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TMI Blog1969 (10) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... the jurisdiction of the respondent to issue the notice and asked him to furnish the materials upon which his belief that the petitioner's income had escaped assessment was based. Not receiving any reply to that letter, the petitioner moved this court under article 226 of the Constitution on March 23, 1966, and obtained this rule. Sen J. held that the respondent had no jurisdiction to issue the notice, upon findings which will appear from below. The Income-tax Officer (hereinafter referred to as " the officer ") and the Commissioner have preferred this appeal against that judgment. As usual, the notice itself did not disclose, as it was not necessary under the law to disclose, the reasons upon which the Income-tax Officer's belief under sub-section (1) of section 147 (corresponding to section 34 of the Act of 1922) was founded. But, in the affidavit-in-opposition to the petition, it was stated in paragraph (5) by the officer that his action was based upon the failure of the petitioner to fill in Part VII of the return which the petitioner had admittedly filed, in respect of the relevant year. Sen J. rejected this plea of the respondent on two-fold grounds : (i) that omission to f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return (Form No. 3) speaks of " particulars of capital gains ". It relates to the acquisition of " capital gains " by the assessee by transfer of properties, such as " house properties " or " other assets " and requires the assesssee to state the date of acquisition, cost of acquisition, value of the consideration for which the transfer was made and ancillary information. Sen J. has held that in a case involving capital gains, " the fact of sale, the price at which the property has been sold, the price at which the property has been acquired by the assessee, the costs, charges and expenses of and incidental to the sale are all primary facts relevant and material for the purpose of assessment and it is the duty of the assessee to disclose all these facts." Nevertheless, according to Sen J., there has been no breach of this obligation on the part of the respondent-assessee for two reasons-- (a) That the respondent had in fact disclosed these particulars in respect of the transaction of transfer of the house property in question made by him on August 5, 1960, at the hearing before the Income-tax Officer, at which the respondent appeared personally and discussed the particulars (b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e (assuming that it was so in the instant case) is also immaterial inasmuch as the non-disclosure need not be wilful or deliberate in order to give jurisdiction to the officer under section 34, as held by this court in P. R. Mukherjee v. Commissioner of Income-tax. As to the plea of the respondent that though he might have omitted to fill in Part VII, he discharged his duty by disclosing the material facts to the Income-tax Officer during the assessment proceeding for the relevant year, it must be said that the jurisdiction of the Income-tax Officer to issue notice under section 147 arises immediately after the omission to file the return or the failure to disclose all the material facts therein and that no subsequent act on the part of the assessee can take away that jurisdiction. In Balchand v. Income-tax Officer Sagar 2, the Supreme Court has held that where the assessee fails to file a return in due time, and the officer issues notice under section 34 of the old Act, the notice is not rendered invalid even if the assessee files a return voluntarily, in respect of the relevant year. In the case before us, it has been pointed out that in the assessment proceeding for the releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, one Income-tax Officer bid accepted the return of the assessee as correct and completed the assessment on that basis. His successor had reason to believe that the cash credits shown in the return were not genuine and issued the notice under section 34(1)(a). This case has special importance in view of the fact that in the case before its, too, the impugned notice has been issued by an officer other than the officer who had initially accepted the return of the assessee. It was held by the Andhra Pradesh High Court that even if the Income-tax Officer had accepted the cash credits as genuine, his successor was not debarred from issuing a notice under section 34(1)(a) on the ground that they were not genuine. The question whether they were genuine or not was to be determined in the proceedings initiated by the notice. The decision of the Supreme Court in Income-tax Officer, A-Ward, Lack-now v. Bachulal Kapur is also authority for the proposition that the acceptance of a return or the completion of an assessment proceeding does not take away the jurisdiction of the income-tax authorities to issue a notice under Section 34(1)(a) on the ground that the information supplied by the retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd setting forth such other particulars ". The section also provides that the return has to be verified in the prescribed manner, and that verification is to the effect that " the information given " in the return is " correct and complete ". Apart from the other consequences which may follow from non-submission of a return or submission of an incorrect or incomplete return, it would render the assessee liable to incur statutory penalty under section 271(1)(a) which says that the penalty may be imposed, inter alia, for failure to furnish the return in the manner required by sub-section (1) of section 139 ", which, read with the Rules, required the assessee to furnish a correct and complete return. Section 147 contains one of the other consequences arising from contravention of the requirements of section 139 and the two parts of clause (a) of section 147 deal with the situation referred to in the different parts of section 139(1). The first part of section 147(a) deals with non-submission of return and the second part deals with the submission of a return which is not in conformity with the manner prescribed ; but a different and wider phraseology is used in the second part of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officers could be diligent enough to make this possible. In fact, no such plea is tenable in view of the decision of the Andhra Pradesh High Court in Sowdagar Ahmad Khan v. Income-tax Officer, Nellore and of the Supreme Court in the case of Kantamani Venkata Narayana and Sons v. First Addl. Income-tax Officer, that the jurisdiction of an Income tax Officer to issue notice under section 34(1)(a) cannot be challenged on the ground that he had produced before the officer materials, otherwise than through the return, which, if pursued by the officer, would have enabled him to gather all the material facts necessary for the assessment. If this be the situation relating to the same proceedings, the position cannot be better if such materials are brought to the notice of the officer acting in another proceeding under a different law. In fact, even according to the respondent's Plea at its best, he had not disclosed before the Wealth-tax. Officer all the particulars required by Part VII of the income-tax return form. In paragraph of the petition, it is stated that the respondent had disclosed to the Wealth-tax Officer the factum of sale of the house in question and the amount of its sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng under article 226 of the Constitution, is satisfied that the officer had prima facie reasons to issue the notice under section 34, it is not for the court to, decide, further, whether the assessee could be held to have disclosed all the material facts in the circumstances of the case. The only point for decision of the court at that stage is whether the Income-tax Officer had jurisdiction to issue the notice (Kantamani's case). (iv) The court has jurisdiction to see whether the prima facie reasons for the belief of the officer were relevant to the question of escape of assessment, but the court has no jurisdiction to determine the adequacy of those reasons (Narayanappa's case, followed in Kantamani's case ). The contention of the respondent that the duty of disclosure can be discharged otherwise than by furnishing particulars in the return cannot also be accepted in view of the observation in Kantamani's case that the duty of the assessee to disclose material facts is not discharged by producing some materials from which the Income-tax Officer, if he had been circumspect, could have found out the truth. Having given our anxious consideration to the circumstances of this case, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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