LALJI HARIDAS Vs. R H BHATT

JUDGEMENT

(1.) This appeal by special leave arises out of a writ petition filed by the appellant, Lalji Haridas, in the High Court of Gujarat under article 226 of the Constitution in which he prayed for a writ including a writ in the nature of certiorari against respondent No. 1, the Income-tax Officer, Ward D, Jamnagar, as well as the respondent No. 2, the Union of India, quashing two notices issued by the respondent No. 1 against him on the 14th April, 1960, and the 7th July, 1960. He also prayed that the assessment order passed against him by the Income-tax Officer on the 17th December, 1958, should likewise be quashed. This petition was dismissed by the High Court in limine without issuing notice to the respondents. Against the dismissal of his petition, the appellant applied for and obtained special leave from this court and it was with this special leave thus granted to him that the appeal has come before us for final disposal today.

(2.) Having heard Mr. Pathak on behalf of the appellant, we have come to the conclusion that there is no substance in this appeal and it must be dismissed with the costs. In fact, this appeal illustrates how an assessee can prolong the assessment proceedings by adopting judicial proceedings available to him under the law and thereby postpone indefinitely the final disposal of the said proceedings by the income- tax authorities.

(3.) The appellant is the resident of Jamnagar and the order of the assessment was passed against him on 17th December, 1958, assessing him to pay income-tax on Rs. 4,74,046. Before making this order of assessment, notice has been issued against the appellant on 20th December, 1957, under section 46(1) (a) of Saurashtra Income-tax Ordinance, 1949. This section corresponds to section 34(1) (a) of Income Tax Act. It appears that respondent No. 1 came to known that for the assessment year 1949-50, a large amount of income received by the appellant had escaped assessment. That is why notice was issued against him calling upon him to make a return of his income for the relevant year. The appellant thereupon made a return showing an income of Rs. 46 for the year in question. Respondent No. 1 had come to know that several amounts had been credited in the account books of the appellant and appeared to represent his income. On the 24th October, 1948, for instance two sums of Rs. 1 lakh each had been credited in the names of M/s. Bhagirath Madangopal & Co., Bombay, and Mulji Manilal Kamdar respectively. The latter amount was subsequently transferred to the account of another firm of M/s. Bhagirath Kasat & Co. On the 7th March, 1949, another sum of Rs. 1,80,000 was transferred to the said company. Further credits to the tune of Rs. 74,000 and Rs. 20,000 were also discovered. In submitting his return, the appellant attempted to say that these amounts did not represent his income at all and showed "benami" transactions entered into by him on behalf of other persons. Respondent No. 1 was not satisfied with the explanation given by the appellant, and so he passed the order of assessment as indicated above.