1964 PLP 59 (PTD)

Re‑assessment‑Jurisdiction‑Absence of fresh information -Appeal to Appellate Assistant Commissioner dismissed as time -barred‑Failure of assessee to appeal to Appellate Tribunal

Whether relevant in considering whether officer had jurisdiction to reassess‑Indian Income‑tax Act, 1922, S. 34 ‑ Constitution of India, Art.

226. In the original assessment for the relevant assessment year the Income‑tax Officer brought to tax as income from undisclosed sources a sum of Rs. 12,788 shown as cash in the house. The Appellate Assistant Commissioner deleted that sum on the ground that part of it had been advanced by the wife of the assessee and the balance was taken from the home chest. Some years later the Income‑tax Officer brought to tax the sum of Rs. 12,788 by way of re‑assessment under section 34 of the Indian Income- tax Act, 1922, for the same assessment year. The order of re‑assessment did not disclose any new information that came to the knowledge of the Income‑tax Officer. All the facts that he took into consideration at the time of the re‑assessment were before him when he made the original assessment, and were also before the Appellate Assistant Commissioner: Held, that the Income‑tax Officer had no jurisdiction to re‑assess, his order of re‑assessment was illegal and it was, there fore, liable to be quashed. Neither the fact that the assessee had filed an appeal from the order of reassessment before the Appellate Assistant Commissioner and that appeal was dismissed as having been filed beyond the period of limitation nor the fact that he did not appeal thereafter to the Appellate Tribunal, was relevant in considering whether the officer had jurisdiction to re‑assess. Calcutta Discount Co. Ltd. v. Income‑tax Officer, Companies District I, Calcutta (1961) 41 I T R 191 ref. JUDGMENT HEGDE, J.‑

In this petition, under Article 226 of the Consti tution, the petitioner amongst other reliefs has prayed for quashing the order of re‑assessment dated February 29, 1960, made under section 34 of the Indian Income‑tax Act read with section 23 (4) of the Act, by the first respondent. It is contended on behalf of the petitioner that the first respondent had no jurisdiction to initiate any proceedings under section 34 (1) of the Act, as he had no reason to believe that the assessee had failed to disclose fully or truly all material facts necessary for his assessment for the assessment year in question. The dispute in this case relates to the assessment year 1953‑54, the accounting year ending on October 18, 1952. At the time of the original assessment, the Income‑tax Officer opined that the sum of Rs. 12,788 shown as cash in the house at the begin ning of the year was in reality undisclosed income earned during the assessment year. He accordingly added back that sum in assessing the income of the assessee. That part of the order of the Income‑tax Officer was set aside by the Appellate Assistant Com missioner who opined that out of the sum of Rs. 12,788 a sum of Rs. 10,000 had been advanced by the wife of the assessee and the remaining amount was taken from the home chest of the assessee. We are not now concerned whether the order of the Appellate Assistant Commissioner is correct on merits or not The Appel late Assistant Commissioner's order was passed on August 24, 1955. On November 30, 1959 the Income‑tax Officer issued a notice under section 34 of the Act to the assessee. Thereafter, he reassessed the assessee taking into consideration the aforemen tioned sum of Rs. 12,

788. From the order of re‑assessment, we are unable to discover any new information that came to the knowledge of the Income‑tax Officer at the time he initiated the proceedings under section 34 of the Act. All the facts that he took into consideration at the time of the reassessment were before him when he made the original order of assessment and were also before the Appellate Assistant Commissioner when the appeal was disposed of. The learned counsel for the revenue has not been able to point out to us any new information coming within the scope of section 34 (1) of the Act which could justify the initiation of proceedings under section 34 of the Act. The jurisdiction of the Income‑tax Officer while acting under section 34 is a limited jurisdiction. He could exercise that jurisdiction only if the conditions mentioned in that section are satisfied. In the absence of those conditions, he has no juris diction to reassess the assessee. Unless we are satisfied that he had prima facie jurisdiction to act under section 34, it has to be held that he had clutched at jurisdiction which he did not possess. If that be so‑this is so in our opinion on the facts of this case the order of re‑assessment made by the Income‑tax Officer is a wholly illegal order and, therefore, calls for our interference under Article 226 of the Constitution. In arriving at this con clusion we have taken assistance from the decision of the Supreme Court in Calcutta Discount Co. Ltd. v. Income‑tax Officer, Com panies, District I, Calcutta ((1961) 41 I T R 191). It is true the assesseee had filed an appeal before the Appel late Assistant Commissioner of Income‑tax against the order of reassessment, but that appeal was dismissed as having been filed beyond the period of limitation. It is also true that he did not go up in appeal before the Income‑tax Appellate Tribunal. But these aspects are not relevant while considering the question whether the income‑tax officer had jurisdiction to act under section 34 (1) (a) of the Act. For the reasons mentioned above, we direct the issue of a writ of certiorari quashing the order of re‑assessment made by the Additional Income‑tax Officer, Shimoga Circle, Shimoga, on February 29, 1960, in G. I. R. No. 3‑S. As a consequence of this order, the order dated March 21, 1960, levying penalty will have to go. If the assessee has paid any tax in pursuance of the order of re-assessment or the penalty imposed on him, the same will be refunded to him We have earlier seen that the assessee was guilty of laches and, therefore, there will be no order as to costs in this petition.