Pathak, J. - (1.) THE Income Tax Appellate Tribunal has referred the following two questions at the instance of the assessee for the opinion of this Court. "1. Whether for the assessment year 1946-47 the Income Tax Officer was justified in initiating the proceedings and completing the assessment under Section 34 (1)(a) or he should have taken recourse to Section 34(1A) or 34(1)(a)? 2. Whether for the assessment years 1947-48 and 1948-49 the Income Tax Officer was justified in initiating action under Section 34(1)(a) or he should have taken recourse to Section 34(1) (b) of the Act?"
(2.) THE assessee is a partnership firm consisting of Rai Bahadur Ram Ratan and his son Prem Nath. It carried on the business of canteen contractors. THE statement of the case submitted by the Tribunal mentions that the account books maintained by the assessee were never accepted by the Income Tax Officer and the income was assessed by applying a flat rate over the turnover disclosed by the assessee. For the assessment year 1946-47 the assessment was completed on July 12, 1947. Subsequently on November 11, 1955 the Income Tax Officer issued a notice under section 34(1) (a) for the assessment year 1946-47 and re-opened the assessment proceedings. Despite the notice requiring the assessee to produce its account books, they were not produced on the plea that they were not available. The Income Tax Officer made an assessment order including a sum of Rs. 2,00,000 in the total income of the assessee on the ground that the sum represented the secret profits of the assessee. For the assessment years 1947-48 and 1948-49 the assessments had already been completed. In respect of those assessment years also the Income Tax Officer took proceedings under Section 34(1) (a) and upon the assessee failing to produce his account books the Income Tax Officer made assessment orders including an amount of Rs. 98,450/- in the total income for the assessment year 1947-48 and an amount of Rs. 2,20,754/- in the total income for the assessment year 1848-48.
(3.) THE assessee challenged the orders of re-assessment for the aforesaid three years in appeal before the Appellate Assistant Commissioner. THE Appellate Assistant Commissioner directed the Income Tax Officer to give the assessee a further opportunity to adduce evidence, and thereafter to submit a report. Upon the final hearing of the appeals, the Appellate Assistant Commissioner reduced the additions made by the Income Tax Officer. This occasioned a number of appeals before the Income Tax Appellate Tribunal, by the assessee as well as the Income Tax Officer. By separate orders in respect of the three assessment years the Tribunal allowed the assessee's appeals in part and dismissed the appeals filed by the Income Tax Officer. THEreafter the instant reference has been made. The assessee contends that the Income Tax Officer had no jurisdiction to take proceedings under Section 34(1)(a) inasmuch as the entire material necessary for the assessment of the assessee's income had been fully and truly disclosed at the time when the original assessments were made. It referred to a statement made by Prem Nath during the original assessment proceedings for the assess- ment years under consideration, the sub--stance of the statement being that overdrafts had been taken by the assessee from the Bharat Bank Ltd., Dehradun against the Call Deposit Account of his wife Padmawati in that Bank. It is urged that the Income Tax Officer was thereby informed of the existence of that account and of the fact that certain sums stood in deposit in the said account during the relevant periods. The Income Tax Officer had proceeded on the basis that the Call Deposits of Rs. 2,00,000/-, Rs. 98,450 and Rs. 2,20,754/- for the three years represented deposits made by the assessee in the name of Padmawati and in fact represented the concealed income of the assessee. This, it is urged, could not be said to constitute information which came to the knowledge of the Income Tax Officer after the conclusion of the original assessment proceedings. It is said that the Income Tax Officer had accepted the explanation tendered originally by the assessee and there was nothing new which came to his knowledge subsequently.;