K.L. Roy, J. -
(1.) The Petitioner carries on business under the name and style of M/s. Shyamlal Ghosal and he is one of the Directors of Jasodalal Ghosal (Pvt.) Ltd. The Petitioner's year of account is the calendar year. The Petitioner's assessment to income -tax for the years 1955 -56 to 1959 -60 were completed by Sri S. N. Sen, Income -tax Officer 'A' Ward, Companies District IV, Calcutta, more or less simultaneously in September 1959. The Petitioner's wealth -tax assessment for the year 1959 -60, for which the corresponding valuation date was December 31, 1958, was also completed by the aforesaid officer on February 29, 1960. It appears that during the course of the aforesaid assessment proceedings a statement of receipts and expenditure as also of assets and a reconciliation statement on balance as on December 31, 1958, was filed before the Income -tax Officer. In the first statement it was shown that 12 shares of M/s. Jasodalal Ghosal (P.) Ltd. were issued to Sm. Amita Ghosal, the wife of the Petitioner, during the year 1957 while 10 such shares were allotted to her in the year 1958. It was further stated that the source of the money invested by the said Sm. Amita Ghosal in the shares of M/s. Jasodalal Ghosal (P.) Ltd. was cash received as gift from the late Jasodalal Ghosal as also accrued interest on the amount of the said gift and dividends received from the said company and that the said Sm. Amita Ghosal was separately assessed in District II. It is alleged that at the bottom of the said statement an analysis of share held by Shyamlal Ghosal in M/s. Jasodalal Ghosal (P.) Ltd. was given which showed that out of 1,415 such shares held in 1958, 200 were sold to his son Swapan Ghosal in 1958 and a further 200 were sold to Sm. Amita Ghosal in 1957 -58, and that the balance 1015 shares remained with him. The income -tax assessments for the aforesaid four years were duly completed by the said S. N. Sen, while in the wealth -tax assessment for 1959 -60 by the same officer the Petitioner's statement that on December 31, 1958, he only owned 1015 ordinary shares in M/s. Jasodalal Ghosal (P.) Ltd. was accepted and the value of these shares was included in his total wealth. Both the income -tax and the wealth -tax assessment of the Petitioner for the assessment years 1962 -63 were completed by one T. V. Ramkrishna who succeeded Sri S. N. Sen as the Income -tax Officer, A Ward, Companies District IV. The income -tax assessments of Sm. Amita Ghosal upto the assessment year 1961 -62 were duly completed by the Income -tax Officer, J Ward, District II, Calcutta. For the assessment year 1962 -63 the Income -tax Officer assessing Sm. Amita Ghosal was of the opinion that she did not have the capacity to possess the sum of Rs. 20,000 with which to purchase the said 200 shares in M/s. Jasodalal Ghosal (P.). Ltd. from the Petitioner in 1957. Two notices under Sec. 14 of the Income -tax Act, 1961, dated March 18, 1967, and March 8, 1967, were issued by Sri A. C. Ghosh, the Income -tax Officer, K Ward, Companies District IV, Calcutta, for the reassessment of the Petitioner's income for the assessment years 1958 -59 and 1962 -63 respectively and were served on the Petitioner, as the said Income -tax Officer had reason to believe that the Petitioner's income chargeable to tax for the aforesaid two years had escaped assessment on June 5, 1967, notices under Sec. 143(2) of the said Act in respect of the said two years were issued and served on the Petitioner. The Petitioner had, in the meantime, filed his returns for the assessment years 1958 -59 and 1962 -63 in response to the aforesaid notices under Sec. 148. Subsequently, by notices dated June 23, 1967, the Petitioner was required to produce before the Income -tax Officer the books of account, Bank pass book etc. in support of his returns for the aforesaid two years under Ss. 142(1) and 143(2) of the said Act. Thereafter, various objections were raised by the Petitioner against the proposed re -assessment proceedings by his letters dated July 4, 1967, and July 11, 1967. The Respondent Income -tax Officer by his letter dated September 21, 1967, required the Petitioner to furnish the particulars in connection with the 200 shares in M/s. Jasodalal Ghosal (P.) Ltd. transferred by the Petitioner to his wife on May 30, 1956, in connection with the assessment year 1958 -59. By his letter dated September 27, 1967, the Petitioner informed the Respondent Income -tax Officer that the aforesaid 200 shares were allotted to him by the said company on May 28, 1956, in consideration of the price for taking over the partnership concern of M/s. Jasodalal Ghosal and, as such, no cash payment was involved in the issue of these shares. The company also informed the Respondent Income -tax Officer by its letter dated October 30, 1967, that no cash transaction was involved in the allotment to the 200 shares allotted to Sm. Amita Ghosal. By his letter dated December 16, 1967, the Income -tax Officer informed the Petitioner of the reasons for his belief that the Petitioner's income had escaped assessment and for re -opening the assessment for the year 1962 63, namely, that certain cash deposits in the Petitioner's wife's account with the Bank of Baroda Ltd. which could not be explained by the Petitioner's wife in connection with her own income -tax assessment and further that during the accounting year the Petitioner's wife had purchased 141 shares of M/s. Jasodalal Ghosal (P.) Ltd. for Rs. 14,100 whose source, could not be fully explained by her. The letter further required the Petitioner to furnish details of the dividends received by his wife in relation to the shares purported to have been transferred to her by the Petitioner as well as those purchased by her subsequently. On December 23, 1967, two notices under Sec. 274/271 of the Act in respect of the aforesaid two assessment years were issued by the Respondent Income tax Officer requiring the Petitioner to show cause why penalty should not be imposed and proposing to refer the Petitioner's case to the inspecting Assistant Commissioner. This Rule was obtained from this Court on January 16, 1968, when an interim injunction was also granted.
(2.) As the petition had been originally affirmed by Benulal Ghosal, the brother of the Petitioner, a preliminary objection as to the maintainability of the application was raised and I directed the Petitioner to re -verify the petition and the petition was, accordingly,, re -verified by the Petitioner on November 27, 1969. Similarly, as the affidavit -in -opposition had been affirmed by Arun Chandra Ghosh, the present incumbent to the post of Income -tax Officer, IK Ward, Companies District IV, who had made the statements in the said affidavit on the basis of information received from the assessment records. I directed Sri Sailendra Nath Sen, the Income -tax Officer who had made the original assessments, to file an affidavit as in view of certain decisions of this Court, such an affidavit as filed in this case would not be the proper mode of showing cause. In accordance with the aforesaid directions the said Sailendra Nath Sen had filed an affidavit affirmed on December 6, 1959. An affidavit in support of the petition has also been filed after the period of filing of such affidavit had expired by the leave of the Court by Sachindra Mohan Roy Choudhury, Chartered Accountant, who represented the Petitioner before the Income -tax Officer during the original assessment proceedings. In the affidavit affirmed by Arun Chandra Ghosh it has been stated that from the records it does not appear that any reconciliation statement of balance as on December 31, 1958, was filed in connection with the assessment year 1958 -59, but such a statement was filed in connection with the year 1959 -60. It is further stated that in the said reconciliation statement the receipt of Rs. 20,000 from the Petitioner's wife as the sale proceeds of 200 shares was not shown and that such receipt was only disclosed by the Assessee in his statement filed in course of the reassessment proceedings. It is also stated that the alleged statement of wealth does not appear to have been filed at all. In the affidavit of Sailendra Nath Sen it is admitted that a reconciliation statement was filed, but such reconciliation statement was filed in connection with the assessment year 1959 -60 and the receipt of Rs. 20,000 from Sm. Amita Ghosal was not shown in the said statement. It is further affirmed that in the said reconciliation statement no analysis of the shares of the Petitioner in M/s. Jasodalal GhosaT(P.) Ltd. as appearing at the end of such a statement annexed to the petition was included. The said Sailendra Nath Sen further states that during the assessment proceedings the Assessee did not claim to have received any money from his wife in the year 1957 on account of the sale of these shares and, as such, the question of the receipt of Rs. 20,000 as the price of these shares was not gone into by him or any evidence on that point was considered by him for the assessment for 1958 -59. As the assessment for the years 1955 56 to 1959 -60 were more or less completed simultaneously he accepted the statement of the authorised representative of the Petitioner that certain shares were sold during the relevant accounting years to Sm. Amita Ghosal and Sri Swapan Ghosal for valuable consideration. For the assessment of the Petitioner to wealth -tax for the assessment year 1959 -60 he only included the price of 1,015 ordinary shares in M/s. Jasodalal Ghosal (P.) Ltd. on the basis of the return filed and the representation made by the authorised representative of the Petitioner. In the aforesaid affidavit of Arun Chandra Ghosh it is claimed that it was only when he was informed by the Income -tax Officer, J Ward, assessing Sm. Amita Ghosal for the assessment year 1962 -63 that the said Sm. Amita Ghosal had no capacity to make -the payment of Rs. 20,000 as consideration for the transfer of the 200 shares in M/s. Jasodalal Ghosal (P.) Ltd. by her husband in October 1957 that he had reason to believe that the Petitioner's income had escaped assessment for the year 1958 -59. So far as the assessment year 1962 -63 is concerned the fact that Sm. Amita Ghosal had purchased subsequently another 141 shares in the said company and also had made various deposits in her Bank account came to the knowledge of the Respondent Income -tax Officer from the Income -tax Officer assessing Sm. Amita Ghosal for that year. I have myself looked into the records of the original assessment proceedings and it appears that the records for all these.years are somewhat mixed up and apparently only one reconciliation statement and one statement of wealth was filed which had been put in the file 'for the assessment year 1959 -60. It also appears from the said records that while the said statement explained the source of money invested by Sm. Amita Ghosal as the money received as gift from Jasodalal Ghosal arid interest from investment made of the money gifted and further dividends received from the' said company, no analysis of the shares of the said company held by the Petitioner as appearing at the end of the reconciliation statement annexed to the petition was given. The statement found in the records has been signed by Sri S. M. Roy Choudhury and dated September 23, 1959.
(3.) There seems to be some confusion as to the exact date on which the Assessee claims to have received the consideration for the 200 shares transferred to his wife. In the wealth statement filed at the time of the original assessment the receipt of Rs. 40,000 as share money is shown in the year 1958, while his wife had stated in her own assessment that the said shares were purchased in October 1957 and the Respondent Income -tax Officer in his letter to the Petitioner dated September 21, 1967, had stated that the Petitioner had transferred to his wife 200 shares in the said company on May 30, 1956, in reply to which the Petitioner had produced the records of the company showing the date of the issue of the said 200 shares to him as May 28, 1956, for consideration other than cash. So, it is not quite clear what is the exact date on which the Petitioner has purported to transfer the said 200 shares to his wife. In the petition itself it is stated that the Petitioner had sold 200 shares to his son Swapan Ghosal in 1958 and 200 shares to his wife Sm. Amita Ghosal in the year 1957 -58. The alleged statement of balance annexed to the petition showing the receipt of Rs. 40,000 as the price of shares in the year 1958 is not found in the records of the original assessments. Further, during the course of the argument it has been assumed that the alleged transfer by the Petitioner to his wife was made during the calendar year 1957.;