COMMISSIONER OF INCOME TAX Vs. H S CHAUHAN

JUDGEMENT

(1.) THE Tribunal, Delhi bench A has referred the following questions of law for the opinion of this Court which arose out of the order of the Tribunal in respect of asst. yr. 1948-49

(2.) AFTER the assessment of the assessee for the year 1948-49, reassessment proceedings were opened under S. 147(a) on the basis of proposals made by the ITO on 11th Feb., 1964. The Tribunal held that the reopening assessment for the year 1948-49 was invalid and the ground given by the Tribunal is that the income escaped assessment is only Rs. 42,000 and so there was no material with the ITO to reopen assessment under S. 34(1) second proviso of the Indian IT Act, 1922. The Tribunal proceeded to consider the matter in the manner that whether the ITO had material to form the belief that the income that had escaped assessment for two years is Rs. one lac or more. According to the Tribunal the assessment orders for the yrs . 1947-48 and 1948-49 became vulnerable. We need not consider the question regarding assessment for the yr. 1947-48. So far as the assessment for the yr. 1948-49 is concerned, the Tribunal expressed that only an amount of Rs. 62,000 relates to the yr. 1948-49 and on further examination a sum of Rs. 22,000 is found to be related to the asst. yr. 1946-47. Therefore the income which had escaped assessment for the year 1948-49 is only a sum of Rs. 42,000 and as such the assessee's assessment could not be reopened under S. 34(1) proviso second. Whether this view of the Tribunal is correct having regard to the provisions contained in second proviso to sub-s. (1) of S. 34 of the IT Act 1922. The relevant provisions of S. 34 reads as under :

(3.) TO us it appears that the Tribunal did not take into consideration the aforesaid underlined words {here printed in italics} or expression occurring in the second proviso to sub-s. (1) of S. 34. It may be stated that after initiation of proceedings under S. 34, the final outcome of the proceedings may be nil. It may be found that no income had escaped assessment. That does not mean that the ITO had no jurisdiction to initiate proceedings when he has material to form a belief that the income that has escaped assessment is likely to amount to rupees one lac or more in the aggregate.