1950 (9) TMI 16

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.... in law? 2. Whether, in the circumstances of the case the action taken under Section 34 was based on discovery of any definite information within the terms of Section 34 of the Act? 3. Whether, in the circumstances of this case, the IVth Additional Income-tax Officer, E.P.T. Circle, Kanpur, had authority to make assessment without issuing fresh notices under Sections 22(4) and 23(2) of the Act?" The first two questions refer to the assessment year 1940-41 only. The assessment in that year was made by Mr. H.L. Giddens, Income- tax Officer, Gorakhpur, on 12th August, 1940. In the assessment year 1939-40 the assessee had made a number of entries of fictitious deposits and had inflated the purchase price of raw material ....

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....inflated and the further fact that a large sum of money, even though not entered in his books in the previous year to the assessment year 1940-41, was entered as fictitious deposits in the next year, the Income-tax Officer believed that a part of the income in the assessment year 1940-41 had escaped assessment. Thereupon he issued notice to the assessee under Section 34 of the Indian Income- tax Act. The statement of the case does not clearly set out the facts mentioned by us above and we had, therefore, to spend considerable time over this case; but from the appellate order of the Tribunal read with the statement of the case it is clear that the definite information in possession of the Income-tax Officer before he issued notice under S....

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....s no right to make a preliminary enquiry before issuing notice under Section 34 and the assessee is not bound at that stage either to produce his books or to give any information or explanation. But if in the course of the performance of his usual duties, while assessing the income of other assessees or for other years of the assessee himself, definite facts come to the knowledge of the Income-tax Officer, which relate to a year about which the assessment has already been concluded, the Income-tax Officer is not bound to shut his eyes to them nor is it necessary that when the Income-tax Officer gets some information he should not verify the correctness thereof or trace it out further so long as he can do it without calling upon the assessee....