Law: Income Tax Act, 1922

Section: 34

Income-tax Act (XI of 1922)].......S. 34---Re-assessment---Violation of principles of natural justice ---Re-assessment was made after the expiry of the prescribed period---Income-tax Officer having failed to confront the assessee with the statements of the parties who had been examined by him behind the back of the assessee and upon whose testimony he had placed reliance, acted in flagrant violation of the principles of natural justice and fairplay and thus rendered his order bad in law. ORDER MUHAMMAD MAZHAR ALI (JUDICIAL MEMBER).---The facts in brief, giving rise to these four appeals pertaining to the charge years 1965-66 to 1968-69 are as follows. 2. The assessee deals in sale and purchase of biscuits and confectionary items. It filed returns for the years under appeal disclosing income of Rs.3,232 in each year. The assessments were completed in agreement with the assessee at Rs.15,608 for 1965-66, Rs.18,000 for 1966-67, Rs.20,000 for 1967-68 and Rs.24,406 for 1968-69 in respect of sale and purchase business of the assessee. Later on, the Income-tax Officer learnt that the assessee was also engaged in manufacturing business of confectionary and that no income therefrom was returned. He therefore, with the permission of the Inspecting Assistant Commissioner of the Income-tax, Hyderabad Range, re-opened the proceedings by issuing notices under section 34 of the Income-tax Act which were served on the assessee in respect of all these years on 12-5-1970. In response thereto the assessee filed the returns disclosing the same incomes Which he had initially returned. The Income-tax Officer thereupon served notices under sections 23(2) and 22(4) upon the assessee, who expressed his inability to produce the sale and purchase bills etc. on the plea of their having been taken by the ex-Accountant, Aziz Ahmed while leaving the service of the assessee some times back. The returns filed in response to the notice under section 34 did not accompany any computation sheet. The assessee's stand before the Income-tax Officer was that he had no manufacturing business of confectionary and that the accounts as filed with the original returns be considered for re-assessment…

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