Ramaswami, J. - (1.) These appeals are brought, by certificate, from the judgment of the Andhra Pradesh High Court dated November 18, 1963, in Writ Petitions Nos. 757, 758, 761, 762, 763, 775 and 776 of 1961.
(2.) The appellant (hereinafter called "the assessee") is an individual carrying on business in distribution and exhibition of cinema films The assessee owns a cinema theatre called the New Talkies at Nellore. The original assessment of the assessees income for the year 1943-44 to 1949-50 were completed during 1944 to 1950. In the course of assessment proceedings for the assessment year 1957-58 the Income-tax Officer found that the assessee had current account in the Imperial Bank of India in the name of his father-in law till the latters death. This fact came to the notice of the Income-tax Officer when the assessee was asked to explain a cash credit of Rs. 40,000 found in the assessment year 1950-51. Similarly, a sum of Rs. 70,000 was advanced by the assessee to Jagamani Pictures on January 9, 1946, which the assessee failed to disclose in the course of the assessment proceedings for the relevant assessment year. When later on Jagamani Pictures could not meet this debt the assessee got their distribution right in lieu of the amount advanced and exploited the films. It was also detected by the Income-tax Officer that in the relevant returns the assessee had not shown income from property in the names of his sons, wife and daughter, though many of the properties we are purchased by him in their names. The Income-tax Officer had therefore reason to believe that, by reason of the omission or failure on the part of the assessee to disclose fully and truly all the basic and material facts necessary for the assessment for those years, income chargeable to tax had escaped assessment or was under-assessed. After obtaining the requisite permission from the Central Board of Revenue, the Income-tax Officer issued notices dated September 5, 1959, under section 34 (1) (a) of the Income Tax Act, 1922 (hereinafter called "the Act") to reopen the assessment for the assessment years 1943-44 to 1949-50. The assessee raised an objection to the issue of the notices on the ground that the proceedings were barred by limitation and the Income-tax Officer was seeking to revise assessments merely on a change of opinion. Thereafter, the Income-tax Officer wrote a letter to the assessee dated November 16, 1959, wherein he gave details of the cash credits for which he required explanation as well as the properties whose incomes should be assessed in his hands. After exchange of some correspondence, the assessee moved the High Court of Andhra Pradesh for grant of a writ under article 226 of the Constitution directing the Income-tax Officer to for bear from proceeding further in pursuance of the notices issued under section 34(1) (a) of the Act. By its judgment dated November 18, 1963, the High Court dismissed the writ petitions holding that the notices issued after March 31, 1956, were not barred by time and there was material before the Income-tax Officer which justified his belief that the income chargeable to tax had escaped assessment.
(3.) It is convenient to set out at this stage the material provisions of section 34 of the Act as amended by the Finance Act, 1956 : "34. (1) If - (a) the Income-tax Officer has reason to believe that by reason of the omission or failure on the part of an assessee to make a return of his income under section 22 for any year or to disclose fully and truly all material facts necessary for his assessment for that year, income, profits or gains chargeable to income-tax have escaped assessment for that year, or have been under assessed, or assessed at too low a rate, or have been made the subject of excessive relief under the Act, or excessive loss or depreciation allowance has been computed..... he may in case falling under clause (a) at any time..... serve on the assessee..... a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 22 and may proceed to assess or reassess such income, profits or gains or recompute the loss or depreciation allowance; and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section : Provided that the Income-tax Officer shall not issue a notice under clause (a) of sub-section (1) - (i) for any year prior to the year ending on the 31st day of March, 1941; (ii) for any year, if eight years have elapsed after the expiry of that year, unless the income, profits or gains chargeable to income- tax which have escaped assessment or have been under-assessed or assessed at too low a rate or have been made the subject of excessive relief under this Act, or the loss or depreciation allowance which has been computed in excess, amount to, or are likely to amount to, one lakh of rupees or more in the aggregate, either for that year, or for that year and any other year or years after which or after each of which eight years have elapsed, not being a year or years ending before the 31st day of March, 1941; (iii) for any year, unless he has recorded his reasons for doing so, and, in any case falling under clause (ii), unless the Central Board of Revenue, and in any other case, the Commissioner, is satisfied on such reasons recorded that it is a fit case for the issue of such notice... (1A) If, in the case of any assessee, the Income-tax Officer has reason to believe - (i) that income, profits or gains chargeable to income-tax have escaped assessment for any year in respect of which the relevant previous year falls wholly or partly within the period beginning on the 1st day of September, 1939, and ending on the 31st day of March, 1946; and (ii) that the income, profits or gains which have so escaped assessment for any such year or years amount, or are likely to amount, to one lakh of rupees or more; he may, notwithstanding that the period of eight years or, as the case may be, four years specified in sub-section (1) has expired in respect there of, serve on the assessee..... a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 22, and may proceed to assess or reassess the income, profits or gains of the assessee for all or any of the years referred to in clause (i), and thereupon the provisions of this Act (excepting those contained in clauses (i) and (iii) of the proviso to sub-section (1) and in sub-section (2) and (3) of this section) shall, so far as may be, apply accordingly : Provided that the Income-tax Officer shall not issue a notice under this sub-section unless he has recorded his reasons for doing so, and the Central Board of Revenue is satisfied on such reasons recorded that it is a fit case for the issue of such notice : Provided further that no such notice shall be issued after the 31st day of March, 1956." ;