TMI Blog1964 (3) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... 1961, excepting the last one which was dated February 13, 1961. Cognisance of the returns was taken by the Income-tax Officer, Shri H. Biswas, and notices under section 23(2) of the said Act were issued and served on Shri J.L. Kherria, an income-tax practitioner, who was an authorised representative of the assessee. On the 18th February, 1961, assessment orders were passed for the years 1953 to 1961. On 28th January, 1963, the Commissioner of Income-tax, West Bengal, issued a notice upon the petitioner under section 33B of the said Act. This notice has been referred to in the pleadings but no copy has been annexed. I have, therefore, called for the original notice to be produced and I have directed that a copy be kept on the record marked as exhibit 1. It is necessary to set out the contents of the notice, which is in the following terms : On calling for and examining the records of your case for the assessment years 1953-54, 1954-55, 1955-56, 1956-57, 1957-58, 1958-59, 1959-60 and 1960-61 and other connected records, I consider that the orders of assessment passed by the Income-tax Officer, D Ward, Howrah, on February 18, 1961, are erroneous in so far as they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Despite my pleadings your inspector insisted for serving the said cover on me. As your inspector was very much adamant on serving the said cover despite my pleadings, I had to accept the said cover and I signed the acknowledgment for myself and under protest. While accepting the said cover, I disclaimed any responsibility and pointed out to your inspector that, if possible, I will send the said cover to the lady but up to this day, I could not transmit the said cover. Here again, R.S. Khemka was writing about his mother, the petitioner, as the lady without stating that she was his mother. He further stated that the registered cover was delivered to his minor sister by the postal peon by misrepresentation and distortion of facts . It is not stated what misrepresentation and distortion of facts had been made. On the 5th February, 1963, a further communication was addressed by the petitioner's solicitor, Messrs. G.P. Lath and Co., a copy whereof is included in annexure A to the petition, at page 4. It was stated therein that on the 29th January, 1963, a closed cover was left with R.S. Khemka who neither resided with the petitioner nor was her authorised agent to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of mandamus should not be issued asking them to forbear from giving effect to the order dated 7th February, 1963, made by the Commissioner and as to why a writ in the nature of certiorari should not be issued quashing the proceedings initiated by the notice dated 28th January, 1963, and for other reliefs. Section 33B of the said Act empowers the Commissioner to call for and examine the record of any proceeding under the said Act and if he considers that any order passed therein by the Income-tax Officer is erroneous, in so far as it is prejudicial to the interests of 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 a direction for a fresh assessment after cancelling the existing assessment. It is, however, provided that no order shall be made after the expiry of two years from the date of the order sought to be revised. The order of assessment had been made on the 18th February, 1961. It would be, therefore, barred by the 17th February, 1963. In other words, if the order dated 7th February, 1963, is set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... afterwards, G.P. Lath Co. wrote a letter under instructions of the petitioner. In the letter written by R.S. Khemka, his address given is 48, Nandlal Mitra Lane, Salkia, Howrah . He has not filed an affidavit to say that he did not reside with his mother on the relevant date. It is in paragraph 9 of the petition that the petitioner states that R.S. Khemka neither resides with your petitioner nor is an authorised agent of your petitioner . This statement has been affirmed by the petitioner as based upon information received from R.S. Khemka and believed to be true which is an absurd situation. Although this allegation has been denied in the affidavit-in-opposition, still no affidavit is forthcoming from R.S. Khemka to the effect that on the relevant date he was not residing with his mother at 48, Nandlal Mitra Lane, Howrah. Upon considering all the facts, I am of the opinion, that on the relevant date R.S. Khemka, an adult male member of the family of the petitioner, was residing with her at 48, Nandlal Mitra Lane, Howrah, and further, that there is no sufficient reason to think that the petitioner was away from Calcutta on the relevant date. I, therefore, hold that the noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave set out above the notice that was sought to be served on the petitioner dated 28th January, 1963. In that notice, reasons have been given for holding that the existing assessment was erroneous and prejudicial to the interests of the revenue. It was stated that upon enquiry it was revealed that no business was carried on by the assessee as alleged in the return and also that the Income-tax Officer was not justified in accepting the initial capital, income from business, the acquisition and sale of jewelleries, etc., without any enquiry or evidence whatsoever. It appears that the petitioner in filing her return, whether voluntarily or otherwise, had made a statement before the Income-tax Officer, a copy whereof is exhibit A to the petition. She mentioned there that she was married in 1911 and her parents and father-in-law were wealthy persons and at the time of her marriage she received substantial amount of presents and dowry in ornaments and jewelleries. She said that this amounted to ₹ 15,000. Thereafter, she made some speculation in silver and hessian for which she has no accounts and she invested an initial capital of ₹ 17,000 towards the business in silver and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g in the same jurisdiction, the Commissioner may distribute and allocate the work between them. If, however, an Income-tax Officer has got territorial jurisdiction, the mere fact that he deals with a file not allotted to him would be a mere irregularity. Mr. Meyer has not contended that it is necessarily fatal. As regards jurisdiction, it appears from the order that certain enquiries were made. It is stated as follows : On enquiry it has been ascertained that the Income-tax Officer, D-Ward, Howrah, had no jurisdiction over the assessee and hence all the assessments made by him are ab initio null and void. It has also been learnt from local enquiries that the assessee was residing with her husband, Shri Mahadeo Prosad Khemka, and her son, Shri R.S. Khemka, at the address noted in the returns, i.e., 48, Nandlal Mitra Lane, Salkia, Howrah. However no business was carried on from that place. It is not stated as to what enquiries were made and what was the exact information received. Mr. Meyer has shown me two reports of inspectors who made the enquiry. He failed however to show that there was any enquiry made which resulted in the information about the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to show that it was properly done. No such thing could have been done without a concert between the Income-tax Officer and the assessee. Of these very serious charges, however, no inkling was at all given to the petitioner in the notice that was served upon her. Let us assume that she received the notice and did not appear at the hearing. At best, the order could have been made after conforming to the rules of natural justice. Just because the petitioner did not appear at the hearing, it did not mean that allegations of fraudulent conduct or the interpolation of records, etc., could be gone into and decided without any notice whatsoever to her that she was being charged with the same or that the order of assessment was being set aside on such grounds. So far as local enquiries are concerned, undoubtedly the Commissioner is given the power under section 33B itself to make necessary enquiries, but if he is going to rely on any such information prejudicial to the assessee, that information must be disclosed to her although not necessarily the source. Apart from the enquiries mentioned in the notice, the Commissioner has relied on other enquiries not mentioned therein. In fact the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of an order is good and another part bad, the whole order becomes defective, because where a finding is based on a material which is only partly irrelevant or inadmissible it was vitiated as a whole. This was held by the Supreme Court in Dhirajlal Girdharilal v. Commissioner of Income-tax [1954] 26 ITR 736 , 740 (SC). Mr. Meyer has drawn my attention to a Supreme Court decision, S.N. Namasivayam Chettiar v. Commissioner of Income-tax [1960] 38 ITR 579 [1960] 2 SCR 885. In that case, the appellant, a resident in India, carried on trade in Colombo in grains and foodstuffs for cattle. For the relevant assessment years the Income-tax Officer rejected the accounts which were produced by the appellant and made an estimate of the profits. The Appellate Tribunal revised this estimate and having taken into account all the relevant factors, computed the profits at 15 per cent. on grains imported from India and 12 per cent. on grains purchased in Ceylon. In support of its computation it pointed out that in certain other cases which came to its notice the rates of profits had been as much as 20 per cent. The appellant contended that the Tribunal had taken into consideration the other cases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecord at all. Mr. Meyer argues that after all the assessee will not be prejudiced because the order of the Commissioner merely sets aside the assessment and a new assessment will be made in accordance with law. Mr. Roy has pointed out that this is not the point of view from which the matter should be approached. If there has been a violation of the rules of natural justice, it is immaterial whether the same results would have been reached if there was no violation of such rules or that the person concerned was not really prejudiced. In General Medical Council v. Spackman [1943] AC. 627, Lord Wright said as follows: A decree of Lord Cottenham L.C. was set aside because he had an interest in the company, unknown to the defendant. It was immaterial that, as Lord Campbell said in Dimes v. Proprietors of Grand Junction Canal Co. [1852] 3 H.L. Cas. 758, 'no one can suppose that Lord Cottenham could be, in the remotest degree, influenced by the interest that he had in this concern'. If the principles of natural justice are violated in respect of any decision, it is, indeed, immaterial whether the same decision would have been arrived at in the absence of the departure fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... denied justice.... he can always ask for the decision against him to be set aside. In the present case, at the hearing the assessee did not appear. Assuming that she is to be deemed to have been served with notice and took the risk of an ex parte order, it must be an order based upon the notice that was issued. Since the Commissioner at the hearing found that there were serious allegations of fraud, collusion and conspiracy, interpolation of records, etc., he should not have proceeded further without bringing these matters to the notice of the assessee and giving her an opportunity of answering the serious charges. The hearing should have been adjourned for that purpose. It is of no use now to say that she was not prejudiced by the order or that had she appeared at the hearing the further charges could have been communicated to her. Mr. Meyer has drawn my attention to the fact that if this order is now set aside, the unfortunate result would be that a revision would be barred because an order under section 33B must be made within two years from the date of the order sought to be revised. That unfortunately is the inevitable result. But I am unable to consider th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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