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Sadhan Kumar Roy Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberIncome-tax Reference Nos. 257 to 260 of 1968
Judge
Reported in[1977]107ITR954(Cal)
ActsIncome Tax Act, 1922 - Sections 5(7C) and 33B
AppellantSadhan Kumar Roy
RespondentCommissioner of Income-tax
Appellant AdvocateS. Bhattacharjee and ;A.N. Ray, Advs.
Respondent AdvocateB.L. Pal and ;Ajit Sen Gupta, Advs.
Cases ReferredRam Saran Das Kapur v. Commissioner of Income
Excerpt:
- .....the case, the commissioner of income-tax was right in passing the order under section 33b of the indian income-tax act, 1922, without complying with the provisions of section 5(7c) of the indian income-tax act, 1922 ?'2. this is a case of reopening of certain orders passed by the commissioner of income-tax under section 33b of the indian income-tax act, 1922. in view of the fact that only one contention was urged before us, we need not set out the other facts leading up to the making of the impugned order in detail in this reference. the material facts so far as this question is concerned appear to be that the impugned assessment orders were passed on the 2nd september, 1963. there was a notice dated the 8th august, 1963, issued by the commissioner of income-tax under section 33b of.....
Judgment:

Sabyasachi Mukharji, J.

1. In this reference under Section 256(2) of the Income-tax Act, 1961, the following question has been referred to this court;

'Whether, on the facts and in the circumstances of the case, the Commissioner of Income-tax was right in passing the order under Section 33B of the Indian Income-tax Act, 1922, without complying with the provisions of Section 5(7C) of the Indian Income-tax Act, 1922 ?'

2. This is a case of reopening of certain orders passed by the Commissioner of Income-tax under Section 33B of the Indian Income-tax Act, 1922. In view of the fact that only one contention was urged before us, we need not set out the other facts leading up to the making of the impugned order in detail in this reference. The material facts so far as this question is concerned appear to be that the impugned assessment orders were passed on the 2nd September, 1963. There was a notice dated the 8th August, 1963, issued by the Commissioner of Income-tax under Section 33B of the Indian Income-tax Act, 1922, in respect of the assessment years 1958-59 to 1961-62. The said notice was issued by one Shri F. H. Vallibhoy who was then the Commissioner having jurisdiction over the assessee. On the 29th August, 1963, the assessee wrote a letter addressed to the Commissioner of Income-tax in response to the said notice in which he raised various contentions disputing the jurisdiction and the rights of the Commissioner to reopen the assessment under Section 33B of the Indian Income-tax Act, 1922. Towards the end of the said letter it was stated by the assessee as follows:

'In conclusion your petitioner requests the learned Commissioner to furnish your petitioner a gist or substance of facts which have been found on enquiry as alleged in the notice under reply so that the same could be rebutted. Further, a short adjournment for only three days is prayed for for furnishing evidence which would conclusively prove that the suspicions on which the learned Commissioner is purporting to act are controvertible. Moreover, your petitioner is a young man just started in life and submits this petition with a fervent prayer that the learned Commissioner will be graciously pleased to drop this harassing proceeding.'

3. It appears that the jurisdiction of the Commissioner was changed and one Shri M. B. Palekar assumed charge as Commissioner on the 2nd September, 1963. The order under Section 33B of the Indian Income-tax Act, 1922, was passed on the 2nd September, 1963. The assessee raised various contentions before the Tribunal about the legality and validity of the impugned order and one of the contentions raised before the Tribunal was that Shri Palekar should have himself called for the records, examined the position himself and given a fresh notice if necessary. This contention appears in paragraph 10 at page 42 of the order of the Tribunal. The Tribunal was unable to accept the said contention. It was, further, contended that in view of the provisions of Section 5(7C) of the Indian Income-tax Act, 1922, as it stood at the relevant time, there had been no compliance With the said provisions and requirements enjoined by the said section and as such the impugned order was not legal. Section 5(7C) is as follows;

'(7C), Whenever in respect of any proceeding under this Act an income-tax authority ceases to exercise jurisdiction and is succeeded by another who has and exercises jurisdiction, the income-tax authority so succeeding may continue the proceeding from the stage at which the proceeding was left by his predecessor :

Provided that the assessee concerned may demand that before the proceeding is so continued the previous proceeding or any part thereof be reopened or that before any order for assessment is passed against him he be re-heard:

Provided further that in computing the period of limitation for the purposes of Sub-section (3) of Section 34, the time taken in reopening the whole or any part of the proceeding or in giving an opportunity to the assessee to be reheard under the preceding proviso shall be excluded.' The Tribunal, as mentioned hereinbefore, was unable to accept this contention for the reasons mentioned in, its order. In the aforesaid circumstances the question mentioned hereinbefore has been referred to this court under Section 256(2) of the Income-tax Act, 1961, as directed by this court.

4. Counsel for the assessee contended before us that in this case there was non-compliance with Section 5(7C) of the Indian Income-tax Act, 1922, inasmuch as the assessee was not given any fresh hearing. It has to be borne in mind that before the Tribunal the contention that was urged was not that the assessee was not given any fresh hearing by Shri Palekar but the contention was that Shri Palekar being the succeeding officer should have satisfied himself about the necessity for the issuance of the notices and proceeded with the matter afresh. Therefore, strictly speaking, the Tribunal had no opportunity to deal with this contention. This contention would involve examination of certain facts as to the consequence of non-hearing which were not raised before the Tribunal and as such it is not proper for us to entertain this objection. Even, however, assuming that the assessee is allowed to agitate this question as another aspect of the question, we are unable to accept the contention urged on behalf of the assessee. As we mentioned before, the impugned order was passed on the 2nd September, 1963 ; the assessment order in respect of which the order under Section 33B had been passed was passed on the 4th September, 1961. Therefore, under the operation of the relevant section as it stood in the 1922 Act the order under Section 33B would have become barred after 4th September, 1963. In the premises, it was imperative that the order to be valid under Section 33B it should have been passed by the 4th September, 1961. In that context we have to see the requirements of Section 5(7C) of the Indian Income-tax Act, 1922. The second proviso of the said section provides that in computing the period of limitation for the purpose of Sub-section (3) of Section 34, the time taken for reopening would be extended if it became necessary to give fresh notice or if fresh hearing became necessary. But the proviso to the sub-section does not make any kind of extension in respect of the proceedings under Section 33B of the Indian Income-tax Act, 1922. Under Section 33B of the Indian Income-tax Act, 1922, as mentioned hereinbefore, it was obligatory to have passed the impugned order within two years from the date of the assessment. The second aspect that has to be borne in mind is that the proviso gives a right to the assessee to demand that before the proceeding is so continued in respect of any pending proceeding or any part thereof should be reopened and be continued from the stage of the previous proceeding and he should be reheard. The question, therefore, is that, firstly, the section stipulates 'rehearing', i.e., a hearing given by the succeeding officer in respect of the matter which has already been heard by the previous officer. In this case it appears that the assessee wanted an extension or adjournment for three days for 'furnishing evidence' which would conclusively prove that the suspicion on which the Commissioner was purporting to act was incorrect. Therefore, the assessee was not asking for any hearing personally before the officer on the 29th August, 1963, when he made the application or replied to the show-cause notice for an opportunity to adduce additional evidence. It is not the case here that he had additional evidence on the 4th September, 1963. As the Tribunal rightly pointed out that it was to prolong or to delay the passing of the impugned order so that the making of the order could be frustrated in view of the requirements of the section that the assessee wanted time. Counsel for the assessee submitted that as he did not know that Shri Palekar had succeeded Shri Vallibhoy, there was no opportunity for him to ask for any hearing. He did not take any care to find out on the 2nd September, 1963, what was the true position. The view we have taken in this case is supported by the decision of this court in the case of Manabendra Nath Roy v. Commissioner of Income-tax : [1977]107ITR959(Cal) and the relevant paragraph dealing with this contention appears at page 962. Counsel for the assessee also drew our attention to the decision of the Punjab and Haryana High Court in the case of Ram Saran Das Kapur v. Commissioner of Income-tax , where, in respect of penalty proceeding under Section 5(7C) of the Indian Income-tax Act, 1922, it was held by the Division Bench of the Punjab High Court that a fresh hearing by the succeeding officer was necessary. The facts of that case were different. Firstly, it was a case of penalty where there was a failure on the part of the assessee to adduce certain evidence which formed an integral part for levying penalty. Consequently, the assessee had submitted written objection asking for personal hearing before the impugned order was passed. In the instant case no such prayer had been made. In the aforesaid view of the matter we are of the opinion that counsel cannot rely on the observations of the said decision in support of his contention.

5. In the premises, we have come to the conclusion that the Tribunal came to the correct decision in this matter. In the aforesaid circumstances, the question referred to this court must, therefore, be answered in the affirmative and by saying that in the facts and circumstances of the case there was no question of non-compliance with Section 5(7C) of the Indian Income-tax Act, 1922. The question is answered in favour of the revenue. Each party will pay and bear it own costs.

Janah, J.

I agree.


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