Case: Tara Devi Aggarwal Vs. Commissioner Of Income-Tax, West Bengal,Calcutta

circumstances of the case, the Tribunal was right in holding that there were no materials before the Commissioner to justify his finding that the assessment order for 1960-61 was erroneous in so far as it was prejudicial to the interests of the revenue ? Apart from these, a further question which will be referred to as the third question, was also referred, at the instance of the assessee, namely.3. Whether the Commissioner of Income-tax could lawfully initiate proceedings under Section 33-B of the Indian Income-tax Act, 1922 on the 25th June, 1963, notwithstanding the repeal of the aforesaid Act by the Income-tax Act, 1961 with effect from the 1st of April, 1962 ?The High Court declined to answer the first question as in its view it was merely academic. The assessee did not press for an answer on the third question. The only other question, therefore, was the second one which was answered against the assessee on the ground that the Income-tax Officer had no jurisdiction to make the order which itself would have been sufficient for the Commissioner to set aside the assessment. In this view of the matter, it head that there were materials before the Commissioner to justify his finding that the order of assessment for the year 1960-61 was erroneous in so far as it is prejudicial to the interests of revenue. It however did not pronounce any opinion on the question whether the Commissioner could have considered materials of the previous year in arriving at his conclusion in respect of the assessment for the year 1960-61.5. The learned advocate for the assessee contends that under Section 33B the Commissioner had no jurisdiction to cancel the assessment made by the Income-tax Officer inasmuch as it cannot be said that where an assessee has been assessed to tax it was prejudicial to the interests of revenue on the ground that no assessment could have been made in respect of the income of which she made a voluntary return. This contention in our view is unwarranted by the language of S. 33B. The words of the section enable the Commissioner to call for and examine the record of any proceeding under the Act and to pass such orders as he deems necessary as the circumstances of the case justify when he considers the order passed was erroneous in so far as it is prejudicial to the interests of the revenue. It is not, as submitted by the learned advocate, prejudicial to the interests of the revenue only if it is found that the assessment for the year was disclosed (sic) on the basis that an income had been earned which is assessable. Even where an income has not been earned and is not assessable, merely because the assessee wants it to be assessed in his or her hands in order to enable someone else who would have been assessed to a larger amount an assessment so made can certainly be erroneous and prejudicial to the interests of the revenue. It so-and we think it is so-the Commissioner under S. 33B has ample jurisdiction to cancel the assessment and may initiate proceedings for assessment under the provisions of the Act against some other assessee who according to the income-tax authorities is liable for the income thereof Rampyari Devi Saraogi v. Commr. of Income-tax, 87 ITR 84 (Cal) lends support to this view. In that case, this Court in similar circumstances held that the Commissioner had jurisdiction under S. 33B of the Act. It appears the Commissioner of Income-tax West Bengal had on enquiries made by the department stated in the notice to the assessee that he neither resided for carried on any business declared in the returns and had found that the Income-tax Officer was not justified in accepting the initial capital, the gift received and sale of jewellery and the income from business without any enquiry or evidence whatsoever. It appeared in that case, as in this case, the assessee had given a fictitious address in order to invest the jurisdiction on a particular Income-tax Officer to make the assessment. While agreeing with the High Court that all this material was supporting material and did not constitute the basic grounds on which the order under S. 33B were passed by the Commissioner, this Court held that there was ample material to show that the Income-tax Officer made the assessment in undue hurry; that the assessee was a new assessee and filed voluntary returns in respect of a number of years i.e. from assessment years 1952-53 to 1960-61. The other circumstances also were similar in nature to those in this case.6. The learned advocate further referred to the case of Commr. of Income-tax v. Rao Thakur Narayan Singh, 56 ITR 234 = (AIR 1965 SC 1421 ) in support of his submission that past assessments against the assessee were final and cannot be relied upon for the purpose of exercising jurisdiction under S. 33B. A reference to the case cited by him however would show that no steps had been taken under S. 35 to rectify the mistake in the order of the Appellate Tribunal nor was any reference to the High Court sought against that order but nonetheless the Income-tax Officer initiated, fresh assessment proceedings under section 34 with respect to interest income and made a fresh assessment to include that income. In these circumstances it was held that where the order of the Appellate Tribunal became final the Income-tax Officer could not initiate re-assessment proceedings even in respect of interest income which was binding on him and he could not therefore re-open the assessment to include that income. "If that were not the legal position", this Court observed, it "would be placing an unrestricted power of review in the hands of the Income-tax Officer to go behind, the findings given by a hierarchy of Tribunals and even those of the High Court and Supreme Court with its changing moods." This case therefore is of little assistance. I

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]High Court declined to answer the first question as in its view it was merely academic. The assessee did not press for an answer on the third question. The only other question, therefore, was the second one which was answered against the assessee on the ground that the Income-tax Officer had no jurisdiction to make the order which itself would have been sufficient for the Commissioner to set aside the assessment. In this view of the matter, it head that there were materials before the Commissioner to justify his finding that the order of assessment for the year 1960-61 was erroneous in so far as it is prejudicial to the interests of revenue. It however did not pronounce any opinion on the question whether the Commissioner could have considered materials of the previous year in arriving at his conclusion in respect of the assessment for the year 1960-61.The learned advocate for the assessee contends that under Section 33B the Commissioner had no jurisdiction to cancel the assessment made by the Income-tax Officer inasmuch as it cannot be said that where an assessee has been assessed to tax it was prejudicial to the interests of revenue on the ground that no assessment could have been made in respect of the income of which she made a voluntary return.This contention in our view is unwarranted by the language of S. 33B. The words of the section enable the Commissioner to call for and examine the record of any proceeding under the Act and to pass such orders as he deems necessary as the circumstances of the case justify when he considers the order passed was erroneous in so far as it is prejudicial to the interests of the revenue. It is not, as submitted by the learned advocate, prejudicial to the interests of the revenue only if it is found that the assessment for the year was disclosed (sic) on the basis that an income had been earned which is assessable. Even where an income has not been earned and is not assessable, merely because the assessee wants it to be assessed in his or her hands in order to enable someone else who would have been assessed to a larger amount an assessment so made can certainly be erroneous and prejudicial to the interests of the revenue. It so-and we think it is so-the Commissioner under S. 33B has ample jurisdiction to cancel the assessment and may initiate proceedings for assessment under the provisions of the Act against some other assessee who according to the income-tax authorities is liable for the income thereof Rampyari Devi Saraogi v. Commr. of Income-tax, 87 ITR 84 (Cal) lends support to this view. In that case, this Court in similar circumstances held that the Commissioner had jurisdiction under S. 33B of the Act. It appears the Commissioner of Income-tax West Bengal had on enquiries made by the department stated in the notice to the assessee that he neither resided for carried on any business declared in the returns and had found that the Income-tax Officer was not justified in accepting the initial capital, the gift received and sale of jewellery and the income from business without any enquiry or evidence whatsoever. It appeared in that case, as in this case, the assessee had given a fictitious address in order to invest the jurisdiction on a particular Income-tax Officer to make the assessment. While agreeing with the High Court that all this material was supporting material and did not constitute the basic grounds on which the order under S. 33B were passed by the Commissioner, this Court held that there was ample material to show that the Income-tax Officer made the assessment in undue hurry; that the assessee was a new assessee and filed voluntary returns in respect of a number of years i.e. from assessment years 1952-53 to 1960-61. The other circumstances also were similar in nature to those in this case.6.The learned advocate further referred to the case of Commr. of Income-tax v. Rao Thakur Narayan Singh, 56 ITR 234   = (AIR 1965 SC 1421  ) in support of his submission that past assessments against the assessee were final and cannot be relied upon for the purpose of exercising jurisdiction under S. 33B. A reference to the case cited by him however would show that no steps had been taken under S. 35 to rectify the mistake in the order of the Appellate Tribunal nor was any reference to the High Court sought against that order but nonetheless the Income-tax Officer initiated, fresh assessment proceedings under section 34 with respect to interest income and made a fresh assessment to include that income.In these circumstances it was held that where the order of the Appellate Tribunal became final the Income-tax Officer could not initiate re-assessment proceedings even in respect of interest income which was binding on him and he could not therefore re-open the assessment to include that income. "If that were not the legal position", this Court observed, it "would be placing an unrestricted power of review in the hands of the Income-tax Officer to go behind, the findings given by a hierarchy of Tribunals and even those of the High Court and Supreme Court with its changing moods." This case therefore is of little assistance.