LexCOMMISSIONER OF INCOME-TAX, WEST BENGAL CALCUTTA & ANR. versus HEMCHANDRA KAR & ORS.
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283
COMMISSIONER
OF INCOME-TAX, WEsr
CALCUTTA & ANR.
BENGAL
v.
HEMCHANDRA KAR & ORS.
April 16, 1970
[J.C. SHAH, K. S. HEGDE AND A. N, GROVER, JJ.]
Indian lncomt•tax Acr (11 of 1922), s. 34 and Indian
Income-tax
Amendment Act, 1953, s. '31-Scope of.
The anessee was a Hindu undivided family.
The Income-tax Ofllcer
determined the total Income. of the assessee at a certain figure.
Foliowlna
demonetization of blah denomination notes the anmee encashed notes
of the value of Rs. f9,000 and each of five members of the family en·
cashed certain notes, the total encaslied by all the five
members belna
Rs. 1,10,000.
The Income-tax Officer reopened the assessments
under
s. 34 of the Income-tax Act, 1922 (as amended in 1948 and made appli-
cable by reason of s. 31 of the Income-tax Amendment Act, 1953)
and
completed the reassessment on January 31, 1955. He included Rs. 19,000
in the total income of the family and the amounts which had been sepa·
ratelv encashed by the five members were included in the reassessments
of their respectiYe individual incomes.
On February 2, 1955, he issued
another notice under s. 34 and after hearing the assessee, included the
•um of Rs. 1,10,000 in the total income of the family.
On the question whether the second notice was competent.
HELD : Under s. 34, as it stood at the relevant time, what the Income-
tax Officer has to see is if by reason of omission or failure on the part
of the assessee to disclose fully and truly •all material facts l\CCessary
for his assessment there had
been escapement of income. From 'the
primary facts disclosed by the assessee or discovered by the authoritl',
the authority has to draw inferences as regards other facts and ultimately
draw the proper legal inferences. In the present case, the primary facts
were within the knowledge of the Income-tax Officer at the time when he
completed the first reassessment. When he was in possession of all facts
and proceeded to make the reassessment by including the. amount in the
individual accounts of the members of the family, the escapement h"'
occurred by reason of· the failure of the officer to include the total sum
in the assessment of the family,
He could
not therefore, a few
day~
later, merely changed his opinion
and issue the second notice
under
s. 34 to the family. [286 F-H; 287 A-CJ
Majority opinion in Calcutta Co. Ltd. v. lnccme-tax Of!icer, Companies
Pistl'ict l Calcutta & Anr, 41 1,T.R. 191. followed.
C1v1L APPELLATE JUR1soicti6N : Civil Appeal No 2273 o{
1%6.
.
Appeal from the judgment and order dated February 12, 1964
of the Calcutta High Court in Income-tax Reference No. 84 of
1960.
.
S. C. Manchanda, R N. Sachthey and B. D. Sharma, for the
appellants.
284
SUPREME COURT REPORTS
fl971] I S.C.R.
A. K. Sen and D. N. Mukherjee, for the respondent No. 2.
The Judgment of the Court was delivered by
Grover, J.-This is an appeal by certificate from a judgment of
the Calcutta High Court i<n an Income ta" Ref~rence.
The assessee during the material time was a Hindu Undivided
Family consisting of the six memb.:rs.
In the original assessment
for the assessment year 1946-4 7 the year of account being from
April 14, 1945 to April 13, 1946, the Income tax Officer deter-
mmed the total income of the assessee at Rs. 35,741
accruing
from the business and other sources such as sale proceeds of forest
produce, fisheries etc.
Following demQnetization of High Deno-
mination Notes in January 1946 the assessee encashed such notes
of the value of Rs. 19,000. The five membP·~ of the family named
below also encashed notes of the value shown against each of them,
the total value of the notes so encashed being Rs. 1,10,000:
1.
Hen1 Chandra Kar
2. Jatindra Nath !<."
3. Atul Chandra Kar
4. Narendra Nath J<,ar
5.
Bishnt.ram ¥.ar
Rs. 26,000/-
. Rs. 24,000/-
Rs. 23,000/-
Rs. 21,000/-
Rs. 16,0CO/-
The Income tax Officer reopened the assessments of the H:1ndu
Undivided Family and of the five members for the assessment year
J 946•47. He included Rs. 19,000 in the total income of the
family and the amounts which had been separately encashed by
the five members were included in the reassessments of their res·-
pective individual income.
This reasses~ment was completed on
January 31, 1955. Two days later i.e. February 2,
1955 the
Income tax Officer issued another notice under s. 34 of the Income
tax Act 1922 to the family seeking to incluExcerpt shown. Read the full judgment & AI analysis in Lexace.