COMMISSIONER OF INCOME TAX Vs. HOLCK LARSEN H

JUDGEMENT

(1.) THIS is a reference under section 66 (1) of the Income-tax Act, 1922, and the question which we have to consider is whether the Income-tax Officer had jurisdiction to re-open the assessment proceedings of the assessment years 1957-58 and 1958-59, under section 34 (1) (b) of the Act.

(2.) THE assessee had shown the profit arising from the sale of shares held by him in M/s. Larsen & Toubro Ltd., as capital gains, on the footing that the shares were held by him as investment. THE claim of the assessee that he was an investor was accepted by the Income-tax Officer, as, indeed, a similar claim was accepted in the previous years. THE assessments of the two years were completed by the Income-tax Officer on the 29th of January, 1958, and the 9th of October, 1958, respectively.

(3.) THE assessee filed appeals to the Appellate Assistant Commissioner against the assessment orders passed by the Income-tax Officer under section 34 (1) (b). In the meanwhile, the Income-tax Officer had passed orders for the assessment years 1959-60 and 1960-61 and the assessee filed appeals against those orders also. THE Appellate Assistant Commissioner consolidated the four appeals, heard them together and disposed of them by a common judgment. He dismissed the appeals relating to the assessment years 1959-60 and 1960-61, confirming the finding of the Income-tax Officer that the assessee was a dealer in shares. In regard to the finding recorded by the Income-tax Officer in the reassessment proceedings of the assessment years 1957-58 and 1958-59, he agreed on merits that the assessee was a dealer and not an investor. He, however, held that the Income-tax Officer had acted without jurisdiction in re-opening the assessments of these two years and on that ground, he set aside the fresh orders of assessment passed under section 34 (1) (b).