TMI Blog1957 (3) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... se lands were sold under an agreement To Tribeni Nath and Ramanand for a sum of ₹ 2,15,000 and to Mohan Singh Autar Singh for a sum of ₹ 1,95,000. Under this agreement certain sums were released by the corresponding to the two assessment years in question, viz., 1945-46 and 1946-47. After the assessment for the year 1945-46 had been completed on 28th November, 1945, by the Income-tax Officer of Banaras, a letter dated 8th January, 1946, was received by him from the Income-tax Officer, Gorakhpur, informing him that the assessee had sold standing timber in the zamindari at Gorakhpur to Tribeni Nath and Ramanand for ₹ 2,15,000 and to Mohan Singh Ram Autar for ₹ 1,95,000. The Income-tax Officer, Banaras, thereupon, addressed a letter making inquiries from the assessee about the details of the transactions. The information was supplied by the assessee and, thereafter, on 23rd February, 1946, the Income-tax Officer issued a notice under section 34 of the Income-tax Act in respect of the assessment for the year 1945-46 calling upon the assessee to show cause why his income from the sale of these trees, which had escaped assessment, should not be brought into assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him in proceedings under section 34 did not contain any signature of his predecessor in token of the fact that these account books had been examined by the latter. The Tribunal also added that the Appellate Assistant Commissioner had pointed out that the assessee die not produce the Siahas and Jamabandis before him but only the books relating to Banaras in which the sale of timber was noted in the Gorakhpur Khata, that the assessee had been taxed for ₹ 35,000 as his receipt during the previous year, while the Gorakhpur Khata had a total of ₹ 1,58,625 and that no details of the various items were given in the account expect under the general head Amdani Ilaqa. After mentioning these facts which were pointed out by the Income-tax Officer and the Appellate Assistant Commissioner in their orders, the Tribunal did not proceed to record their concurrence with the views of the officers on these points. What the Tribunal stated was merely that they agreed with the Appellate Assistant commissioners view that, when the items in questions were mixed up with such a mass of agricultural income as is admitted by the assessees own munim Ramji, no conscious knowledge of the existence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est income were ever in the conscious knowledge of the Income-tax Officer. In thus proceeding, the Tribunal clearly committed an error of law as they lost sight of the principle of burden of proof in such a case. Under section 34 of the Income-tax Act, the jurisdiction of the Income-tax Officer to initiate proceedings depended on his receipt of definite information, the consequence of which was that he discovered that some income had escaped assessment. The Income-tax Officer could, therefore, proceed under that provision of a law only on the clear finding that the Income-tax Officer did not have that definite information at the earlier stage of the original assessment. If that information was already available to the Income-tax Officer when he first made the original assessment, it is not possible to say that the subsequent discovery of escape of income from assessment is the result of receipt of the same information at the later stage. A mere possibility that that information had escaped his notice when he was making the original assessment is not sufficient to justify proceedings under section 34 of the Indian Income-tax Act. The principle that an Income-tax Officer cannot proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must be answered in favour of the assessee. The second question had been divided into two part : in the first part of the question, the point raised is whether the income received by the assessee from forests was agricultural income under section 4(3)(viii) of the Income-tax Act. On this point, the finding of fact recorded by the Tribunal on scrutiny of the evidence was that the evidence fell short of proving that the forests were grown by the process of agriculture in the manner stated by the assessees witnesses, The result of their examination of the evidence was that the assessee had failed to prove it as a fact that the forest in questions were planted by him by means of any agricultural operations. The forests consisted of timber trees which were natural products of many parts of this Province and they were, therefore, of spontaneous growth like other natural products. On these finding, it is quite clear that the income of the assessee from forests in this case cannot be held to be agricultural income. Reference may be made to a decision of this court in Pratap Singh Balbeer Singh v. Commissioner of Income-tax, U.P. C.P., where it was held that the the words agriculture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fruit or vegetable or trees and the process in each case should and must be regarded as agricultural process. A similar view was taken by a Bench of the Orissa High Court in Vikram Deo Varma, Maharaja of Jeypore v. Commissioner of Income-tax, Bihar Orissa. Both these cases also proceed on the interpretation of the decision of their Lordships of the Privy Council in Raja Mustafa Alikhan v. Commissioner of Income-tax, U.P., Ajmer and Ajmer-Merwara, which is the leading case on the point and which was followed by this Court in Pratap Singh Balbeer Singh v. Commissioner of Income-tax, U.P. C.P. It appears to be unnecessary for us to discuss all the decisions on this point again in detail. It appears to us to be sufficient to refer to a decision of the Supreme Court in Civil Appeals Nos. 107-111 of 1949, Maharaja Sir Pateshwari Prasad Singh v. Commissioner of Income-tax, U.P., C.P. Berar, which case was decided on the 26th of September, 1951, by a Bench consisting of their Lordships H. J. Kania, C.J., Mehr Chand Mahajan, J., and Chandrasekhara Iyer, J., and which case does not seem to have been reported so far in any of the law reports. In that case, it was noted by the Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal clearly are that no human skill or labour was employed in any such manner and consequently, the income derived from forests by the assessee cannot be held to be agricultural income. The other contention raised by the assessee in the second question that it was casual income is based on the ground that the entire timber of the trees in all the areas in the two village Anantpur alias Bhadauna and Dumri was sold at one time so that it was one single transaction which did not result in any such income to the assessee which could be charged with income-tax. The Tribunal rejected this contention holding that the income had accrued from the sale of trees, which became the stock-in-trade of the assessee as soon as they were severed from the forest ground with a view to earn an income from the sale of such trees as had reached their cutting age. On behalf of the assessee, an agreement entered into by him with Tribeni Nath Tewari and Ram Anand Tewari was produced in this Court in connection with this reference. The terms contained in that agreement show that the trees which were sold were to be removed by operation carried out over a number of years and the price of the trees was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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