JUDGMENT - 1. In this petition is challenged a notice under Section 34 of the Indian Income-tax Act, Act XI of 1922, issued against the petitioner by the In- come-tax Officer, Special Investigation Circle, Nag-pur. The second respondent is the Appellate Assistant Commissioner of Income-tax, who passed an appellate order in consequence of which the impugned notice under Section 34 of the Indian Income-tax Act came to be issued against the petitioner.

2. The circumstances under which the notice came to be issued against the petitioner may be briefly stated as follows. The petitioners father, the late Bhawanji Naranji, was carrying on a mining business, principally at Nagpur. He passed away on 25th August 1956, and by a will bequieathed his movable and immovable properties to the petitioner. He originally hailed from Cutch but migrated to Nagpur for business and became a lessee from Government of manganese mines in and round about Nagpur district.

3. For the assessment year 1947-48 he had made a return of his income and was duly assessed to income-tax as per Exhibit I. By that order passed on 7-12-1948 he was assessed to a total income of Rs. 39,750/-. According to the petitioner, at the time that the assessment order was passed, he had produced all the evidence in his possession, including his account-books and the Income-tax Officer was satisfied as to the genuineness of the transactions therein disclosed. It is unnecessary for the purpose of deciding this petition to refer to the several transactions which have been set forth by the petitioner in paragraphs 3 and 4 of his petition, though no doubt, they were referred to extensively in the arguments before us.

4. After the first assessment was made on 7-12-1948, the assessee taking advantage of the voluntary disclosure scheme then announced by the Government of India, made a statement of disclosure in a petition filed by him on 22-10-1951. That disclosure was made voluntarily, and on the basis of that disclosure a revised assessment was made on 1-3-1952. By that revised assessment, the petitioners father was assessed to a total income of Rs. 64,584/-. After that order was passed, a fresh notice was issued against the petitioners father and the Income-tax authorities purporting to act under Section 34 of the Income-tax Act as it then stood read with Section 23(3) assessed him afresh for the same assessment year 1946-47. That assessment order is at Exhibit 6, and according to that assessment order the total income to which the petitioners father was assessed was Rs. 1,37,034/-.

5. When this assessment order was passed the Income-tax Officer found that certain income had been concealed and therefore ordered a notice to issue under Section 28(3) of the Income-tax Act. Meanwhile, the petitioners father appealed to the Appellate Assistant Commissioner of Income-tax and the Appellate Assistant Commissioner upon certain findings to which we shall presently refer, reduced the total income by Rs. 58,400/-. At the same time he made observations in paragraphs 11 and 12 of his order to ,the effect that certain transactions in gold which the assessee had entered into had not been disclosed and required his explanation. The Appellate Assistant Commissioner, therefore, ordered that the assessee should be served with a notice in respect of that income which was from some undisclosed source.

6. It was pursuant to the observations made by the Appellate Assistant Commissioner of Income-tax in that order, dated 29-9-1961, that the notice impugned in the present petition came to be served. As we have already said, by that time, the petitioners father having- passed away, the notice name to be served upon the petitioner. The order of the Appellate Assistant Commissioner of Income-tax is at Exhibit 8 and the notice issued pursuant to the direction therein is at Exhibit 9. That notice was issued on 5th January 1962 and as is not unusual with the notices issued by this Department, specifies nothing more than

Click Here to Read the rest of this document