee is supposed to have sold the ornaments, received the sale proceeds and invested the amount in the various businesses which she alleges to have carried on. It was submitted that since the order of assessment and the order of the Commissioner under section 33B of the Indian Income-tax Act, 1922, for the year 1955-56 has been set aside by the Income-tax Appellate Tribunal, the Commissioner of Income-tax in pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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