SOWDAGAR AHMED KHAN Vs. INCOME TAX OFFICER NELLORE

JUDGEMENT

(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 :