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HIGH COURT OF CALCUTTA
Sinha
JAGMOHAN GOENKA - Appellant
Versus
K. D. BANERJEE - Respondent
Matter 98 Of 1952
Decided On : FEBRUARY 17, 1954
INCOME TAX - Re-assessment - Section 34, Income-tax Act - Scope and interpretation - Whether the power to re-assess under Section 34 can be exercised more than once - Held, yes.
Fact of the Case:
The petitioner, Jagmohan Goenka, was assessed to income tax for the years 1942-43 and 1946-47. In 1948, a notice was issued to the petitioner under Section 22(2) read with Section 34 of the Income-tax Act for re-opening the assessment for the year 1946-47. The reason given was that the petitioner had not disclosed the fact that he had received a sum of Rs. 12,246/10/0 as bonus from the Government of India. A similar notice was issued for the assessment year 1942-43. The petitioner complied with the notices under protest. By an order of assessment dated 14-3-1952, the petitioner was assessed upon a total income of Rs. 20,45,414/- for the assessment year 1946-47. The petitioner challenged the order of assessment on the ground that the notice under Section 34 was invalid and that the books of account did not warrant the order of re-assessment.
Finding of the Court:
The court held that the power to re-assess under Section 34 of the Income-tax Act can be exercised more than once. The court observed that the section imposes a time limit within which there is no restriction imposed as to the number of proceedings that can be taken to re-open the assessment whether by way of assessment or re-assessment, computation or re-computation.
Issues: 1. Whether the notice under Section 34 was invalid? 2. Whether the books of account warranted the order of re-assessment? 3. Whether the power to re-assess under Section 34 can be exercised more than once?
Ratio Decidendi: The court interpreted Section 34 of the Income-tax Act and held that the power to re-assess under the section can be exercised more than once. The court observed that the section imposes a time limit within which there is no restriction imposed as to the number of proceedings that can be taken to re-open the assessment whether by way of assessment or re-assessment, computation or re-computation.
Final Decision: The court dismissed the petition and held that the order of assessment was valid.
( 2 ) IN May/june 1948, notice under Section 22 (2) read with Section 34, Income-tax Act was served upon the assessee, for re-opening the assessment for the year 1946-47. The reason given for this was that the assessee had not disclosed the fact that he had received a sum of Rs. 12,246/10/0 as bonus from the Government of India. The re-assessment was made on 29-6-1948.
( 3 ) ON 26-3-1951, notice was issued upon the petitioner under Section 34, I. T. Act as amended in 1948, for re-opening the assessment for 1942-43. This was served at the colliery upon Kishorilal Goenka, brother of the petitioner. The ground was that the petitioner had been under-assessed for the year 1942-43. A similar notice was issued and served similarly, in respect of the assessment year 1946-47. The ground was also under assessment in this case. We are concerned here with the proceedings initiated by this latter notice. The petitioner complied with the notices under protest (because he disputed the propriety of the service of notice upon his brother ).
( 4 ) BY an order of assessment dated 14-3-1952 (Exhibit E to the petition) the petitioner has been assessed upon a total income of Rs. 20,45,414/- for the assessment year 1946-47. Originally he was assessed in that year (1946-47) upon a total income of Rs. 55,414/ -. To this has been added a sum of Rs. 19,94,000/ -. It is this order which is attacked in this application.
( 5 ) IT is alleged that in 1938, the petitioner brought in a sum of Rs. 20,00,000/- into the business. It is impossible to say upon the materials before me as to what the source was. It appears also that during the proceedings under Section 34, books were produced for the year 2001-2002 Dewali as also for 2002-2003 Dewali. In the latter books (corresponding to 1947-48) there is an entry of the sum of Rs. 19,93,999/12/- in the name of Jagmohan Goenka (the petitioner), being the balance to his credit brought down from the previous year, but it is stated that, in the books for the previous year there is no such amount appearing in his name. The assessee was called upon to explain this item and explanation given was that the amount represented acquisitions for many years of moneys received from ancestors. The income tax officer was not satisfied that this was a true explanation or borne out by the books disclosed. He has therefore treated it as undisclosed income for the year 1946-47.
( 6 ) THE reason given for re-opening the assessment for 1946-47 is that it was discovered that the assessee had made huge investments in a certain limited company and upon a consideration of the books the income-tax officer was satisfied that the amount of Rs. 19,93,999/12/- was income received but undisclosed, out of which the investments were made.
( 7 ) ON behalf of the petitioner it is alleged that the sum of Rs. 19,93,999/12/- is the adjusted balance of Rs. 20,00,000/- which was duly disclosed in previous proceedings as having been brought in, in the year 1938. In the affidavit in opposition affirmed by Kali Das Bannerjee, the first respondent, it is alleged that no link has been established between the two sums.
( 8 ) AS against the finding of the income-tax officer dated 14-3-1952, the petitioner has preferred an appeal which is pending. The income-tax officer has proceeded, upon Section 46 (2) of the Income-tax Act and certificate proceedings have been taken. The petitioner applied for stay of the proceedings pending the appeal but the stay has been refused. This rule
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