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Smt. Santosh Debi Baid Vs. Income-tax Officer, Central and anr. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberMatter No. 101 of 1965
Judge
Reported in[1971]81ITR552(Cal)
ActsIncome Tax Act, 1961 - Sections 147(1) and 148; ;Income Tax Act, 1922 - Section 33B
AppellantSmt. Santosh Debi Baid
Respondentincome-tax Officer, Central and anr.
Appellant AdvocateS.K. Banerjee, Adv.
Respondent AdvocateDipankar Gupta, Adv.
Excerpt:
- .....inter alia, by reason of the omission and failure on the part of the petitioner to make a return of income for the assessment years to the income-tax officer having proper jurisdiction, '12. the materials annexed to the second affidavit of sri ajit sinha, in my view, make it abundantly clear that the sole ground on which the proceedings were sought to be reopened against the petitioner under section 148 of the act was that the original assessment had been cancelled by the commissioner of income-tax under section 33b of the old act. there is no indication of any omission or failure on the part of the assessee to disclose fully or truly any material necessary for her assessment in the course of the original assessment proceedings. that being so, the contention of mr. banerjee is.....
Judgment:

T.K. Basu, J.

1. For the assessment years 1956-57, 1957-58, 1958-59, 1959-60 and 1960-61, the petitioner, Santosh Debi Baid, furnished voluntary returns of her income before the Income-tax Officer, E-Ward, District 11(1), Calcutta. The assessment for the aforesaid assessment years was completed by the Income-tax Officer in the usual course. It is the case of the petitioner that she had submitted all the relevant accounts and statements of material facts necessary for her assessment for the aforesaid years.

2. By an order dated the 22nd December, 1962, the Commissioner of Income-tax, Calcutta, cancelled the assessment orders for the aforesaid assessment years under Section 33B of the Indian Income-tax Act, 1922 (now repealed). The material portion of the order under Section 33B is in the following terms:

'Taking the facts and circumstances into consideration I cancel the assessments made by the Income-tax Officer, E-Ward, Dist. 11(1), Calcutta, on 28th December, 1960, for the assessment years 1956-57 to 1960-61 and direct that fresh assessments in accordance with law be made by the Income-tax Officer having proper jurisdiction over the case after due enquiry.'

3. On the 27th October, 1964, the Income-tax Officer, Central Circle XIII, Calcutta, issued a notice under Section 148 of the Income-tax Act, 1961, (hereinafter referred to as 'the Act'), proposing to reopen the assessment for the assessment year 1960-61 on the ground that the Income-tax Officer has reason to believe that the petitioner's income chargeable to tax for that assessment year had escaped assessment within the meaning of Section 147 of the Act. Similar notices were issued on the 20th November, 1964, under Section 148 of the Act in respect of the assessment years 1956-57, 1957-58, 1958-59 and 1959-60.

4. The petitioner in this application challenges these notices under Section 148 of the Act for the assessment years 1956-57 to 1960-61.

5. Mr. S. K. Banerjee, appearing on behalf of the petitioner, confined his challenge to the notices in respect of the assessment years 1956-57 to 1959-60. Since the notices in respect of these years were issued on the 20th November, 1964, i.e., beyond the expiry of four years from the end of the relevant assessment years, they could only be justified with reference to Section 147(1)(a) of the Act. This position was not disputed by Mr. Dipankar Gupta, appearing on behalf of the revenue.

6. Mr. Banerjee contended that before a notice to which Section 147(1)(a) of the Act applies could be issued, the Income-tax Officer had to have reasons to believe that, by reason of any omission or failure on the part of the assessee either to make a return under Section 139 of the Act or to disclose fully and truly all the material facts necessary for assessment for the year, income chargeable to tax has escaped assessment for that year. Mr. Banerjee relied on the well-known authorities of the Supreme Court in the Calcutta Discount Company's case, : [1961]41ITR191(SC) as also Narayanappa's case, : [1967]63ITR219(SC) for the proposition that fulfilment of these two conditions precedent was necessary before the Income-tax Officer could assume jurisdiction under Section 147(1)(a) of the Act.

7. It was next contended that there was no omission or failure on the part of the assesses in the present case either to file a return or to make a full or true disclosure of all material facts. The fact that the order of assessment had been cancelled by the Commissioner of Income-tax under Section 33B of the old Act, according to Mr. Baaerjee, did not justify the assumption of jurisdiction under Section 147(1)(a) of the Act.

8. My attention was drawn in this connection to the affidavit of Ajit Sinha, Income-tax Officer, Central Circle XIII, Calcutta, affirmed on 29th May, 1965. In paragraphs 3 and 4 of the affidavit all that is said is that the impugned notices under Section 148 of the Act were validly and properly issued. Apart from this bald statement no other material has been disclosed in respect of the action in issuing the impugned notices. In the circumstances, Mr. Banerjee contended that the challenge of the petitioner goes uncontradicted on the affidavits.

9. The reasons are identical for all the assessment years and are in the following terms :

'I have reason to believe that the assessee's income in the previous years exceeded the minimum taxable limit and which escaped assessment on account of the assessee's failure to disclose it truly and fully. '

10. In the letter, dated the 27th October, 1964, addressed to the Commissioner of Income-tax (Central), Calcutta, praying for sanction to commence proceedings for the aforesaid assessment years, the following paragraphs occur :

'I am submitting herewith proposals under Section 147(1)(a) for reopening the proceedings in the case of Smt. Santosh Debi Baid for the above assessment years.

The assessments for these years were originally completed by the Income-tax Officer, E-Ward, District 1(1), as follows:

1956-57

Rs. 14,767

1957-58

Rs. 8,333

1958-59

Rs. 9,000

1959-60

Rs. 9,125

These assessments were later on cancelled by the Commissioner of Income-tax under Section 33B and for which one of the grounds was that the Income-tax Officer had no jurisdiction to make these assessments. The jurisdiction in this case has since been transferred to me, and, therefore, reopening the proceedings under Section 147(1)(a) has become essential.

Necessary sanction may kindly be accorded, '

11. In paragraph 5 of the affidavit of Sri Sinha, however, the following statement occurs :

'It appeared to me that there was an omission or failure on the part of the petitioner to make a return for the assessment years in question to the Income-tax Officer having jurisdiction over the case. From the materials on record as also from the order of the Commissioner of Income-tax mentioned above I had reasons to believe and I reasonably believed that for the assessment years in question the petitioner had income which would be chargeable to tax. Since no valid return had been filed and since no valid assessment orders had been passed, I had reasons to believe and I bona fide believed that income chargeable to tax had escaped assessment for the assessment years in question being assessment years 1956-57, 1957-58, 1958-59, 1959-60 and 1960-61. I further had reasons to believe and I bona fide believed that such escape had occurred, inter alia, by reason of the omission and failure on the part of the petitioner to make a return of income for the assessment years to the Income-tax Officer having proper jurisdiction, '

12. The materials annexed to the second affidavit of Sri Ajit Sinha, in my view, make it abundantly clear that the sole ground on which the proceedings were sought to be reopened against the petitioner under Section 148 of the Act was that the original assessment had been cancelled by the Commissioner of Income-tax under Section 33B of the old Act. There is no indication of any omission or failure on the part of the assessee to disclose fully or truly any material necessary for her assessment in the course of the original assessment proceedings. That being so, the contention of Mr. Banerjee is correct and is fully borne out by the materials disclosed in the second affidavit of the Income-tax Officer.

13. Mr. Dipankar Gupta sought to contend that there was no valid return in the original assessment proceedings as the returns were filed before an Income-tax Officer who had no jurisdiction over the assessee's case. Mr. Gupta contended that the duty of the assessee to file a returnpostulated a duty to file the same before the proper Income-tax Officer having jurisdiction over the case of the assessee. In the absence of such a return before the proper Income-tax Officer, according to Mr. Gupta, there would be an omission to file a return so as to attract the operation of the first limb of Section 147(1)(a) of the Act

14. It is to be noted, however, that the original returns filed by the assessee in the original proceedings were made on that basis. I fail to see how it could be said that there was no filing of the return in the present case or that the returns filed were a nullity. At the highest it was an irregularity which, on the facts of the case, appear to have been condoned by the assessing Income-tax Officer. This contention of Mr. Gupta, therefore, is rejected.

15. Mr. Dipankar Gupta, with his usual fairness, stated before me that he could not justify the notices on the ground that there has been any omission or failure on the part of the petitioner within the meaning of the second limb of Section 147(1)(a) of the Act.

16. In that view of the matter, it must be held that the conditions precedent for the assumption of jurisdiction not having been fulfilled in the present case, the respondent-Income-tax Officer had no jurisdiction to issue the impugned notices under Section 148 of the Act in respect of the assessment years 1956-57 to 1959-60.

17. I make it clear, however, that no argument was advanced on behalf of the petitioner as to the invalidity of the notice dated 27th October, 1964, in respect of the assessment year 1960-61 which, having been issued before the expiry of four years from the end of the assessment year, could be justified under Section 147(1)(b) of the Act.

18. In the result, this application succeeds and the rule is made absolute to the extent indicated above. There will be a writ in the nature of mandamus directing the respondents to forthwith recall, cancel and withdraw the notices under Section 148 of the Act in respect of the assessment years 1956-57, 1957-58, 1958-59 and 1959-60, all dated the 20th November, 1964, and a writ in the nature of prohibition restraining the respondents from giving effect to the said notices in any manner whatsoever. The respondents would, however, be at liberty to proceed according to law.

19. There will be no order as to costs.


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