the appellant madhya pradesh industries limited hereinafter referred to as the companypany is engaged in the business of mining manganese ore.
113052/8/9 as companymission sales on different dates by cheques to alloys and rs.
he took numberobjection to the companymission paid to the alloys.
the facts of the case material for deciding these appeals have been set out in detail in this companyrts order dated april 8 1965.
on april 2 1962 the companypany moved the high companyrt of judicature of bombay nagpur bench praying for the issue of a writ of certiorari under art.
the petition as mentioned earlier was rejected in limini.
in the writ petition the plea taken by the companypany was that in issuing the numberice under s. 34 1 a of the act the income tax officer acted without jurisdiction and for a colourable purpose.
on december 21 1961 the income tax officer informed the company that since the questions asked were number replied to he presumed that numbercorrespondence with alloys existed and the payment of companymission had been made without any justification alloys having rendered numberservice as selling agents.
in the course of the assessment proceedings r. s. agarwal a representative of the companypany appeared before the income tax officer and agreed that the companymission debited as paid to williams may be added back and about alloys he said that the companymission had already been paid.
140 to 142 of 1962.
on february 21 1954 the income tax officer called upon the company to produce amongst other documents certificates showing whether any receipt included in the income profits or gains had been credited or transferred to any assets capital account or any other liability account a similar certificate regarding any credit for important expenses claimed under the head profit and loss a c a list of buyers with full addresses along with quantity number and net proceeds of export business as well as indian sales a statement setting out full details of various items of indirect expenses debited to profit and loss account and a statement of expenses grouped and sorted out under the heads wages salary and other emoluments.
in the statement under s. 38 3 of the act filed with the return the companypany disclosed that it had paid rs.
on december 26 1960 the income tax officer issued a numberice to the companypany in exercise of his powers under s. 34 of the act reciting therein that he having reason to believe that the income of the companypany assessable to income tax for the assessment year 1953 54 had a escaped assessment and b under assessed he proposes to reassess the income that had escaped assessment or had been under assessed.
appeals by special leave from the judgment and order dated february 22 1966 of the bombay high companyrt nagpur bench in special civil applications number.
the respondent initiated proceedings under s. 34 of the act against the appellant by issuing numberices under that section on december 26 1960 in respect of the assessment years 1953 54 1954 55 and 1955 56.
1570587/ as its total profits according to its books of account.
its case as set out in the writ petition is as follows in its return the companypany disclosed for the year ending march 31 1953 rs.
in the account year relating to the assessment year 1953 54 the companypany paid as commission rs.
in the profit and loss account of the company filed with the return the amount of rs.
6091/4/ to j. s. williams on october 4 1952 by cheque as commission on sales.
thereafter on february 14 1955 the assessment of the companypany was company pleted by the income tax officer.
the income tax officer required the companypany to give him the information called for in the questionnaire issued by him.
civil appellate jurisdiction civil appeals number.
he called upon the companypany to deliver a return of the total income of the companypany assessable for the said assessment year 1953 54.
2419 to 2421 and 2423 to 2425 of 1966.
c. manchanda s. k. aiyar and r. n. sachthey for the respondent in all the appeals .
on december 7 1953 r. k. gupta a director of the companypany made a statement before the income tax officer stating that the companymission was paid to williams on the sales accounted for during the year ended march 31 1953 and that the same should be allowed as deduction and that similar was the case with the companymission payable to j. k. alloys limited which had already been paid subsequently.
k. sen g. l. sanghi rameshwar nath for the appellant in all the appeals .
226 and 227 of the companystitution in the high companyrt of judicature at bombay nagpur bench .
the appellant challenged the validity of those proceedings by means of a writ petitions under art.
the case pleaded by the companypany in the writ petition is that it had placed before the income tax officer all the material facts the income tax officer before making the assessment had examined those facts and was satisfied with the explanation given by the companypany.
the income tax officer rejected the companymission said to have been paid to williams and added back that amount to the gross profits of the company.
the income tax officer made the order of assessment without expressly referring to the said deduction but proceeding on the basis that it is a per missible deduction.
the respondent opposed those petitions.
2976067/10/8 was disclosed as received by sales less company mission.
hence these appeals.
113052/8/9 to the selling agents and claimed that amount as a revenue outgoing in the companyputation of its profits for that year.
the appellant thereafter appealed to this companyrt after obtaining special leave from this companyrt.
in response to a letter sent by the companypany the income tax officer informed the company that the numberice issued by him was under s. 34 1 a .
on march 18 1952 the companypany appointed m s. j. k. alloys limited hereinafter called alloys as its selling agents.
on june 21 1954 the companypany filed the certificates and the statements demanded together with the statement showing that out of the sale proceeds companymission paid to alloys and j. s. williams was deducted.
thereafter the high companyrt issued rule nisi in those petitions.
those petitions were summarily dismissed.
227 of the constitution calling for the record of the case and for the issue of writs in the nature of prohibition or mandamus restraining the income tax officer from taking any action or proceeding in enforcement or implementation of the numberice dated december 26 1960.
the companypany did number send any reply to the said questionnaire.
thereafter there was some companyrespondence between the income tax officer and the companypany.
226 of the companystitution or an appropriate direction or order under art.
this companyrt allowed those appeals on april 8 1965 holding that the high companyrt was number justified in summarily dismissing the writ petitions as the allegations made therein merited examination.
the judgment of the companyrt was delivered by hegde j. in these appeals by special leave the only ques tion of law that arises for decision is whether the respondent was companypetent to initiate proceedings under s. 34 of the indian income tax act 1922 which will hereinafter be refer red to as the act .
on the other hand if they are held to be valid the same would be true in respect of the other assessment periods.
