TaxTMI 
TaxTMI 
1966 (10) TMI 50
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.... that had prompted him to issue the notices of reassessment. On March 24, 1962, the Income-tax Officer issued notices under section 34 for reassessment of the income of the assessee for the years 1940-41 to 1949-50. The assessee then presented petitions in the High Court of Andhra Pradesh for writs of prohibition directing the Income-tax Officer to refrain from proceeding in pursuance of the notices for the assessment years 1940-41 to 1949-50 and 1950-51 and 1951-52. A single judge of the High Court rejected the petitions and the order was confirmed in appeal by a Division Bench of the High Court. The assessee has appealed with special leave. The notice issued by the Income-tax Officer did not specifically refer to section 34(1)(a) of the Income-tax Act : it did not set out the clause under which it was issued. But on that account the proceeding under section 34 is not vitiated. It was held by the Calcutta High Court in P. R. Mukherjee v. Commissioner of Income-tax, that it is not necessary or imperative that a notice under section 34 must specify under which of the two clauses, clause (a) of clause (b) of sub-section (1) of section 34, the notice is issued. The main notice to b....
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....r to the section as amended by Act 48 of 1948. This court in Calcutta Discount Co. Ltd. v. Income-tax Officer, Companies District I, Calcutta observed that before the Income-tax Officer may issue a notice under section 34(1)(a) of the Indian Income-tax Act, two conditions precedent must co-exist : the Income-tax Officer must have reason to believe (1) that income, profits or gains had been under-assessed, and (2) that such under-assessment was due to non-disclosure of material facts by the assessee. The court further held that where the Income-tax Officer has prima facie reasonable grounds for believing that there has been a non-disclosure of a primary material fact, that by itself gives him jurisdiction to issue a notice under section 34 of the Act, and the adequacy or otherwise of the grounds of such belief is not open to investigation by the court. In a recent judgment of this court in S. Narayanappa v. Commissioner of Income-tax, Ramaswami J., speaking for the court, observed : ".......... the legal position is that if there are in fact some reasonable grounds for the Income-tax Officer to believe that there had been any nondisclosure as regards any fact, which could h....
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.... Rs. 49,000, and the plea of the assessee that growth in the investments of the assessee in those years was mainly due to the " cash balance " held by the manager out of his share received on partition between him and his brothers, and cash gifts from his father-in-law which were till then kept uninvested even in the money-lending business, was not supported by any evidence, that the assessee had suppressed the account books for the periods prior to April 1, 1949, and that the assessee had not produced the deed of partition relied upon. According to the Income-tax Officer, the net wealth of the family on April 1, 1937, inclusive of investments in the money-lending business was less than Rs. 50,000 and the investments made by the assessee in money-lending business were approximately of the order of Rs. 21,000, that the assessments made on the family from 1937-38 till 1948-49 showed that the assessee's aggregate income for those years was Rs. 30,000, that taking into account the manager's professsional income and the agricultural income of the assessee, the aggregate could not exceed Rs. 1 lakh, and that possession of large wealth on April 1, 1949, which was not explained, justified ....
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....money-lending or other business. The Income-tax Officer had, therefore, prima facie, reason to believe that information material to the assessment had been withheld, and that on account of withholding of that information income liable to tax had escaped assessment. From the mere production of the books of account it cannot be inferred that there had been full disclosure of the material facts necessary for the purpose of assessment. The terms of the explanation are too plain to permit an argument being reasonably advanced, that the duty of the assessee to disclose fully and truly all material facts is discharged when he produces the books of account or other evidence which has a material bearing on the assessment. It is clearly implicit in the terms of sections 23 and 34 of the Income-tax Act that the assessee is under a duty to disclose fully and truly material facts necessary for the assessment of the year, and that the duty is not discharged merely by the production of the books of account or other evidence. It is the duty of the assessee to bring to the notice of the Income-tax Officer particular items in the books of account or portions of documents which are relevant. Even ....