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The Tribunal referred the following question.

"Whether the present proceedings initiated under Section 34(1) (a) of the Act against the assessees are valid in law ?"

The, relevant facts may now be stated. For tile assessment year 194849 (accounting, year ending November 12,,.1947) an assessment was made on Abdullabhai Fazalali in the status of an individual onSeptember 30, 1948 ,on a total income of Rs. 9,102. the sourcesof income considered in the assessment were share income fromthe firm of S. A. Bhaagt and Co., and proper come. Subsequently, it came to light that Abdullabhai Fazalali had deposited Rs. 40,000 in cash on July 28, 1947 in the branch of the Bank of India Ltd. at Palanpur, now in North Gujarat. Abdullabhai Fazalali died on August 1, 1954. Notice under Section 34 (1) (a) of the Act was served on February 9, 1957 on Hussainbhai Abdullabhai as legal heir and representative of the estate of the late Abdullabhai Fazalali. On March 9, 1957 a return was filed showing the income as Rs. 8,237, but in Column 'D' the sum of Rs. 40,000 aforesaid was mentioned. While the proceedings were pending under Section 23(2) of the Act a petition was filed in the High Court challenging the validity of the proceedings under Section 34(1)(a). On March 15, 1957 assessment was made. An appeal to the Appellate Assistant Commissioner under Section 30 of the Act was filed on April 15 1957. On March 15, .1958 the High Court dismissed the writ petition on the ground that the assessee had already availed himself of the ordinary remedies provided under the Act. It appears from the order of Appellate Assistant Commissioner dated April 29, 1958 that the High Court expressed the view: that the proceedings under Section' 34 (1) (a) were illegal. The appellate Assistant Commissioner by this order: following the finding of the High Court regarding the illegality of the proceedings under Section 34 set aside the assessment on the ground that the proceedings initiated under Section 34 were illegal and not valid. The Income Tax Officer then issued a fresh notice under Sec- tion 34 (1) (a) on July 9, 1958 to all the legal representatives of the deceased Abdullabhai Fazalali. By his order dated December 14, 1960, the Income-tax Officer held that the cash deposit of Rs. 40,000 in the Bank of India in Palanpur came from undisclosed sources of income of the assessee in the then taxable territories and assessed it accordingly.