1968 PLP 397 (PTD)

(2) Whether in the facts and circumstances of the case, the Income‑tax Appellate Tribunal was correct in holding that the assessment made by the Income‑tax Officer under section 34 for the assessment years 1947‑48, 1948‑49 and 1949‑50 was illegal?" In this case the Income‑tax Officer made assessment for three years as set out in the second question referred to by us. It is claimed that the Income‑tax Officer thereafter received a definite information of suppression of income by the assessee: The Income‑tax Officer naturally felt that there was under‑assessment as a result of the incorrect return submitted by the Assessee and he therefore issued a notice under section 34 of the Act. In response to the said notice, the Assessee produced books of accounts before him and was represented by Mr. T. C. Saraf and Mr. Rameswarlal Agarwala. In respect of the Assessment year 1947‑48, the conclusion reached by the Income‑tax Officer is that the assessee suppressed an income of Rs. 41,983 for, in, the balance‑sheet of the assessee there was a credit balance to the extent of Rs. 1,35,370 in the name of M/s. Askaran Kissenlal who, however, claimed credit balance of Rs. 93,387 only. The assessee thus, it is alleged, inflated his liability by the aforesaid amount of Rs. 41,

983. Similarly, for the year 1948‑49, the assessee was found to have suppressed his income to the extent of Rs. 1,27,

967. In respect of the assessment year 1949‑50, the income‑tax Officer found that suppression was for a sum of Rs. 1,64,

676. The Income‑tax Officer took into consideration the amounts thus suppressed and made fresh assessment. On appeal, the Appellate Assistant Commissioner agreed that there was suppres sion of income but the amounts of suppressed income in respect of two years were modified by him: The assessee, however, obtained complete success on a further appeal to the Income‑tax Appellate Tribunal for, it set aside the fresh assessment altogether as it reached the conclusion that notice under section 34 was issued without any definite information. Finding to the effect that there was suppression was not challenged before the Tribunal. The Commissioner of Income‑tax thereafter submitted an application under section 66(1) of the Act for reference of the two questions to this Court for opinion but the Tribunal rejected the same. The Commissioner then applied to this Court under section 66(2) of the Act and the two questions as quoted at the outset were then directed by this Court to be referred for our opinion. Mr. Afzalul Haque, learned Advocate for the Commissioner of Income‑tax, submits that both the questions should be answered in the negative inasmuch as on a definite information the notice under section 34 was issued. He also points out that the information was ultimately found to be correct on examination of the relevant Books of Accounts of all concerned. He emphasi ses that no case has been made out for considering the proceeding initiated, under section 34 as illegal or void. The Appellate Assistant Commissioner who heard the three appeals together observed: "It appears I. T. O. found from the statement of accounts filed by M/s. Askaran Kissenlal Commission Agent of the Appellant firm, that liability shown in the name of M/s. Askaran Kissenlal in the books of the appellant firm was much more than the debit balance shown in the books of M/s. Askaran Kissenlal and as such liabilities shown in the books of accounts of the appellant firm for each of the three years were fictitious." The Assistant Commissioner further noticed: "In the absence of satisfactory explanation I. T. O. treated this as income from suppressed transaction by showing fictitious liability to this extent for the assessment year 1947‑48." He thereafter took into consideration the assessment of the other two years and agreed with the Income‑tax Officer that there was suppression of income. For the purpose of answering the questions referred to us, it is not necessary to go into further details of the case. We are to examine if there was definite information on the basis of which a notice under section 34 of the Act could be issued. The correctness of the finding of suppression of Income is not questioned before us. In fact no such attempt was made before the Assistant Commissioner or the Appellate Tribunal. The only question, therefore, is if the proceeding has been rendered nugatory for want of there being any definite information on which the proceeding under section 34 could be initiated. The Tribunal itself recorded the substance of the grounds of appeal preferred by the assessee against the order of the Appellate Assistant Commissioner in the following terms : "Issue of notice under section 34 was not based on proper enquiry on the basis of the examination of the accounts of the other party, namely, Askaran Kissenlal, but no mere: submission of a fictitious account by the same Askaran Kissenlal to put your humble appellant in difficulty and the accounts submitted by the said party were not genuine accounts and must have been based on certain fictitious books of accounts . . The grievance of the assessee is mainly founded on the want of proper enquiry on the, basis of the examination of the accounts of Askaran Kisseanlal. This grievance itself presupposes the existence of certain accounts of Askaran Kisseanlal before the Income‑tax Officer prior to his issuing a notice under section

34. The allegation of such account being fictitious is indeed an expression of opinion by the assessee. The substance of the grounds as quoted by the Tribunal, therefore, clearly indicates that the Income‑tax Officer had information before him about the suppression of income by the assessee. It is still necessary to consider if information can be called a definite information. An information which is precise or not vague is definite. In this case it has already been noticed that the assessee has shown large amounts to the credit of Askaran Kissenlal and the information to the contrary as received by the Income‑tax Officer was on the basis of the accounts submitted by that very firm, Askaran Kissenlal. The amounts of liability were thus inflated. An information, to cite an example, would be vague if it would be merely to the effect that the assessee's income would be larger than what he had shown in his report. But in this case accounts of the firm concerned were before the Income tax Officer who found that amounts to be paid to that firm were much smaller than what were shown in the books of accounts of the assessee. We are, therefore, clearly of opinion that a definite information as contemplated in the third proviso to section 34 was before the Income‑tax Officer who was as such entitled to initiate proceedings and the Tribunal erred in law in holding otherwise. This question is therefore to be answered in the negative. Next question is if the assessment made by the Income‑tax Officer for the assessment years 1947‑48, 1948‑49 and 1949‑50 was illegal. In asking us to answer this question in the affirmative, Mr. Nurul Huq, learned Advocate for the respondent argues that the notice was issued beyond four years and as such it was barred by limitation. In this case by reason of subsection (i) of section 34, in a case of suppression of income, period of limitation would be eight years under the laws as it then existed. As we have taken the view that the Income tax Officer had definite information, we are of opinion that this contention of learned Advocate for the respondent is of no substance. We are of opinion that this question should also be answered in the negative. One other point as urged by the learned Advocate for the respondent is that in respect of the year 1947‑48, no sanction of the Income‑tax Commissioner was obtained. This contention is also devoid of any substance, for, we have already held that there was definite information on the basis of which the proceed ing was started. It is clear that no previous permission of the income‑tax Commissioner is necessary under the third proviso to subsection (1) of section 34 if action is taken on a definite information. For the reasons stated above, we answer both the questions in the negative and direct the respondent to pay the costs to the appellant. A. H. KHAN, J.‑I agree. S. Q. References answered in the negative.