COMMISSIONER OF INCOME-TAX PUNJAB HIMACHAL PRADESH AND Vs. SHREE JAGAN NATH MAHESHWARY AMRITSAR
HIGH COURT OF PUNJAB AND HARYANA
COMMISSIONER OF INCOME-TAX, PUNJAB, HIMACHAL PRADESH
JAGAN NATH MAHESHWARY, AMRITSAR
(1.) THE main facts leading to this reference are that the assessee carried on business at Amritsar, in speculation dealings, besides, deriving income from rent and interest. For the accounting year 1938-1939, corresponding to the assessment year 1939-40, an assessment was made on a total income of Rs. 4,006. 00 including rs. 2,500. 00 under the head 'business'. The Income-tax Officer, Amritsar, after issuing notice, as required under Section 34 of the Income-tax Act, determined the income at Rs. 7,006. 00. This assessment was set aside on appeal and fresh notices under Sections 22 (2) and 34 of the Indian Income-tax Act were served on the assessee, and the proceedings that followed resulted in the income being computed at Rs. 41,833. 00. This was followed by an appeal to the Appellate assistant Commissioner, who, by his order dated 11-3-1846, rejected it. This order was challenged in appeal before the Appellate Tribunal, which, by its order dated 7-8-1950, determined the assessable income at Rs. 21,814/- as against Rs. 41,833/ -. The relevant paragraph from the order of the Tribunal reads as under:
"so far as the assessment for 1939-40 is concerned, the notice under section 34 was issued in respect of a particular item of concealment which amounted to Rs. 17,808. 00. The enhancement, therefore, should not have gone beyond the item in dispute. The only addition that could have been made to the quantum determined in the original assessment was Rs. 17,800/ -. The assessable income is, therefore, determined at rs. 21,814/- as against Rs. 41,833/ -. " In the result, the appeal was partly allowed.
(2.) THE Commissioner of Income-tax then presented an application requiring the tribunal to refer to the High Court, question of law, which he thought arose from the order of the Tribunal relating to the assessment year 1939-40. The Tribunal, in its order of reference, dated nth July, 1951, observed as under:-" the Tribunal, on the facts placed before them in the view that in law section 34 would be applicable only to the particular item which hid set in motion the Section 34 proceedings and was specifically mentioned in the notice as such could invoke the provisions of Section 34 deleted from the figure on which assessment had been made by the authorities the other amounts and confined the extra-assessment to a sum of Rs. 17,800/ -. A close examination of the record, however, reveals that even this sum of Rs. 17,800/- was not mentioned in the Section 34 notice but had to be inferred from the order sheet of the Income-tax Officer, It is not possible to ascertain how the assesses knew the fact, that the notice under Section 34 related to Rs. 17,800/- or other amount. '"it is as arising from this order that this reference application had been preferred. So we refer the following question of law to the High Court. "whether in the circumstances of the case when a notice is issued under section 34 based on a certain item of income that had escaped assessment, it is permissible for the Income-tax authorities to travel beyond the notice and include other items in the assessment in addition to the item which had initiated and resulted in the notice, under Section 34".
(3.) THE parties before Us agree that the question framed for reference should be resettled so as to read as under:-
"whether in the circumstances of the case when a notice is issued under section 34 based on a certain item of income that had escaped assessment it is permissible for the Income-tax authorities to include other items in the assessment in addition to the item which had initiated and resulted in the notice, under Section 34. ";