DHAKESWARI COTTON MILLS LTD. versus COMMISSIONER OF INCOME TAX, WEST BENGAL

Citation: [1955] 1 S.C.R. 941 · Decided: 29-10-1954 · Supreme Court of India · Bench: MEHR CHAND MAHAJAN, SUDHI RANJAN DAS, GHULAM HASAN, NATWARLAL HARILAL BHAGWATI, T.L. VENKATARAMA AIYYAR · Disposal: Remitted to Lower Court

Cited by 3 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

-
, 
S.C.R. 
SUPREME COURT REPORTS 
941: 
DHAKESWARI 
COTTON 
MILLS LTD. 
v. 
COMMISSIONER OF INCOME TAX, 
WEST BENGAL 
[MEHR CHAND MAHAJAN C.J.,· S.R. DAs, 
GHuLAM HASAN, BHAGWATI and 
VENKATARAMA AYYAR JJ.] 
Constitution 
of India, Art. 
Supreme Court's powet-lndian 
23(3)-Assessm'ent when invalid. 
136-Appeal by Special 
Leave-'-
Income-tax Act (XI of 1922), s. 
It is not possible to define 
with any 
precision the limitations 
of the 
powe'rs conferred on the 
Supreme Court by Art. 136 of 
the Constitution. This is an overriding and exceptional power and 
should be exercised sparingly 
and . with 
caution 
and 
only 
in 
special and 
extraordinary situation. 
Beyond this no set 
formula 
or rule can stand in the way of or fetter the exercise of the power 
conferred on the Supreme Court under Art. 136 of the Constitu-
tion. 
Sufficient safeguard and 
guarantee for the 
exercise of this 
power lie in the trust reposed by the Constitution in the wisdom 
and good sense of judges of the Supreme Court. This power 
is 
not hedged in by technical hurdles of any kind when it is called 
in aid against any 
arbitrary 
adjudication 
or for advancing 
the 
cause of justice or 
for giving a fair deal to a litigant so that in-
justice may not be 
perpetrated or perpetuated. Conclusiveness 
or finality 
given to any decision 
by any domestic 
law 
cannot 
deter the 
Supreme 
Court from exercising the power 
conferred 
under Art. 136 of the Constitution. 
The powers given to the 
Income-tax Officer under s. 23(3) of 
the Indian Income-tax Act, 1922, however wide, 
do not entitle 
him to 
base the assessment on pure guess without reference 
to 
any evidence or m~terial. 
An assessment under s. 23(3) of 
the 
Act cannot be 
made only 
on bare suspicion. 
An assessment 
so 
made without disclosing to the assessee the information supplied 
by 
the 
departmental 
representative 
and 
without 
giving 
any 
opportunity to the 
assessee to rebut the 
information so supplied 
and declining to take into consideration all materials . which 
the 
assessee wanted to produce in support of his case -constitutes 
a 
violation of 
the 
fundamental 
rules of justice · and tails for the 
powers under Art. 136 of the Constitution. 
Seth Gurmukh Singh v. Commissioner of 
Income-tax, 
Punjab 
( 1944 I.T.R. 393) approved. 
CrvrL 
APPELLATE 
No. 217 of 1953. 
JURISDICTION : 
Civil 
Appeal 
" I'-
Appeal from the Judgment and Order dated 
the 
16th day of January, 1950, of the 
Income-tax Appellate 
!954· 
, October 29. 
1954 
DhakJWtJri 
Cotton Mills Ltd. 
v. 
Commissioner of 
Jncomt~tax 
Wesl Bengal. 
942 
SUPREME COURT REPORTS 
[1955) 
Tribunal, Calcutta in Income-tax 
Appeal · · No. 4658 of 
1948-49 and E.P.T.A. No. 1137 of 1948-49. 
N. C. Chatterjee and Veda 
Vyas, (S. K. Kapoor 
and Ganpat Rai, with them) for the appellant. 
C. K. Daphtary, Solicitor-General for India 
( G. N. 
Joshi, with him) for the respondent. 
1954. 
October 29. 
The 
Judgment of the 
Court 
was delivered by 
MEHR 
CHAND 
MAHAJAN C.J.-The appellant is a 
public limited joint stock company incorporated under 
the Indian 
Companies 
Act, 1913, with its registered 
office at Calcutta. 
It carries on the business of manu-
facture and sale of cotton yarn and piece-goods. 
On 
the 28th of July, 1944, the 
Income-tax 
Officer issued a 
notice to it under section 22(2) of the Indian Income-
tax Act calling upon it to file the return 
of its income 
for the assessment year 
1944-45 
(account year 
being 
1943-44). 
Before the expiry of the due date for filing 
the return the account books of the appellant company 
together with the documents relevant to the accounts, 
were taken into custody by the 
Sub-Divisional 
Officer, 
Narayanganj and it is alleged that these remained. 
in 
the custody 
of 
the 
court 
of 
the 
Sub-Divisional 
Magistrate till January, 1950, when they were 
handed 
back to the appellant. 
In this 
situation 
the assessee 
pleaded for extension of time to furnish 
the 
return. 
This request was refused, and a show cause notice was 
·issued under section 28(3) of the 
Act calling upon the 
appellant company why penalty should not· be imposed 
upon it for its ofailure to file the return. 
An officer of 
the company appeared befor.e the · Income-tax 
Officer 
and explained the cause for this default. 
In order to 
ascertain whether the explanation 
furnished 
by 
the 
assessee was genuine, the 
Income-tax 
Officer 
made 
inquiries from the 
court concerned about this m

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