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Gangadhar Baijnath Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberIncome-tax Case Nos. 800, 810, 812, 813 and 816 of 1971
Judge
Reported in[1976]102ITR662(All)
ActsIncome Tax Act, 1922 - Sections 22(2), 22(4), 27, 34(1A) and 66(2)
AppellantGangadhar Baijnath
RespondentCommissioner of Income-tax
Appellant AdvocateM.P. Mehrotra, Adv.
Respondent AdvocateR.R. Misra, Adv.
Excerpt:
.....applications relate to six assessment years 1942-43 to 1947-48. the assessee failed to file a return of income required under section 34(1 a)/22(2) of the act and to produce books of account and documents required under section 22(4) of the act. as a consequence, the income-tax officer made a best judgment assessment by estimate. the assessee thereafter went up in appeal before the appellate assistant commissioner of income-tax, which was dismissed on the ground that the income-tax officer was justified in making the best judgment assessment for the two defaults mentioned by the income-tax officer. the appellate assistant commissioner accordingly held that the assessee had failed to comply with the notice under section 22(4) of the act as also committed default without sufficient..........applications relate to six assessment years 1942-43 to 1947-48. the assessee failed to file a return of income required under section 34(1 a)/22(2) of the act and to produce books of account and documents required under section 22(4) of the act. as a consequence, the income-tax officer made a best judgment assessment by estimate. being aggrieved by the ex parte orders, the assessee filed applications under section 27 of the indian income-tax act, 1922, for all the six years in question. an affidavit of one sri krishujanuj sahai edoliya was filed on behalf of the assessee. it was averred that the assessee was prevented by sufficient cause from making the return under section 34(la)/22(2) of the act and also that the assessee did not comply with the terms of the notice under section.....
Judgment:

C.S.P. Singh, J.

1. These reference applications under Section 66(2) of the Indian Income-tax Act, 1922, raise identical questions of law and are as such being disposed of by a common order.

2. The reference applications relate to six assessment years 1942-43 to 1947-48. The assessee failed to file a return of income required under Section 34(1 A)/22(2) of the Act and to produce books of account and documents required under Section 22(4) of the Act. As a consequence, the Income-tax Officer made a best judgment assessment by estimate. Being aggrieved by the ex parte orders, the assessee filed applications under Section 27 of the Indian Income-tax Act, 1922, for all the six years in question. An affidavit of one Sri Krishujanuj Sahai Edoliya was filed on behalf of the assessee. It was averred that the assessee was prevented by sufficient cause from making the return under Section 34(lA)/22(2) of the Act and also that the assessee did not comply with the terms of the notice under Section 22(4) inasmuchas the assessee in its letter dated 16th August, 1960, and 29th August, 1960, asked the Income-tax Officer to stay proceedings in view of the fact that proceedings in some cases of the Bagla group had been stayed by the Allahabad High Court. It was also averred that the assessee did not comply with the notice under Section 22(4) of the Act inasmuch as the Income-tax Officer had told the assessee's employee, Mr. Edoliya, that the Income-tax Officer was going to Delhi to consult higher authorities and that the Income-tax Officer would let the assessee know the position after his return from Delhi. The Income-tax Officer held that the assessee was not prevented by sufficient cause either from making a return under Section 34(1 A)/22(2) of the Act or from complying with the directions contained in the notice under Section 22(2) of the Act. In this view of the matter, he rejected the application under Section 27 of the Act. The assessee thereafter went up in appeal before the Appellate Assistant Commissioner of Income-tax, which was dismissed on the ground that the Income-tax Officer was justified in making the best judgment assessment for the two defaults mentioned by the Income-tax Officer. The assessee thereafter filed appeals before the Tribunal.

3. The Tribunal permitted the assessee to file two affidavits in support of its contention that it was prevented by sufficient cause in not filing the return or complying with the notice under Section 22(4) of the Act. These affidavits were allowed to be brought on the record and the appeals were remanded, and the matter sent back to the Appellate Assistant Commissioner for a decision of the appeal afresh after enquiring into the allegations made by the assessee. The Appellate Assistant Commissioner summoned Mr. K.S. Edoliya and after cross-examining him and considering his testimony came to the conclusion that the averments made by him that the Income-tax Officer had told him that he would be going to Delhi for consultation with the Inspecting Assistant Commissioner and that he would inform Mr. K.S. Edoliya about the position after his return from Delhi were incorrect. The Appellate Assistant Commissioner accordingly held that the assessee had failed to comply with the notice under Section 22(4) of the Act as also committed default without sufficient cause in not filing a return as required under Section 34(1A)/22(2) of the Act. In this view of the matter, the appeals were dismissed. The matter thereafter was taken up by way of appeal to the Tribunal.

4. It was urged before the Tribunal that inasmuch as the earlier Bench of the Tribunal while remanding the case had set aside the orders of the Appellate Assistant Commissioner, it should be deemed that it had waived the default under Section 34(1A)/22(2) of the Act and, inasmuch as that order had become final, it was binding upon the Bench hearing the matter against the order of the Appellate Assistant Commissioner passed onremand. The Accountant Member held that the earlier order of the Tribunal was in reality in the nature of an interim order as the Tribunal did not go into the merits of the controversy relating to the first default under Section 34(1A) read with Section 22(2) of the Act, and no final order on merits as to whether there was any sufficient cause for not filing the return was passed in the appeal. The Judicial Member, however, held that the earlier order of the Tribunal was a final order and was binding on the parties as also on the subsequent Bench of the Tribunal. He, however, agreed with the Accountant Member that the previous Bench of the Tribunal had not waived the default committed by the assessee in not filing the return as required under Section 34(1A)/22(2) of the Act. He held further, disagreeing with the Accountant Member, that there was no default on the part of the assessee in complying with the notice under Section 22(4) of the Act inasmuch as it could not be held with certainty that the Income-tax Officer was at Kanpur on August 31, 1960. However, in view of the decision of the hon'ble Supreme Court in the case of Commissioner of Income-tax v. Segu Buchiah Setty, he held that inasmuch as the assessee had not been able to explain each of the two defaults committed under Section 22(4) of the Act, the assessments in question were justified. The Accountant Member held that the assessee had committed default on both counts, viz., under Section 34(1A) read with Section 22(2) of the Act and also under Section 22(4) of the Act. Inasmuch as the Bench had differed on the question as to whether the assessee had committed default under Section 22(4) of the Act, the question arises as to whether the matter should be referred to the President of the Tribunal. The Bench, however, declined to refer the case inasmuch as it thought that it was not necessary to do so on account of the decision of the hon'ble Supreme Court in Commissioner of Income-tax v. Segu Buchiah Setty. The questions raised in the present application related to the orders rejecting appeals under Section 27 of the Act. Both the Members of the Tribunal have found that the assessee had made a default in not filing return as required under Section 34(1A)/22(2) of the Act, and no sufficient cause had been shown by the assessee to explain this default. This being so, even if the assessee had not committed any default under Section 22(4) of the Act, the ex parte assessment cannot be touched in view of the decision of the Supreme Court in the case of Commissioner of Income-tax v. Segu Buchiah Setty : [1970]77ITR539(SC) .

5. Questions Nos. 1, 2 and 5 seek to challenge the order of the Tribunal in respect of the default committed under Section 34(1A)/22(2) of the Act. Inasmuch as the Tribunal had found that the assessee had not established sufficient cause for making default under Section 34(1 A)/22(2) of the Act, no question of law arises. So far as questions Nos. 3 and 4 are concerned, they relate to the defaultunder Section 22(4) of the Act. Both these questions arc academic in view of the decision in Commissioner of Income-tax v. Segu Buchiah Setty. Questions Nos. 6, 7 and 8 relate to the interpretation/of the order of the Tribunal dated August 4, 1967, and, as has been noticed, both the Members of the Tribunal have rightly taken the view that, by this order, the Tribunal did not hold that the assessee had shown sufficient cause for not filing his returns. No question of law arises as is posed by these three questions. Question No. 9 is essentially one of fact and does not raise any question of law. Question No. 10 is also academic in view of the fact that both Members of the Tribunal agreed that the assessee had committed default without sufficient cause by not filing his return, and as such it was not necessary for the Members to have referred the case to the President. So far as question No. 11 is concerned, it is vague and docs not set out the ground on which the order of the Tribunal can be said to be otherwise bad in law. The applications are accordingly dismissed. There shall be one set of costs which is assessed at Rs. 100.

Income-tax Case No. 816 of 1971.

6. For orders in this case, see our judgment of date in the connected Income Tax Case No. 800 of 1971, dated April 9, 1973.


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