TMI Blog1979 (9) TMI 207X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 a return declaring the net income of ₹ 37,591 was filed. This is the amount at which the assessee had been assessed before the said notice. On the date of hearing no one appeared on behalf of the assessee. The ITO by his order of 19th March, 1974 found the assessee having had income from undisclosed sources and estimated it at ₹ 45,000. Later on, however, in response to the assessee moving an application under s. 146 of the Act, the order of 19th March, 1974 was cancelled and proceedings for assessment were started do novo. 2. The ITO by his order of 23rd Oct., 1975 referred to the unexplained cash credits appearing in the books and also noted that despite the opportunity given to the assessee he had failed to prove the genuineness of the accounts. He was also of the view that the duplicate books maintained by the assessee in the relevant period 1961-62 showed that the assessee had interest income which was not mentioned in the return of income. He, therefore, added an income of ₹ 1,24,610 on account of the various unexplained cash credits and another income of ₹ 32,621 as income from interest from the duplicate books of account perused by the Departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt order of 19th March, 1974 the ITO had estimated the escaped income being from undisclosed sources at ₹ 45,000. But that order was set aside and de novo proceedings started which led to the order of the ITO on 23rd Oct., 1975 wherein the undisclosed income was found to be ₹ 1,24,610, ₹ 32,621, i. e., ₹ 1,57,231, i. e., more than ₹ 50,000 No doubt this order was set aside in appeal on 10th March, 1977 but the order was set aside not on merits but on the finding that the condition precedent of obtaining the sanction of the Commr. under s. 151(2) had not been complied with. Thereafter, when the impugned notice of 13th March, 1978 was to be issued by the ITO, it is obvious that he had before him the assessment order made on 23rd Oct., 1975 which showed the escaped assessable income to be more tan ₹ 50,000 and would naturally treat the case under s. 149(1)(a)(ii) for which there is a 16 years time limit Manchanda, however, contends that the income assessed on 23rd Oct., 1975 had been deliberately inflated so as to confer jurisdiction on the ITO under s. 148 even beyond the period of 8 year. We find the argument unacceptable. No malice is alleged or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Indian IT Act, 1922 was issued on the ground that the two items of assessee's income, namely, forest income and interest income were not included in the original assessment. The assessee, however, had originally filed a return showing the forest income. The ITO made revised assessment including both the incomes. The matter went to the Tribunal which found that the forest income had been disclosed and, therefore, the ITO could not reopen the assessment with regard to that income. By inadvertence it set aside the whole of the reassessment including the income of interest, which was mentioned therein. The ITO did not take up the matter further in reference but sought to reopen the matter later under s. 34 of the Act on the ground that the interest income had escaped assessment. It was in that context that the Supreme Court stated that the order of the ITO had become final and that the ITO had full knowledge that the order of the Tribunal had excluded the interest income and that subsequently there was no further fact the discovery of which could alone have been relevant for the ITO to initial reassessment proceedings. The Court therefore, held that 190 issuing an order for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng business and interest income was recorded in the duplicate books of account which were nearer produced before the Department and came into possession of the Department through the CB1. The examination of these books of account shows that for the relevant asst. yr. 1961-62 and income of ₹ 1,57,083/- had escaped assessment on account of omission to disclose the interest income of ₹ 32,473/- and cash credits aggregating to ₹ 1,24,610/-. The belief of the ITO on material before him and as disclosed by the reasons cannot be said to be illusory or dishonest as was sought to be contended by Manchanda. The reasons given by the ITO for the formation of his belief have rational connection and a relevant bearing on the formation of belief and cannot be said to be in any manner non-existent. There was thus a rationale for the opinion of the ITO that concealed income was in excess of ₹ 50,000/-. As to whether on merits the assessee will be able to satisfy the ITO otherwise, are matters not relevant in any way at this stage of challenge to the issue of notice under s. 148 because that relates to the merits of the controversy which can only be decided by the IT autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter was replied to on 13th Feb., 1978 in which para-wise comments to the query raised by the Board was answered. It was thereafter that the Board by its letter of 22nd March, 1978 returned the file with the proposal duly approved by it. It is thus clear that the reasons mentioned by the ITO were duly scrutinized with care and after applying full mind and it was thereafter that the approval was given. there is no merit in the contention that either no approval was given or that it was given without application of mind. 9. The next argument was that the ITO was not competent to issue the impugned notice of 13th March, 1978 because it was the IAC alone who could issue the same, because of s. 125A(1) of the Act. Sec. 125A was added to the IT Act by the Taxation Laws (Amendment) Act, 1975 w. e. f. 1st Oct., 1975. Sub-s. (1) of s. 125A empowers the Commr. by a general or special order, to direct that all or any of the powers or functions conferred on or assigned to the ITO under the Act is exercised or performed concurrently by the IAC. Sub-s. (2) of 125A provides that where the IAC exercises concurrent jurisdiction with one or more ITO's in respect of any area, the ITO shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 48. In reiteration of the statement made at the bar, Kirpal has also filed an affidavit of the IAC in which he has sworn that he has not passed any order under sub-s. (2) of s. 125A and the ITO as well as IAC both had concurrent jurisdiction in the matter and the ITO had jurisdiction to issue the impugned notice under s. 148. Manchanda's argument seeks to assert that once a notification under s. 125A(1) is issued, the ITO concerned becomes totally incapable of doing anything under the Act even though the Act specifically authorises him to exercise that power unless he first obtains permission from the IAC. In our view such a sweeping denuding of the powers of the ITO conferred by the Act is not contemplated by the notification issued under s. 125A(1) which is only concerned with giving concurrent jurisdiction to the IAC. The meaning of concurrent jurisdiction is that both the officers have the jurisdiction in the same matter of course, subject to that if the IAC has given any general direction, then the ITO cannot Act contrary to it and must comply with it. 10. Manchanda has sought to refer to the hierarchy of officers given in Chapter XIII and stresses that every ITO has to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s argument, which goes contrary to the pleading, cannot be allowed to be urged at the fag-end of the hearing. More so because it seems to us that it is more as case of lack of information with the petitioner about his case having been transferred to District VI(13) and that there does not seem to be any doubt in the petitioner's mind that his cases have been dealt with by the ITO who has jurisdiction in the matter. We may note that District VI(13) was created on 16th Dec., 1977 by a notification while Manchanda relies on notification 14th Nov., 1977 and it is quite possible that after December, 1977 there is a further notification by which the petitioner's cases has been transferred to Circle District VI(13). In any case, in view of the specific allegation of the petitioner himself that his case was being looked after by the ITO District VI(13) and also the petitioner had been so told specifically as far back as 1978, that it does not lie with the petitioner now to say that the jurisdiction of his case does not lie in District VI(13). No foundation has been laid for this argument which is contrary to the pleading. At this stage we are not prepared to let Manchanda urge this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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