SUGANCHAND SARAOGI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE facts in this case are shortly as follows : THE petitioner in this case is M/s Suganchand Saraogi stated to be a partnership firm. Since the asst. yr. 1950-51 it has been assessed to income- tax as an unregistered firm. In this case we are concerned with the assessment of the firm for the year 1953-54. On or about the 25th Sept., 1953, a notice under s. 22(2) of the IT Act was served upon the assessee. No return was filed. On the 4th March, 1957, a notice under s. 22(4) of the said Act was issued and served on the assessee on the 6th March, 1957. No response was received from the assessee although reminders were issued on 25th June, 1957, and 4th July, 1957, requesting it to appear before the ITO with the books of account. No response having been received, a final notice was served to the effect that if the party failed to appear, an ex parte assessment would be completed. In spite of the reminders the assessee failed to comply with the requisition. THEreupon, on the 31st July, 1957, the ITO completed the assessment on an ex parte basis. This was, therefore, a best judgment assessment based on previous records and information available to the ITO. THE total income was computed to be Rs. 3 lakhs. Against this assessment order no appeal was preferred, but an application was made for revision to the CIT by petition dt. 15th Nov., 1957. In this petition it is stated that at the relevant time all the partners (seven in number) were out of Calcutta and that the agent in Calcutta was ill and so forth. It was urged that the computation of rupees three lakhs as income in the assessment order was " hard and heavy without any basis whatsoever." THE matter was considered by the CIT and he passed an order dt., 20th Jan., 1960, a copy whereof is Annexure "D" to the petition. THE Commissioner did not accept the story of the assessee about the circumstances leading to the ex parte assessment. He then dealt with the question of quantum. It was stated in the order that the ITO has subsequently examined the books of account and a tabular statement was set out showing the basis on which the assessment had been made for other years, namely, between the years 1950-51 and 1955-56. This tabular statement contains two columns which are important. THE first sets out the income on which the assessment had been made during these assessment years, and the other column sets out the "gross income from brokerage." This firm carried on business as commission agents and brokers, so that the income from brokerage was the principal income, but there were incomes from other sources as well. This is evident from the figures of 1954-55. In that year, the income on which the assessment was made was Rs. 1,22,400 but the gross income from brokerage was Rs. 1,11,493. That the income varied widely from year to year is also apparent from the fact that the gross income from brokerage in 1952-53 was Rs. 3,32,661 whereas the income in 1950-51 was Rs. 58,952 and in 1955-66 it was Rs. 67,174. Having considered these figures, the CIT stated as follows :

(2.) THE assessee had also made an application for getting the benefit of registration. This prayer was rejected, because the assessee had not made an application for registration at the proper time. It is against this order of the CIT under s. 33A of the IT Act, that this application is directed. THE rule that has been issued called upon the CIT to show cause why this order dt. 20th Jan., 1960, should not be quashed by a writ in the nature of cetiorari.

(3.) THE result is that for the reasons aforesaid, this application fails. THE rule is discharged. Interim orders are vacated. No order as to costs.