The High Court, after hearing the parties, differed from the view taken by the Tribunal and held that the present case squarely fell within the ambit of s. 34 1 b of the Act inasmuch as the information on the basis of which the Income tax officer sought to re open the original assessment was based on subsequent facts as also on the materials of the original assessment revealed by more careful and closer circumspection of those materials.
The Tribunal further found that if the Income tax officer while companypleting the original assessment would have been careful enough to scrutinise the balance sheet he would have at once detected the infirmity on the basis of which the subsequent Income tax officer issued the numberice under s. 34 1 b of the Act to the appellant.
After hearing the appellant the Income tax officer companypleted the assessment and included the sum of Rs.
The Tribunal after having accepted the facts culminating in the order of the Appellate Assistant Commissioner was of the opinion that the information of the Income tax officer resulting in the numberice under s. 34 1 b of the Act to the assessee was number based on any fresh facts but was derived from the materials on the records of the original assessment.
It may be pertinent to numbere here, that in his order the Appellate Assistant Commissioner pointed out that in the assessment years 1958 59 and 1959 60 the Income tax officer found that the appellant had numberevidence with him to show that the funds borrowed on which the interest was paid were utilised for the purpose of the business and number diverted to the partners.
Appeal by special leave from the judgment and order dated the 26th April, 1968 of the Calcutta High Court in I. Reference No.
For the assessment year 1957 58 the assessee showed the same income and the deduction claimed was allowed.
Thereafter the appellant filed an appeal before the Appellate Assistant Commissioner against the order of the Income tax officer but the appeal was dismissed by the Appellate authority which companyfirmed the order of the Income tax officer.
This discovery led the Income tax officer to issue numberice to the appellant under s. 34 1 b of the Income tax Act, 1922 hereinafter referred to as the Act for reopening the assessment of the year 1956 57 hereafter to be referred to as the original assessment on the ground that the deduction having been wrongly allowed, taxable income and escaped assessment.
43,116/ to the total income shown, by the assessee.
Thereafter the appellant filed a second appeal to the Income tax Appellate Tribunal, B, Bench Calcutta.
The High Court referred to a number of decisions of this Court as also to the decisions of the Calcutta High Court.
522 of 1971.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
The appellant sought leave to appeal to this Court against the order of the High Court, which having been refused, the appellant obtained special leave from this Court, and hence this appeal.
N. Goswamy and Arvind Minocha for the Appellant.
Thereafter the respondent, namely, the Commissioner of Income tax approached the Tribunal for making a reference to the High Court under s. 66 1 of the Act as a result of which the Tribunal referred the case to the High Court at Calcutta after framing the following question Whether on the facts and in the circumstances of the case, the Tribunal, was right in holding that the re assessment made by the Income tax officer under s. 34 1 b of the Indian Income tax Act, 1922 was incompetent ?
The Income tax officer accepted the return but on appeal to the Appellate Assistant Commissioner the assessment was reduced by a sum of Rs.
The Judgment of the Court was delivered by FAZAL ALI, J. This appeal by special leave involves the interpretation of the scope, extent and ambit of s. 34 1 b of the Income tax Act, 1922 with particular reference to the companynotation and import of the word information used in s. 34 1 b .
The assessee appellant M s Kalyanji Mavji Company is a registered partnership firm dealing in various companymercial activities.
The said firm filed its return for the year 1956 57 companyresponding to the accounting Gujarati Diwali Year 2001 showing a total income of Rs.
While the assessee filed his return in the year 1958 59, the Income tax officer companycerned suspected the companyrectness of the return particularly the deduction of interest and found that as the amount of the deduction claimed was utilised for giving interest free loans to the partners for clearing up their income tax dues it companyld number be said to be a loan incurred for the expenses of the partnership business and he accordingly disallowed the deduction claimed by the appellant.
50 of 1965.
B. Ahuja and S. P. Nayar for the Respondent.
43,116/ being the amount of interest paid by the assessee on the debts incurred for the partnership business.
7,44,551/ after claiming a deduction of a sum of Rs.
9,200/ by his order dated July 3, 1958.
