DEBI PRASAD MALVIYA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN this reference under Section 66(1), INcome-tax Act the point submitted by the Tribunal for opinion is as follows : "Whether, in the circumstances of the case, the notice under Section 34, INcome-tax Act could be legally issued?"

(2.) THE facts as they appear from the order of the Income-tax Appellate Tribunal and the statement of the case are that the assessee was being assessed as a Hindu undivided family. On 2nd December 1938, a partnership firm known as Kanpur Iron Steel Co., was started of which one Brij Bhoosan Lal, a nephew of the assessee, was a partner. THE share of the capital invested in the firm by Brij Bhoosan Lal was advanced by the assessee. THE sum of Rs. 17,000 advanced by the assessee was entered in his books as follows :

(3.) AS regards the question referred to us under Section 06(1) we find that the facts on the basis of which notice under Section 34 was issued were all known to the Income-tax Officers concerned except, of course, the actual amount of profits that had been made by the Kanpur Iron Supply Co., in the two years in question. From the assessment order of 25th February 1946, it is dear, as also from the previous assessment order of 25th March 1944, which had been set aside by the Appellate ASsistant Commissioner, that the Income-tax Officer knew that the assessee had a one-third share in the partnership firm, Kanpur Iron Supply Co., and that the profits of that concern had to be added to the total income of the assessee. In the assessment order of 25th February 1946, the Income-tax Officer said : "It appears from the file of the firm Arya Steel Company that it had no business during the previous year for the assessment year 1943-44, while the assessments for that year of the firms Kanpur Iron Supply Co.. and U.P. Iron and Steel Company have not yet been completed. Necessary action for revising the present assessment by inclusion of assessee's share of profits in the latter firms will be taken later on receipt of the necessary reports from the Income-tax Officer, Kanpur."