(1.) This is an appeal from an order of Sinha, J. dismissing an application under Article 226 of the Constitution.
(2.) The Appellant is a firm carrying on business at No. 178, Harrison Road, Calcutta, and it has all along been assessed as a registered firm under Section 26A of the Indian Income Tax Act. In respect of the assessment years 1940-41 to 1945-46 the Appellant firm had been regularly assessed under Section 23(3) of the Indian Income, Tax Act and the partners of the said firm had duly paid the sums specified to be payable under Section 29 of the Act for said assessment years. By a notice, dated November 30, 1954, the case of the Petitioner was transferred under Section 5(7A) of the Indian Income Tax Act to the Income-tax Officer, Central Circle VI, Calcutta, who on March 21, 1956, purported to reopen the assessment of the Appellant firm in respect of the said assessment years 1940-41 to 1945-46 and issued notices under Section 34(1A) of the Indian Income Tax Act on the ground that the said Income-tax Officer had reasons to believe that income, profits or gains assessable to income-tax of the several years mentioned in the said notice had partly/wholly escaped assessment and that the income, profits or gains of the previous years which fell wholly or partly within the period beginning on September 1, 1939, and ending with March 31, 1946, and which had to escaped assessment, amount to or likely to amount to rupees one lakh or more. By the said notices, the partners of the said firm were requested to deliver to the said Income-tax Officer a return of the total income and the total world income assessable for the respective years mentioned in the said notices. It was further stated in the said notices that the same were being issued after obtaining the necessary satisfaction of the Central Board of Revenue. On July 2, 1956, the Appellant firm made an application under Article 226 of the Constitution for the quashing of the proceedings on the ground inter alia that Sections 5(7A) and 34(1A) of the Income Tax Act were ultra vires the Constitution and particularly Articles 14 and 19 thereof. Although a Rule Nisi was issued on the said application by Sinha, J., the learned Judge at the final hearing dismissed the said application and discharged the Rule in view of the decision of the Supreme Court in Pannalal Binjraj v. Union of India,1958 31 ITR 565. Thereafter on February 25, 1958, the Appellant sent a letter to the Income-tax Officer, Central Circle VI, asking for
(1) Copy of the order of satisfaction of the Central Board of Revenue,
(2) The materials on which the Income-tax Officer had reason to believe that income, etc. had escaped assessment,
(3) The basis on which the income-tax Officer was of the opinion that the amount of such escaped income was likely to amount to rupees one lakh or more.
(3.) By the said letter the Appellant also offered to pay the costs of inspection and the costs of obtaining copies of the documents referred to in the letter. On February 28, 1958, the Income-lax Officer, Central Circle VI, wrote a letter to the Appellant firm expressing regret that he was not in a position to furnish the reasons recorded for starting proceeding under Section 34(1A) or to grant inspection of the records as requested, and he asked the Appellant to file the return of the total income without any further delay. On March 12, 1958, the Appellant requested the Income-tax Officer to reconsider the application for furnishing the information and copies of the documents asked for in their previous letter, but the Income-tax Officer by his letter, dated March 20, 1958, again expressed his inability to grant copies of the reasons or inspection of the records as asked for by the Appellant. On July 8, 1958, the Appellant moved this Court under Article 236 of the Constitution for the issue of a Writ of Certiorari for quashing of the notices issued under Section 34(1A) and the proceeding started pursuant thereto and for cancellation or withdrawal of the said notices. In the petition which was affirmed in support of the application the Appellant put forward inter alia the ground that the Income-tax Officer by refusing the Appellant inspection of the records and the materials on which the Income-tax Officer had reason to believe that certain income had escaped assessment and the amount of the alleged escaped income was rupees one lakh or more, had acted in flagrant violation of the principles of natural justice, and it was incumbent open the Income-tax Officer to disclose reasons which led to his belief, inasmuch as the proceedings started pursuant to such notices under Section 34 of the Act, were in the nature of Judicial or quasi-judicial proceedings. In the affidavit-in-opposition, which was filed pursuant to certain special directions given by the learned trial Judge and which was affirmed on March 23, 1959, by one Mr. Pradhan who was the Income-tax Officer, Central Circle VI, Calcutta, at the point of time the notices under Section 34(1A) had been issued, it was stated in para. 5 as follows:
I say that in the reasons recorded by me as required by the first proviso to Section 34(1A) of the Indian Income Tax Act and on which the Central Board of Revenue expressed its satisfaction that the present case was 4 fit case for the issue of a notice under Section 34(1A) of the said Act, facts are enumerated which show that there has been concealment of assets by the Petitioner and non-disclosure of income by, and benami transactions entered into by, the Petitioner. I had, therefore, reasons to believe that the income, profits and gains of the Petitioner firm had escaped assessment for the assessment years 1940-41 to 1945-46.;