FAZLUR RAHMAN Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THIS is a special appeal against the judgment of Manchanda J. dismissing the writ petition filed by the appellant, challenging a notice dated September 14, 1961, issued under Section 34(1)(a) of the Indian Income-tax Act, 1922.

(2.) THE accounting year of the appellant for his business income was the calendar year. During the course of the examination of the appellant's account books in connection with the assessment for the assessment year 1947-48 (corresponding to the accounting year 1946), the Income-tax Officer noticed that 20 high denomination notes of Rs. 1,000 each were encashed by the appellant on January 19, 1946. THE Income-tax Officer called upon the assessee by a notice under Section 23(3) to explain the nature arid source of the income of Rs. 20,000. THE explanation of the assessee was that the notes were out of the closing balance of Rs. 23,916 on the evening of January 11, 1946. This explanation was not accepted by the Income-tax Officer who held that the amount represented the secreted profit of the assessee and was liable to income-tax. THE amount was added to the income for that year as undisclosed income. Corresponding assessment was made for purposes of excess profits tax also.

(3.) BY order dated November 24, 1961, the Income-tax Officer rejected the objection. On March 17, 1962, the assessee moved an application before the Central Board of Revenue, asserting that the notice issued under Section 34(1)(a) was time-barred and praying that the Income-tax Officer be directed to close the proceedings. BY a letter dated May 10, 1962, the assessee was informed that the Central Board of Revenue did not consider it necessary to interfere in the matter. After this, the writ petition was filed on August 1, 1962, praying for a writ of prohibition restraining the Income-tax Officer from taking any further proceedings on the basis of the impugned notice.