COMMISSIONER OF INCOME TAX, U.P. versus GURBUX RAI HARBUX RAI

Citation: [1972] 1 S.C.R. 357 · Decided: 24-08-1971 · Supreme Court of India · Bench: K.S. HEGDE, A.N. GROVER · Disposal: Appeal(s) allowed

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Judgment (excerpt)

A 
B 
D 
E 
F 
G 
H 
COMMISSIONER OF INCOME TAX, U.P. 
v. 
GURBUX RAI HARBUX RAI 
August 24, 1971 
(K. S. HEGDE AND A. N. 0,ROVER, JJ.J 
Excess Profits T~x Act, 1940, ss. JOA and J5-Scope of. 
357 
"-
Section 10~ of the 'Excess Profits Act, 1940, deals \vi th 
transactiOns _ 
deyigned to avoid or reduce liability to excess profits tax and 
emgN-.vcrs 
the .Excess Profits Tax Officer to n1ake appropriate adjustments as respects 
liability t~xcess profits tax. 
But before any action can be taken uJ?,Qer 
, the section, there should be pending a proceeding for assessment or re-
assessment of excess- Profits tax. Under s. 15, if in consequence of definite 
jnformation .\Vhich has come into his possession,~ the Excess Profits Tax 
OffiCer discovers that the profits of any chargCable accounting "period have 
escaped assessment, he Q1ay serve a notice on the as!'essee and proceed to 
assess the profits liable to excess profits tax. 
_ ""' __ 
Jn the present case, the Appellate Assistant Commissioner, in appeal 
from the Income-tax Officer order, stated that there was a partial partition 
in the family of one of the partners of the a'ssessee. 
On the basis of that 
order, the Excess Profits Tax Officer started proceedings under s. lOA. He 
issued notices to the assessee under both' ss. 15 and lOA on the same day, 
but the notice under s. 15 was ordered to be issued first. 
After con-
sidering the reply of the assessee the Excess Profits Tax Officer passed an 
order under s. 15 moOifying· the original assessment. 
On the questions : 
( J) whether the Excess Profits Tax Officer was 
competent to apply the provisions of s. 1 OA- and n1ake the re\.ised assess-
ment under s. 15, and (2) whether there was ·any definite inforn1ation by 
virtue of which the Excess Profits Tax Officer was competent to re-open the 
original assessment. 
HELD : 
( 1) Though the notices under ss. 15 and !OA were issued 
on the same date, the requirement.:; of la\V were satisfied, 
because, the 
Excess Profits Tax Officer had initiated pro:cedings under s. 
15, 
before 
issuing notice under s. lOA by ordering the notice under s. 15 to be issued 
first. 
The asscssee also did not take any 
objection in his 
reply to 
the 
notice under s. lOA· that the notice under s. 15 had not been issued before 
the notice under s. JOA was issued. p65 F; 366 B-CJ 
(2) The information... wttich came into the 
possession of the Excess 
Profits Tax Officer of partial -partition having been effected was relevant 
for th:! purpose o[ s. 15 and once he had initiated proceedings under that 
section, he \\'as competent~~nd had jurisdiction to examine for the purpose 
of s. lOA 'vhether partial partition had been 
effected for· avoidance or 
reduction of liability to excess profits. [367 B-C] 
(a) The Appellate Assistant Commissloncr in the proceedings relating 
to the assessn1cnt of income tax of the asscssce had stated the fact of 
partial partition which waS certainly infonnation 
whiah came into 
the 
possession of the Excess Profits Tax Officer. 
It \vas information received· 
fron1 the decision of superior authorities and not a mere change of opinion 
by himself. [3 66 F-GJ 
358 
SUPREME COURT REPORTS 
[ l 9 721 I S.C.R. 
(b) lbe proceedings before the Appellate Assistant 
Commissioner 
related only to assessment of income tax. Therefore, it could not be said, 
that because he did not consider whether the object of the partition was 
to reduce liability to excess profits, there was no escapement for purposes 
of excess profits tax. [367 Al 
Bansilal v. C./. T., M.P., 70 I.T.R. 74 (S. C.) and Asm. Controller 
of Estates Duty, Hyderabad v. H.E.H. Nizam of Hyderabad, 72 I. T.R. 
376(S.C. I, applied. 
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 1225 
and 1226 of 1967. 
Appeals from the judgment and decree dated May 22, 1964 of 
the Allahabad High Court in Income-tax Reference No. 189 of 
A 
B 
1953. 
c 
S. T. Desai, R. N. Sachthey and B. D. Sharma, for the appel-
lant (i,n both the appeals). 
M. C. Chagla and A. N. Goyal, for the respondent (in both 
the appeals). 
The Judgment of the Court was delivered by 
Shah, C. J. 
Gurbux Rai Harbux 
Rai-hereinafter called 
'the assessee'-is a registered firm carrying on a business in piece 
goods and commission agents. It has its head office at Kanpur 
and a branch office at Farrukhabad. 
During the chargeable 
accounting periods July 4, 1943 to June 21, 1944 and June 22, 
1944 to July 10, 1945 Gurbux Rai and Harbux Rai (each repr

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