Back
1964 Supreme(Cal) 251
High Court of Calcutta
H.K. Bose, B.C. Mitra, JJ.
Kalawati Devi Harlalka – Appellant
Versus
Commissioner of Income Tax And OrS. – Respondent
Appeal from Original. Order No. 281 of 1963
Decided On : Dec 08, 1964
R.B. Pal, S. Roy, D. Pal, G. Mitter, S. Mukherjee
The power of the CIT to initiate proceedings under S. 33B of the Indian IT Act, 1922, was preserved by S. 297(2)(a) of the new Act.
Headnote:
INCOME TAX - REPEAL OF ACT - SAVING CLAUSES - POWER OF CIT TO INITIATE PROCEEDINGS UNDER S. 33B OF THE INDIAN IT ACT, 1922 - WHETHER PRESERVED - INCOME-TAX (REMOVAL OF DIFFICULTIES) ORDER, 1962, CL. 4 - WHETHER VALID.
Fact of the Case:
The appellant, who carries on business, inter alia, in money lending, speculation in bullion and shares and investment in shares and other commodities, filed returns of her income for the asst. yrs. 1952-53 to 1960-61. The ITO completed the assessments of income of the appellant in respect of the said years under S. 23(3) of the Indian IT Act, 1922, and issued the assessment orders in respect thereof on the 7th Feb., 1961. On the same date, the ITO also issued notices of demand under S. 29 of the Act of 1922 in respect of the said assessment orders. On the 25th Jan., 1963, the appellant was served with a notice dt. the 24th Jan., 1963, issued by the CIT, purporting to be under S. 33B of the Indian IT Act, 1922, alleging that the orders of assessment passed by the ITO were erroneous in so far as they were prejudicial to the interests of the Revenue. The appellant challenged the validity of the notice.
Finding of the Court:
The Court held that the power of the CIT to initiate proceedings under S. 33B of the Indian IT Act, 1922, was preserved by S. 297(2)(a) of the new Act and the action taken by the respondent-Commissioner against the appellant was properly taken and such action cannot be challenged as being without jurisdiction.
Issues: Whether the power of the CIT to initiate proceedings under S. 33B of the Indian IT Act, 1922, was preserved by S. 297(2)(a) of the new Act?
Ratio Decidendi: The Court held that the expression "proceedings for the assessment" in cl. (a) of sub-S. (2) of S. 297 is wide enough to bring within its ambit the power of revision contained in S. 33B of the Act of 1922. The Court further held that the Income-tax (Removal of Difficulties) Order, 1962, by enacting cl. 4, had not made any provision which is inconsistent with the provisions of the 1961 Act.
Final Decision: Appeal dismissed.
BOSE, C.J.
1. CONSTITUTION.
2. THE appellant alleges that she carries on business, inter alia, in money lending, speculation in bullion and shares and investment in shares and other commodities under the name and style of Shankar and Co., at Ramrajatola, Santragachi, in the District of Howrah.
In January, 1961, the appellant filed returns of her income for the asst. yrS. 1952-53 to 1960- 61. The ITO, D-Ward, Howrah, completed the assessments of income of the appellant in respect of the said years under S. 23(3) of the Indian IT Act, 1922, and issued the assessment orders in respect thereof on the 7th Feb., 1961. The ITO found that the sources of income of the assessee during the accounting years were income from interest from investments and speculation in shares and silver and/or other sources for which no bank account nor any proper books of accounts were kept by the assessee and the income returns had been based on estimate. In the assessment proceedings, the appellant was represented by one Sri Bagchi, an advocate an authorised representative of the appellant-and after hearing this advocate and discussing with him in detail certain particulars, the ITO had completed the assessments and issued the assessment orders. On the very same date-7th Feb., 1961-the ITO, respondent No. 2, also issued notices of demand under S. 29 of the Act of 1922 in respect of the said assessment orders.
3. ON the 25th Jan., 1963, the appellant was served with a notice dt. the 24th Jan., 1963, issued by respondent No. 1, CIT, West Bengal, purporting to be under S. 33B of the Indian IT Act, 1922, alleging that respondent No. 1 had called for and examined the records of the appellant's case in respect of the asst. yrs. 1952-53 to 1960-61 and other connected records and it appeared to him that the orders of assessment passed by the ITO, "D" Ward, Howrah, on the 7th Feb., 1961, were erroneous in so far as they were prejudicial to the interests of the Revenue for the following amongst other reasons :
"Enquiries made have revealed that no business as alleged was carried on from the address declared in the returns. Also the said ITO was not justified in accepting the initial capital, the acquisition and sale of jewellery, the income from business, gift made by you (the appellant), etc., without any enquiry or evidence whatsoever " and the concluding paragraph of the said notice was as follows : "I, therefore, propose to pass such orders thereon as the circumstances of the cases justify after giving you an opportunity of being heard under the powers vested in me under S. 33B of the IT Act, 1922. The cases will be heard at 11 a.m. on 1st Feb., 1963, at my above office when you are requested to produce the necessary evidence in support of your contentions. Objections in writing accompanied by necessary evidence, if any, received on or before the appointment for personal hearing will also be duly considered. Please note that no adjournment of the hearing will be granted. Yours faithfully, Sd/- F. H. Vallibhoy, 24-1-63. CIT, West Bengal."
ON the 31st Jan., 1963, the appellant through her solicitors, Khaitan and Co., wrote a letter to the CIT asking the CIT to recall or cancel the notice dt. 24th Jan., 1963, and to refrain from taking any steps thereunder. It is stated in this letter that the notice served was bad in law and illegal and void ab initio, inter alia, on the following grounds :
"(1) that the assessments in question had been completed before the IT Act, 1961, came into force and there were no proceedings pending relevant to those years at the time of the commencement of the Act of 1961 and, as S. 33B of the old Act had been repealed by S. 297 of the Act of 1961, provisions of S. 33B of the Act of 1922 could not be applied to the orders of assessment in question : (2) that the Income-tax (Removal of Difficulties) Order, 1962, issued under S. 298 of the IT Act, 1961, was ultra vires ; (3) that the notice is absolutely vague, as it does not indica
