9911796707
TMI Blog1971 (7) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... lmia, Hindu undivided family, and S. P. Jain (in his individual capacity). In the course of proceedings in pursuance of these notices, the petitioner, along with J. Dalmia and S. P. Jain, submitted proposals for settlement under section 34(1B) of that Act which were accepted by the Central Board of Revenue with the previous approval of the Central Government. The petitioner claims that the impugned notices issued in spite of the previous assessments and the settlement are illegal, invalid and without jurisdiction. Both the petitioners are contested by the respondents. Shri V. S. Desai argued Civil Writ No. 316-D of 1965 challenging the notices issued to the association of persons while Shri S. C. Manchanda argued Civil Writ No. 318-D of 1965 in which the petitioner has assailed the notice issued to him individually. The petitions involved several common questions of law and fact. The learned counsel for the petitioners, therefore, argued them together. In view of the nature of the points involved, both the petitions were directed to be heard by the Division Bench. The main argument of the learned counsel for the petitioner in both the petitions was that there was no material bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion. All that clause (a) of section 147 of the Act requires, on this aspect, is that the Income-tax Officer must have reason to believe and not that he should launch an investigation and come to a positive finding before issuing the notice. There should be facts before him that reasonably give rise to the belief. The belief held by him must of course be in good faith. It cannot be a mere pretence; but the facts on the basis of which he entertained the belief need not at this stage be irrebuttably conclusive to support his tentative conclusion. In case of challenge, it is open to the court to examine whether there was material before the Income-tax Officer having a rational connection or relevant bearing to the formation of the belief that is claimed to have been held at the time when he issued the notice; but the court cannot for the purpose of ascertaining the validity of the notice examine the sufficiency of the reasons for the belief. (See S. Narayanappa v. Commissioner of Income-tax) Reference in this connection may also be made to Commissioner of Income-tax v. A. Raman and Co. In that case, notices under section 147 of the Act were issued requiring the assessee to show caus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act been acquired by the assessee during October, 1947, along with another lot of 13,743 shares of Rs. 100, each costing Rs. 60,91,585. Facts in support of this averment are given in the statement. Amongst others, it is stated that the document, exhibit 1043/S-75, reproduced on Appexdix II on page 181 of the Vivian Bose Commission Report which is a photostat copy of a piece of paper and which, according to the assessees, was written some time in April, 1948, at the time of partition to show which companies were mutually partitoned, showed that Punjab National Bank and National Investment Trust had been assigned to the petitioner in this partition. This fact, the statement says, showed that Punjab National Bank was already an asset of the assessees before May, 1948. In October and December, 1948, it is further stated, that Dalmia Cement Marketing Company Ltd. allegedly purchased 7,325 shares of Madhusudan Mills from National Finance Ltd. and National Construction and Development Ltd. at a price which was considerably higher than the market rate. These shares were sold on January 19, 1951, to Express Newspapers Ltd. and Dalmia Cement Paper Marketing Company was shown to have suffered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ank on hundis drawn on Shapurji Brocha Mills Ltd. and Madhowji Dharamsi Manufacturing Co. Ltd. But this explanation, it is stated, was not borne out by the account books of the named parties. The assessee in consequence, it is claimed, was under-assessed to the tune of Rs. 60,91,585, being the cost of these shares. The third item relates to the joint venture between Dalmia Jain Airways and Allen Berrys Ltd. It is stated in the statement of reason that the asseseess admitted the income from this venture as their income for the purpose of taxation for the period ending December 31, 1947. Transactions of the same nature existed during the period after December 31, 1947, but no profits in respect of them were shown by the assessees. The last item mentioned in the statement of reasons is " asset left out of wealth statement ". It is stated that the wealth statement, as worked out by the assessees for the period ending December 31, 1947, did not contain particulars of their further holdings in Dalmia Jain Airways Ltd. and part of holdings of Bennet Coleman and Co. Ltd. which in the year 1948 were the subject-matter of partition between them. Reliance in this connection is again placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to investigate at this stage. The sufficiency of the grounds which induced the Income-tax Officer to take action and to issue the impugned notices is not a justiciable issue as ruled by the Supreme Court in Madhya Pradesh Industries Ltd. v. Income-tax Officer . It was then urged by the learned counsel that, after the settlement under section 34(1B) of the Indian Income-tax Act, 1922, it was not open to the respondents to start any proceedings under sections 147 and 148 of the Act and there remained no valid grounds for the initiation of these proceedings. The plea cannot be sustained. Copy of the settlement is annexure "C" on the record. Clause (2) of the settlement reads as under: " It is further agreed that the concealed income mentioned in clause (1), supra, shall be deemed to have been accrued and arisen to the assessees in accounting years relevant to the assessment years 1941-42 to 1947-48, both inclusive. " The assessment proposed in the impugned notices is for the period subsequent to this. The settlement cannot, therefore, be set up as a bar to the proposed assessment. Besides, clause (10) of this settlement further provides that in case any item of concealed income not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me had been received during a particular year but it is not clear who has received that income it is open to the Income-tax Officer to start proceedings against all the persons individually or collectively to ascertain the correct position. Reference in this connection may be made to Lalji Haridas v. Income-tax Officer, where it was held that : " In cases where it appears to the income-tax authorities that certain income has been received during the relevant 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 by B or by both together, it would be open to the income-tax authorities to determine the question who is responsible to pay tax by talking assessment proceedings both against A and B. " This contention of the petitioner, therefore, has no merits and has to be repelled. It was next contended that the previous assessment of the petitioner, as an individual, had been made by the Income-tax Officer, Special Circle, Charge IV, Patna, and the Income-tax Officer, Special Investigation Circle, New Delhi, who issued the impugned notice had, therefore, no jurisdiction to issue the same. In answer to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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