BANDHANRAM BHADANI Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) IN this application under Art. 226 and 227 of the Constitution, the prayer of the petitioner is to quash Annexures 4', 7' and 9' appended to the application. Annexure 4' is an order dt. 29th Oct., 1964 passed by the ITO, Special Circle, Ranchi under S. 35 of the INCOME TAX ACT, 1922, (Hereinafter referred to as the Old Act;) by which the petitioner's deemed income in respect of Hirjee Mills Limitd, Bombay, had been reduced. Annexure 7' is an order dt. 4th Nov,, 1968 passed by the ITO, Special Circle, Ranchi refusing the petitioner's prayer for rectification in respect of asst. year 1953 - 54 and Annexure 9' is an order dt. 31st Aug., 1973 passed by the Tribunal in ITA No. 425/Pat. Of 1971 -72, by which the order of the AAC dt. 27th Feb., 1971 passed in NO. 61 of 1968 -69, Special Circle Ranchi, has been cancelled.

(2.) THE facts which this application is founded are that for the asst. year 1953 -54 the petitioner's income from various sources including deemed income from different companies was duly assessed in the status of Act and the total income as assessed by the ITO was Rs. 23,386. This assessment order was made on 16th May, 1957, and a copy of this order has been appended to and marked as Annexure 1'. On the basis of an information received from the ITO, Bombay, about an order passed under S. 23A of the old Act in respect of a Bombay known as J.R. Bhadani Co. (P) Ltd; Bombay; in which the petitioner was a shareholder, proceeding under S. 34 of the old Act was initiated and by an order dt. 1st July, 1958 (a copy of which is Annexure "2"), the ITO included sum of Rs. 3,519 as deemed income in the total income of he petitioner for the year 1953 -54. Similarly, for the year 1954 -55the petitioner was assessed on a total income of Rs. 1,85,667 under the Old Act by an order dt. 9th July, 1969. This assessed amount included deemed dividend to the tune of Rs. 1,62,526 in pursuance of an order under S. 23A of te old Act regarding Hirjee Mills Limited, Bombay, in which also the petitioner was a shareholder, a copy of this order is dt. 9th July, 1959 is Annexure 3' appended to the writ application. Subsequently, by an order dt. 29th Oct., 1964 the ITO under S. 35 of the old Act, for the asst. year 1954 -55, reduced the deemed dividend of Hirjee Mils Limited, Bombay, to Rs. 1,46,273 from Rs. 1,62,526 as originally incorporated in his order dt. 9th July, 1959, a copy of this order has been appended to and marked as Annexure 4'. It has further been stated by the petitioner that since the rectification dt. 29th Oct., 1964 in substance reduced the demand against the petitioner, under S. 35 of the Old Act, no notice regarding proposed rectification was given to the petitioner. In consequence of the reduced demand, a demand notice in terms of the order dt. 29th Oct., 1964 was served on the petitioner on 5th Nov., 1964.

(3.) BEING aggrieved by the order of the ITO dt. 4th Nov., 1968, the petitioner went up in appeal before the Asstt. CIT, Ranchi Range, who by his order dt. 27th Feb., 1971, cancelled the order of the ITO dt. 4th Nov., 1968. The AAC further held that the petitioner's grievance was genuine and the demand raised by the ITO vide his order dt. 29th Sept., 1964 under S. 35, was illegal. Hence, that demand was also vacated.