9911796707
TMI Blog1966 (9) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... No return was filed by the appellant. The assessment was completed by the Income-tax Officer on such material as was available on the 23rd February, 1955, and the income was assessed at Rs. 36,068. Subsequently, while making assessment for the assessment year 1955-56, the appellant was asked to furnish a wealth statement which was actually filed on the 30th June, 1954. From the wealth statement it was found that the appellant had made investments for Rs. 39,000 during the previous year which ended on the 30th June, 1950, though in respect of that previous year, the appellant's income was assessed only at Rs. 36,068. A scrutiny of the wealth statement and the bank account and the extensive nature of the business carried on by the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the reasons which induced the Income-tax Officer to initiate the proceedings under section 34 were justiciable. It was submitted that those reasons, should have been communicated by the Income-tax Officer to the assessee before the assessment was made. In this connection, the further argument of the appellant was that those reasons " must be sufficient for a prudent man to come to the conclusion that the income had escaped assessment ". In our opinion, there is no substance in any one of these arguments. It is true that two conditions must be satisfied in order to confer jurisdiction on the Income-tax Officer to issue the notice under section 34 in respect of assessments beyond the period of four years, but within a period of eight ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee but not the sufficiency of the reasons for the belief. Again the expression " reason to believe " in section 34 of the Income-tax Act does not mean a purely subjective satisfaction on the part of the Income-tax Officer. The belief must be held in good faith : it cannot be merely a pretence. To put it differently, it is open to the court to examine the question whether the reasons for the belief have a rational connection or a relevant bearing to the formation of the belief and are not extraneous or irrelevant to the purpose of the section. To this limited extent, the action of the Income-tax Officer in starting proceedings under section 34 of the Act is open to challenge in a court of law (see Calcutta Discount Co. Ltd. v. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the Income-tax Officer and for obtaining the sanction of the Commissioner are administrative in character and are not quasi-judicial. The scheme of section 34 of the Act is that, if the conditions of the main section are satisfied, a notice has to be issued to the assessee containing all or any of the requirements which may be included in a notice under sub-section (2) of section 22. But before issuing the notice, the proviso requires that the officer should record his reasons for initiating action under section 34 and obtain the sanction of the Commissioner who must be satisfied that the action under section 34 was justified. There is no requirement in any of the provisions of the Act or any section laying down as a condition for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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