Law: Income Tax Act, 1922

Section: 34,63(3),4(2A)

(a) Income-tax Act (XI of 1922)---S.34--Income escaping assessment--Assessee at the time of first assessment had not submitted any explanation with regard to a credit entry--During the inquiry in respect of admitted investment, Income-tax Officer observed that assessee had omitted to declare material facts relating to trading liability having taken as an asset and credited in personal account of assessee--Income-tax Officer, held, was justified in issuing notice under S.34 to the assessee in circumstances. (b) Income-tax Act (XI of 1922)- ---Ss.63 (3) & 34--Issuance of notice under S:34 when can be challenged by the assessee. Section 63 (3), Income-tax Act, 1922 clearly provides that if an assessee complies with the notice under section 34, submits his revised return without any objection or without prejudice to his rights available to him to challenge the notice then .he is debarred from challenging the notice at any subsequent stage. If any assessee wants to challenge the validity of a notice under section 34 then he has to do it immediately before tiling the return. Once' he has fled return without any objection or reserving his right to challenge the validity of the notice, he will be estopped from challenging it at any later stage. In the present case there was nothing on record to show that when notice under section 34 was issued the applicant had challenged its validity or legality before or at the time of filing the return. Therefore, at a later stage he was not entitled to challenge the validity of the notice under section 34. (c) Income-tax Act (XI of 1922)-- ---S.4 (2-A)--Credit entries remained unexplained--Provisions of S. 4 (2-A), held, were attracted. The assessee had offered several explanations to justify the credit entry in his account book, which were found unsatisfactory and unbelievable. The assessee had failed to produce cogent and valid evidence to show that the credit entry r6presented the capital investment made by him through his own funds from abroad. From the facts on record the credit entry had remained unexplained. In the circumstances the provision of section 4 (2-A) were attracted. The law clearly provides that, all the…

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