TMI Blog1973 (9) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... years 1946-47 and 1947-48 were made on January 28, 1951. The Income-tax Officer found that for the year 1946-47 there was a loss of Rs. 44,844 and for the assessment year 1947-48 there was an income of Rs. 26,495. In the assessment for one of the subsequent years, that is, for the year 1949-50, on behalf of the assessee-family it was contended that there was a disruption of the assessee-family and there was a partition by metes and bounds on April 11, 1948. It was further contended that after the disruption of the Hindu undivided family, the karta and his three sons who were the only coparceners of the Hindu undivided family prior to the disruption had joined together with effect from April 12, 1948, to form a partnership to conduct the business of the oil mills in partnership and that the business was being carried on in the same name as before, namely, Messrs. Nanalal Tribhovandas. In the course of the assessment proceedings for 1949-50 the Income-tax Officer came into possession of certain information and on the basis of that information he entertained the belief that there was escapement of income for the three years 1945-46, 1946-47 and 1947-48. He, therefore, issued notices u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice under section 23(3) and after proper examination of the material and data that had been produced and may be produced thereafter. It may be pointed out that one of the contentions urged before the Appellate Assistant Commissioner before he passed the order dated September 12, 1959, was that the notice under section 34 was illegal and invalid inasmuch as the Income-tax Officer had not relevant material before him and had not considered the explanations given by the assessee before he came to issue notices under section 34. It was contended before the Appellate Assistant Commissioner in this connection that the Income-tax Officer had issued a letter on January 11, 1954, in the course of the assessment for the year 1949-50 and in response to that letter the assessee had furnished explanation for each and every item of the acquisition of the different assets by the Hindu undivided family but the Income-tax Officer without considering the said explanations and without giving the appellant any opportunity to substantiate those explanations by proofs, issued notices under section 34 for the three years 1945-46, 1946-47 and 1947-48. It was on this ground that the validity of the noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 34 were invalid inasmuch as the assessee was called upon to file the returns on April 15, 1954, whereas the notices were served upon it on April 1, 1954. The contention before the Appellate Assistant Commissioner in terms was that the notices were ab initio void because the necessary time of 30 days for filing the returns required to be given by the provisions of section 34 read with section 22(2) was not given. In paragraph 11 of his order dated October 22, 1968, the Appellate Assistant Commissioner held that the notices required the assessee to file his returns within a period which was less than the statutory period of thirty days. He further held that notice of thirty days is a condition precedent to the exercise of jurisdiction by the Income-tax Officer whenever he desires to reopen completed assessments and if this notice is ab initio void, all the subsequent proceedings flowing therefrom will have to be declared void and illegal. He, therefore, held that all the three reassessments for the assessment years 1945-46, 1946-47 and 1947-48 were illegal and void. The revenue, thereafter, took the matter in appeal before the Appellate Tribunal and the Tribunal came to the conclus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... karta, Tribhovandas Harkishandas, Dohad, the Tribunal has held against the revenue and Income-tax Reference No. 8 of 1971 had been made at the instance of the revenue which we have already referred to. In the opinion of the Tribunal the same questions of law also arise in the matters where Kalidas Nanalal was the assessee and hence the very same two questions have been referred to us in Kalidas Nanalal's case also to this High Court. Under section 34(1) of the Indian Income-tax Act, 1922, if the Income-tax Officer has reason to believe as set out in clause (a), or has information in his possession as set out in clause (b), he may in cases falling under clause (a) at any time and in cases falling under clause (b) at any time within four years of the end of that year, serve on the assessee, or, if the assessee is a company, on the principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 22 and may proceed to assess or reassess such income, profits or gains or recompute the loss or depreciation allowance ; and the provisions of the Act shall, so far as may be, apply accordingly as if the notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory period of thirty days contemplated by section 22(2). Mr. Kaji on behalf of the revenue contended that by the order dated September 12, 1959, the Appellate Assistant Commissioner had clearly directed the Income-tax Officer to make assessments in reassessment proceedings for the three relevant years according to law " after giving the appellant reasonable opportunity of meeting the points that the Income-tax Officer may make out in a specific notice under section 23(3) and after proper examination of the material and data that has been produced and may be produced ". Mr. Kaji contended that in view of the specific directions given by the Appellate Assistant Commissioner in his order dated September 12, 1959, and particularly in view of the fact that in terms the Appellate Assistant Commissioner had held that the action under section 34 was fully justified and was quite legal and proper and that the notices under section 34 issued by the Income-tax Officer were perfectly legal and valid, it was not open to the assessee in proceedings taken by the Income-tax Officer on remand after September 12, 1959, to urge that the notices under section 34 were invalid nor was it open either to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e powers under section 31 of the Act which goes to the extent of conferring jurisdiction upon the Income-tax Officer if he is not lawfully seized of jurisdiction. To our minds, the direction issued by the Appellate Assistant Commissioner travels far beyond the scope of section 31 of the Act in the circumstances of the case. If the direction is neither lawful nor valid, it cannot come within the scope of the saving proviso and serve to remove the bar of limitation. " In that particular case the order of remand passed by the Appellate Assistant Commissioner in terms directed the Income-tax Officer to interpret the bar of limitation in a particular manner which was contrary to law and the observations made by the learned judges of the Madras High Court were made in the context of those facts. We find that this decision in Commissioner of Income-tax v. Estate of late N. Veeraswami Chettiar was followed by the same High Court in N. Naganatha Iyer v. Commissioner of Income-tax. The facts in that case were that the assessee, a member of a Hindu undivided family, who was also a partner in a firm in his individual capacity, submitted his returns for the assessment years 1948-49 and 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns given to him by the Appellate Assistant Commissioner. Moreover, the Appellate Assistant Commissioner himself had no jurisdiction under section 31 of the Act of 1922 to issue directions which went to the extent of conferring jurisdiction upon the Income-tax Officer when he was not lawfully seized of jurisdiction. In view of these conclusions we are not referring to the authorities relied upon by Mr. Kaji in support of his contention that the Income-tax Officer, after the order of remand of September 12, 1959, could only act within the four corners of the order passed by the Appellate Assistant Commissioner on September 12, 1959. The three authorities which Mr. Kaji relied upon in support of this contention were : (1) P. Subba Rao Co. v. Appellate Assistant Commissioner of Income-tax, which was a decision of the Andhra Pradesh High Court ; (2) decision of the Bombay High Court in Commissioner of Income-tax v. Indo-Aden Salt Works Co. and (3) the decision of the Bombay High Court in Commissioner of Income-tax v. Devidayal Metal Industries Pvt. Ltd., In our opinion, the question which arises for our consideration is totally different from the questions which arose before the di ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
