GIRINDRANATH PAUL Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) This is an appeal by the petitioner against an order dated July 2, 1971, passed by Banerjee J. discharging the rule obtained by the petitioner against proceedings initiated against him under Section 34 of the Indian Income-tax Act, 1922. The facts as stated in the petition are as follows: The petitioner was originally assessed for 1959-60 by A. K. Sanyal, Income-tax Officer, "J" Ward, District 1(2), Calcutta, respondent No. 1 in the rule under Section 23(3). On July 3, 1961, N. C. Addy, the Income-tax Officer, "C" Ward, District 1(2), Calcutta, the respondent No. 2, issued a notice under Section 34, advising the petitioner that as he had reason to believe that the income assessable to income-tax for assessment year 1959-60 had escaped assessment, he proposed to assess the said income that had escaped assessment. The petitioner was thereby required to deliver within thirty-five days of receipt of notice, a return in the attached form for the said year ending March 31, 1960. It was further stated that the notice was being issued after obtaining the necessary satisfaction of the Commissioner of Income-tax, Calcutta. The said notice is annexure "B" to the petition.

(2.) In the assessment year 1959-60, as already stated, the respondent No. 1 completed the assessment of the petitioner under Section 23(3) of the Act and computed the income of the petitioner at Rs. 23,590. At the time of this assessment the petitioner produced all books of account, documents and other evidence relevant for the purpose for the assessment year 1959-60, and the petitioner's representative had discussion with the Income-tax Officer regarding various points of assessment including sales effected by the petitioner; The Income-tax Officer on due consideration of the materials and on full satisfaction about the sources of income and the genuineness of the sales effected by the petitioner computed the income as stated above as will appear from the assessment order, annexure "A". At the time of this assessment there was no omission or failure on the part of the petitioner to disclose fully and truly all material facts necessary.

(3.) The petitioner thereafter submitted a return under protest showing the income as shown in the return at the time of original assessment. On September A, 1964, the petitioner received a notice under Section 22(2) of the Act calling upon him to produce the books of accounts and papers for the financial year 1958-59 and for three preceding years. Again, by three notices dated September 14, 1964, under Section 23(2) of the Act, addressed to the individual members of the then non-existent Hindu undivided family, including the petitioner, the respondent No. 1 called upon them either to attend his office personally or through a representative or to produce documents and evidence in support of the return. On receipt of the said notices the petitioner made an application on September 24, 1964, to the respondent No. 2 stating that in compliance with the said notice under Section 34 he had already submitted a return under protest and also filed an application dated September 14, 1964, to which there was no reply. The petitioner by the said application again requested the respondent No. 2 to disclose the material facts on which the case of the petitioner was reopened. By another application dated September 24, 1964, the petitioner stated that at the time of the original assessment he produced all books of account and disclosed all material facts to the Income-tax Officer and there was no failure on his part to disclose fully and truly all materials necessary for assessment for 1959-60, and accordingly, the condition precedent for assumption of the jurisdiction was not satisfied. The petitioner further stated that if the respondent No. 2 was determined to proceed under Section 34 of the said Act, the petitioner requested him to furnish the material facts on which the Income-tax Officer had reason to believe that the income had escaped assessment on account of failure to disclose the material facts on the part of the petitioner. Thereafter, in spite of demands made by the petitioner for production of such material, the respondent No. 2 without furnishing any material or reply to the petitioner's said letter sent a notice to him informing that the case was fixed for hearing on June 19, 1966. The petitioner appeared on that date before respondent No. 2 but instead of furnishing any material respondent No. 2 refixed the case on July 27, 1966. On that date also the petitioner appeared but no material was disclosed. The petitioner thereafter appeared on September 7, 1967, when he reiterated his demand and was informed that the case was fixed on September 22, 1967. Thereafter, it was refixed on September 30, 1967, and the petitoner having fallen ill prayed for an adjournment to which there was no reply. The petitioner in the circumstances apprehended that respondent No. 2 without disclosing the material would complete the assessment for the year 1959-60 and would take steps for recovery of tax on the basis of the illegal assessment.