TARA DEVI AGGARWAL vs. COMMISSIONER OF INCOME-TAX, WEST BENGAL, CALCUTTA

CIVIL APPEAL No. 2387/1969Supreme Court[1973] 2 S.C.R. 103527 November 1972Bench: 3 JudgesAuthor: K.S. HEGDE, P. JAGANMOHAN REDDY, HANS RAJ KHANNA B8 pages
AI SummaryDismissed

What were the facts?

The assessee, Tara Devi Aggarwal, filed voluntary returns for assessment years 1955-56 to 1959-60, providing an address in Calcutta. The Income-tax Officer completed assessments for these years rapidly, accepting the initial capital, sale of ornaments, business income, and investments without substantial inquiry. For assessment year 1960-61, a similar process occurred, with the assessment completed by the Income-tax Officer, Howrah, despite noted defects in evidence regarding speculative transactions and interest income. The Commissioner of Income-tax, after issuing a notice under Section 33B of the Income-tax Act, 1922, found the Income-tax Officer's orders erroneous and prejudicial to the revenue, directing a fresh assessment. The Appellate Tribunal ruled in favour of the assessee on the Commissioner's jurisdiction, but the High Court, on reference, ruled in favour of the Revenue.

What did the Supreme Court hold?

The Supreme Court dismissed the appeal, upholding the High Court's decision. Regarding the first issue, the Court held that the Commissioner had ample jurisdiction under Section 33B to cancel an assessment found to be erroneous and prejudicial to the revenue. The Court clarified that prejudice to revenue interests can arise even if an income was not earned or assessable, especially if the assessee seeks its assessment to shield another party from a larger tax liability. The Court relied on the case of Rampyari Devi Saraogi v. Commissioner of Income-tax. Concerning the second issue, the Court agreed with the High Court's finding that the Income-tax Officer lacked jurisdiction to make the order for assessment year 1960-61, which was sufficient grounds for the Commissioner to set aside the assessment. The Court did not pronounce on whether the Commissioner could consider materials from previous years for the 1960-61 assessment. The third issue regarding the repeal of the Act was not pressed by the assessee.

What were the issues?

1. Whether the Commissioner of Income-tax had the jurisdiction under Section 33B of the Income-tax Act, 1922, to cancel the assessment made by the Income-tax Officer, particularly when the assessee had made a voluntary return and been assessed to tax. - Assessee's contention: The Commissioner lacked jurisdiction as an assessment having been made on a voluntary return cannot be considered prejudicial to the revenue. - Revenue's contention: The Commissioner had jurisdiction as the assessment was erroneous and prejudicial to the revenue's interests. 2. Whether the Income-tax Officer had jurisdiction to make the order of assessment for the year 1960-61. - Assessee's contention: Implicitly, the assessee argued the Income-tax Officer lacked jurisdiction, as the High Court's finding on this point was against the assessee. - Revenue's contention: Implicitly, the Revenue argued the Income-tax Officer lacked jurisdiction, leading the High Court to uphold the Commissioner's action. 3. Whether the Commissioner of Income-tax could lawfully initiate proceedings under Section 33B of the Indian Income-tax Act, 1922, on June 25, 1963, notwithstanding the repeal of the Act by the Income-tax Act, 1961, effective April 1, 1962. - Assessee's contention: Not pressed before the Supreme Court. - Revenue's contention: Not recorded.

Which sections of the Income-tax Act were involved?

Section 33B,Section 66,Section 23(2),Section 35,Section 34

AI-generated summary — verify with the full judgment below

A B c D E F G H 1-035 TARA DEVI AGGARWAL v. COMMISSIONER OF INCOME-TAX, WEST BENGAL, CALCUTTA November 27, 1972 [K. s. HEGDE, P. JAGANMOHAN REDDY AND H. R. KHANNA, JJ.] Income-tax Act (11 of 1922) s. 33B.-Power of Commissioner to cancel assessn1ent and re.open-'Prejudicial tO the interests of rev~nue', scope of.

Section 33B of the Income-tax Act, 1922, enables the Commissioner to call for and examine the record of any proceeding ·under the Act and to pass such orders as. he deems necessary, a.s the circumstances of the case justify when he considers the order passed erroneous insofar as it is prejudicial tO· the interests of the revenue.

In the present case, the assessee-appellant submitted a return and the income-tax officer. though he was not satisfied a.1JOut the various sou~ces of the assessee's income, passed an order of assessment.

The Com~is­ sioner of Income-tax, after notice under s. 33B of the Income-tax A.ct, 1922, held that inquiries revealed that the assessee neither resided in nor carrfcd 01; .ri:rzy business from the address given in the return, that the income-tax officer was not justified in accepting the initial capital, the sale of ·

The order continues below.

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