Law:

Section:

Section 124 of the income-tax act, 1961-Income-tax Officer-Jurisdiction of-Whether ito, in his exclusive jurisdiction to go into question whether a particular amount was income or not, could be prohibited from making an enquiry in relation to a decreed amount-Held, on facts, no-Whether, where statements of a large number of persons have to be recorded to expedite enquiry and complete assessment within time limit, ito can commission other officers to assist him-Held, yes-Whether during enquiry by ito, witnesses could be allowed to be represented by counsel, if they so desire-Held, no Facts The Tamilnadu Farmers Service Co-operative Federation was started in 1974 with the object of helping the farmers by providing them integrated credit and other services. It was taking deposits on payment of 10 per cent interest. A large number of farmers had lent money on interest to the Federation and the petitioner in the instant case was one of them. In 1976, the petitioner came to know that the Federation had some problems with the Income-tax Department and, therefore, he demanded repayment from the Federation of the amount advanced to the Federation. As the Federation did not pay the amount, the petitioner filed a suit which was decreed. Similar decrees had also been obtained by several others. When the Federation was approached for payment of the decretal amount the petitioner was informed that the Asstt. Director of Inspection had issued a prohibitory order under section 132(3) prohibiting the Federation from removing, parting with or otherwise dealing with the amounts deposited in the Federation's bank account. Subsequently, notices under section 148 were issued to the Federation for the purpose of making an assessment on it and the ITO was vested with jurisdiction to make the assessment. However, even before the notices were issued, enquiries had been made regarding the large bank deposits held by the Federation. At this stage, the Federation informed the ITO of the names and particulars of the suits filed and the decrees obtained against it. The ITO sought to make enquiries about the depositors and the court proceedings and made a provisional order of assessment to…

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