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1935 (3) TMI 19
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....the questions were as follows: (i) Whether, having regard to the fact that Section 34 of the Act requires "particulars" to be stated in the notice and that the notice is the basis of the proceedings under the said section, the Income Tax Officer was competent in law to go behind the particulars as specified in the notice under Section 34 in the present case? (ii) Whether in view of the fact that admittedly the previous assessment did not give the details of the estimate on which the assessment was made, and in view of the nature of the business carried on by the assessee, the Income Tax Officer was entitled to assume that income from dividends had not and could not have been included in the previous assessment? or, was it not open to the assessee to rebut the said assumption by reference to his books of account and other evidence and claim to reopen the said previous assessment accordingly? (iii) Whether or not in the circumstances of the case, the Income Tax Officer was justified in law in holding that he was precluded from entering into the merits of the former assessment?" The Commissioner of Income Tax was required to show cause why he should not stat....
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....ts etc." ditto: the total being stated to be Rs. 11,752. It has thus to be seen that in the revised return which was made on the 27th of June, 1929, the assessee had put the return in such a form as would indicate that he had given close attention to the various headings under which he might be chargeable to income-tax. The importance of this return is that against heading 7 "Dividends" he had put "nil". The Income Tax Officer was then of opinion that even this second return did not properly or fully disclose the whole of the taxable income of the assessee and accordingly the Income Tax Officer served a notice upon the assessee under the provisions of Sections 22 (4) and 23 (2) calling upon him to furnish such evidence as was available to substantiate the return which he had made and also calling upon to produce accounts and other documents in support of it. In pursuance of that notice the assessee did produce certain accounts in the form of a "daily purchases and sales book" sowda book, and as a result of the enquiry that ensured, on the 10th of December, 1929, an assessment was made under the provisions of Section 23 (3) of the Act which provides that "the Income Tax Officer afte....
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....of April, 1930, again duly signed by the assessee in which he stated that the income of the Calcutta business was Rs. 38,000 and the income of the Agra business Rs. 12,000 making a total of Rs. 50,000. A month later on the 21st of May, 1930, an assessment was duly made upon the basis of that return with the addition of a sum of Rs. 100 on account of certain house property owned by the assessee in Agra whereby the total income was brought up to a sum of Rs. 50,100. The assessment was in these terms: "In this case notice under Section 22 (2) read with Section 34 was issued as per orders dated 20th March, 1930. The assessees filed a duly verified return on 23rd April 1930. They have failed to comply with the terms of the notice under Section 23 (2). It has been alleged that no accounts are kept by them. This is unthinkable. A business firm like theirs cannot do without accounts and I am of opinion that the books are being intentionally withheld. They are thus liable for assessment under Section 23 (4). I assess them accordingly under Section 23 (4) for 1929-30 read with Section 34 on a total income of Rs. 60,100. Income tax now due Rs. 1,156-4-0." After that there was an i....
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....books and some others and the accounts disclosed in these documents were under examination by the income tax authorities for a considerable period of time; and ultimately on the 28th of April, 1933, an assessment was made which is the assessment now called in question in these proceedings. The relevant part of the order of the 28th of April, 1933 is in these terms: I compute assessee's income as under:- Property at Agra ... 100 Business at Calcutta and Agra ... 50,000 There may or may not have been a loss as disclosed by The books, but I am precluded from entering into the merits of the former assessment made on Rs. 50,000 for business as I am of opinion that no income from business escaped assessment." Then comes the heading "Dividends." Net ... Rs. 81,758 plus 3 29ths ... Rs. 8,457 Total Rs. 90,215 That added to 50,100 made a grand total Rs. 1,40,315. Then follows a calculation for super-tax. Super-tax on Rs. 50,000 @ 0-1-0 ... Rs. 3,125 on Rs. 15,315 @ 0-1-6 Rs. 1,435-13-0 Rs. 4,560-13-0 The order of the Income Tax Officer when that assessment was made contained a statement of his r....
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....em only as in the notice under Section 34 it was said that dividends partially escaped assessment. It has also been urged that the income from business is intermixed with income from dividends and that the Income Tax Officer should have considered the business loss shown in the return last submitted". We have also been referred to the order dated the 26th of May, 1932, in which the Income Tax Officer said as follows:- "No income excepting dividends appears to have escaped assessment. The proceedings under Section 34 will be disposed of afterwards". From the above order of the Income Tax Officer the learned Advocate wants me to hold that the findings above have been arrived at after the Income Tax Officer had examined the accounts in respect of all the sources of income and that he should therefore have made the assessment of all the sources. It is also urged that having issued the notice saying "dividends etc.", the Income Tax Officer must have to assess all the sources other than dividends as well as dividends. Then comes this finding: From the recital of the facts above it will be clear that gradually things began to come to light. In this case from the solemn decl....
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.... Tax Officer that the assessee had a substantial income from dividends, the actual amount of dividends received in the year of account being Rs. 90,215, a sum which is not questioned by the assessee; I underline that last sentence and on receipt of information to this effect the Income Tax Officer issued another notice under S. 34 calling for return of income and incompliance with that notice the assessee submitted a return showing profits of Rs. 5,544 under the head business and against that item a sum of Rs. 8,457-11-0 tax already charged. Then the Commissioner makes reference to the foot note in the return dated the 27th of November, 1930, and with regard to it he says "The Income Tax Officer refused to accept this contention and on the ground that this income from dividends had escaped assessment, he again made an assessment under S. 34 adding to the income originally assessed the sum of Rs. 90,215." Then he proceeds to discuss the contentions of the assesses and the reasons put forward why the Commissioner should state a case for the opinion of this Court. I need only refer to one passage which is in these terms: "I have already stated that in the first assessment ....
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....rned Commissioner to state a case. I mentioned at the outset the three questions which at the suggestion or with the assistance of the Court were finally put forward in the application for the Rule. Mr. Biswas has not seriously argued with regard to the first two of those questions. The first question deals with the form of notice. It is admitted that notice under Section 34 is not to be in any prescribed or any statutory form. Therefore, so long as it brings to the attention of the person to whom it is served the matters required to be answered or dealt with or the things required to be furnished it is sufficient. The second question as finally settled is very much the same as question 3, only in a different form. Put quite shortly, the whole matter resolves itself into this-whether in the circumstances it was incumbent on the Income Tax Officer to reopen not only the assessment which had been made after service of the first notice under Section 34, but even the assessment which had originally been made as a result of the return submitted by the assessee himself. I am of opinion that the view taken by the learned Commissioner of Income Tax as regards the question of law was correc....