# 1-035 TARA DEVI AGGARWAL v. COMMISSIONER OF INCOME-TAX, WEST BENGAL, CALCUTTA

- **Citation:** [1973] 2 S.C.R. 1035
- **Court:** Supreme Court of India
- **Decided:** 1972-11-27
- **Case number:** Civil Appeal No. 2387 of 1969
- **Bench:** K. s. HEGDE, P. Jaganmohan Reddy, H. R. Khanna
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/1-035-tara-devi-aggarwal-v-commissioner-of-income-tax-west-bengal-calcutta-5756
- **Pages:** 8

## Headnote

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 ·ornaments, the income from business, the investments etc .. withotit
any inquiry or evidence whatsoever, and that there were suspicious circumstances showing connection with the business of the assessee's husbimd.
In the result, he held that the order of the income-tax officer was erroneous and prejudicial to the revenue and directed the income-tax officer
to make a fresh assessment, after making inquiries with regard to the juris~
diction and the business carried on by the :;ssessee, the possession ot
initial capital, acquisition and sale of ornaments, purchase of plot of land
and resources, and the money invested in the name o'f the assessee.
On the question of the jurisdiction of the Commissioner to pass the
order the Appellate Tribuna1 held in favour of the assessee, arid the High
Court, on reference, in favour of the Revenue.
·
In appeal to this Court, it was contended that the Commissioner had
no jurisdiction under S. 33B to cancel the assessment made by the income,
tu. officer inasmuch as it cannot be said that where an B66essee lras been
assessed to tax it was prejudicial to the interests of· revenue on the ground
that no assessment could have been made in respect of the income of
which she made a volunt~J!Y return.
Dismissing the appeal,
HELD : Even where an income had not been earned and is not assessable, merely because the assessee wants it to be assessed in his or her
hands in artier to assist someone else who would have been "'5sessed to
a larger amount, an assessment so made can certainly be erroneous and
prejudicial to the interests of revenue. If so, the Commissioner, under
s. 33B, had ample jurisdiction to cancel the assessment and to initiate pro·
ceedings for assessment under the provisions of the Act against some other
assessee who, according to the income-tax authorities, is liable for
the
income thereof. [1040 H; 1041 A-CJ
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J.036
SUPREME COURT REPORTS
[1973] 2 S.C.R,
Ra.n1payan' Devi Saraogi v. Commissioner of Income-tax, 81 I.T.R. 84
followed.
Commr. of Income-tax v. Rao Thakur Narayan Singh, 56 I.T.R. 234
explained.

## Text

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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 ·ornaments, the income from business, the investments etc .. withotit
any inquiry or evidence whatsoever, and that there were suspicious circumstances showing connection with the business of the assessee's husbimd.
In the result, he held that the order of the income-tax officer was erroneous and prejudicial to the revenue and directed the income-tax officer
to make a fresh assessment, after making inquiries with regard to the juris~
diction and the business carried on by the :;ssessee, the possession ot
initial capital, acquisition and sale of ornaments, purchase of plot of land
and resources, and the money invested in the name o'f the assessee.
On the question of the jurisdiction of the Commissioner to pass the
order the Appellate Tribuna1 held in favour of the assessee, arid the High
Court, on reference, in favour of the Revenue.
·
In appeal to this Court, it was contended that the Commissioner had
no jurisdiction under S. 33B to cancel the assessment made by the income,
tu. officer inasmuch as it cannot be said that where an B66essee lras been
assessed to tax it was prejudicial to the interests of· revenue on the ground
that no assessment could have been made in respect of the income of
which she made a volunt~J!Y return.
Dismissing the appeal,
HELD : Even where an income had not been earned and is not assessable, merely because the assessee wants it to be assessed in his or her
hands in artier to assist someone else who would have been "'5sessed to
a larger amount, an assessment so made can certainly be erroneous and
prejudicial to the interests of revenue. If so, the Commissioner, under
s. 33B, had ample jurisdiction to cancel the assessment and to initiate pro·
ceedings for assessment under the provisions of the Act against some other
assessee who, according to the income-tax authorities, is liable for
the
income thereof. [1040 H; 1041 A-CJ
r
I
J.036
SUPREME COURT REPORTS
[1973] 2 S.C.R,
Ra.n1payan' Devi Saraogi v. Commissioner of Income-tax, 81 I.T.R. 84
followed.
Commr. of Income-tax v. Rao Thakur Narayan Singh, 56 I.T.R. 234
explained.
CIVIL APPELLATE JURISDICTION :
Civil Appeal No. 2387
of 1969.
Appeal by certificate from the judgment and order dated
May 16, 1969 of the Calcutta High Court in Income-tax Reference No. 25 of 1966.
G. C. Sharma, Randhir Chawla, 0. P. Dua, R. P. Soni, S. R.
Gupta and M. V. Goswami for the appellant.
P. L Juneja. S. P. Nayar and R. N. S<Jl;hthcy
for the respondents.
The Judgment of the Court was delivered by
JAGANMOHAN REDDY, J.-This is an appeal by certific,ate
agains1 the judgment of the High Court of Calcutta rendered on
a reference under sub-s. ( 1) of s.66 of the Indian Income-tax
Act, 1922 (hereinafter referred to as the 'Act'). The assessee,
it appears, had filed voluntary returns of income for the assessment
years 1955-56 to 1959-60 giving her address as 5/ A Bysack
Street, Calcutta which was then within the jurisdiction of the
Income-tax Officer, 'J' ward, District I (1) Calcutta. The return
for 1958-59 was dated 22nd August 1959 while the &SSessments
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for the other years were antedated. It also appears ft:om
the
order sheet that the Income-tax Officer had directed issue 'of
notice under s.23(2) in respect oi five years on 14th December
1959 which notices were purported to
have
been
received
personally by the authorised representative of the assessee
on
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the same date. The cases were heard on 21st and 23rd Decem~r
19 5 9 and the assessment for these years was completed by the
Income-tax Officer on 23rd December, 1959. It further appears
from the records that the assessee had signed a declaration on
15th December 1959 stating inter alia that:-
(i) at the time of her
marriage with Sri
Ram
Prasad Luharwala about 15 years ago, the assessee
received presents and dowry and "1th day presentations
on different occasions in kind as well as in cash to the
extent. of Rs. 18,000 and also a sufficient quantity of
ornaments.
(ii) with this amount of cash, she started business
of investment on interest and out oi the int;rest received
she could save about Rs, 600
after
meeting
her
expenses up to March 1950;
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TARA DEVI v. C.I.T. (Jaganmohan Reddy, 1.)
!037
(iii) the sum of money at her disposal in March
1950 was Rs. 13,500 which had been shown as the
initial capital for the accounting year 1950-51;
(iv) subsequently she started speculation business
in shares in addition to the investment business and out
of the income from this business she made the following
investments and acquisition :~
(A) purchase of a piece of land on 14-8-1956 for
Rs. 2,299.
(B) investment of two sums of Rs. 50,000 each on
26th November, 1957 and 28th November, 1957 with
Ml s ~aluram Prahledrai on interest;
( v) she sold some of her ornaments in the year
1955-56. for Rs. 30,600 and the remainder of her ornaments in 1956-57 for Rs. 37,400 and the certificates
showing the sale of such ornaments were enclosed with
declaration;
(vi) the assessee was doing the aforesaid business
in her individual capacity and this business had
no
connection with the business of her husband;
(vii) she kept no regular l:r:>oks of acoount and
neither had she any bank accoull't.
The Income-tax Officer, J-Ward District I(I) ·Calcutta who
made the assessment for the years 1955-56 to 1959-60 accepted
the initial capital and the fact that the assessee had been carrying
on money lending and speculation business. He made an addition
of Rs. 1,000 to the disclosed income of Rs. 4,300 and made an
assessment on a total income of Rs. 5,300 for
the assessment
year 1055-56. Similar sho~t stereo-typed assessment orders were
made for each of the years 1955-56 to 1959-60, the income
assessed for these years being Rs .. 5,500, Rs. 6,000 Rs. 6,900 and
Rs. 7,500 respectively.
For the assessment year 1960-61 :a1so a
voluntary return
dated July 6, 1960 W!IS received by the Income-tax Officer on
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July 20, 1960 and on November 30, 1960 the Income-tax Officer
directed the issue of a notice under s.23 (2) fixing ~he date of
hearing on February 25, 1961. Thereafter by her letter dated
March 13. 1961 the assessee informed the Income-tax Officer that
her place of business had been shifted. to No. 1, Gunsala Road
Lillooab, Howrah and on the basis of this letter the assessee's file
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was transferred to the Income-tax Officer 'D' Ward., Howrah. On
July 2, 1961 the Income-tax Officer Howrah again issued notice
under s.23 ( 2) of the Act fixing the hearing on July 10, 1961.
This notice was also received by the assessee's
authorised re-
1038
SUPREME COURT REPORTS
(1973] 2 S.C.R,
presentttive and the assessment for 1hat year was made on 1he
<late of hearing, viz., 10th July 1961, when the demand noti~e,
<:hallan and a copy of the assessment ord~r were stated to have
b~n personally served on the said authorised personal representtatJve on 10th July 1961.
In his assessment for the above year the Income-tax Officer
Howrah while remarking that the source of income of the assessee
during the accounting year was income from speculation
and
interest on investments stated that neither the assessee was able to
produce the -details and vouchers of the speculative transactions
made during the accounting year nor was
there any
evidence
regarding the interest received by her from different parlles on her
investments. Notwithstanding these defects he did not investigate
into the various sources but assessed the appellant on a total income
oi Rs. 9,037/-. Thereafter on 7•th June 1963 the Commi.;sioner
by a notice under s. 33-B of.the Act required the assessee to show
cause on or before June 25, 1963 why appropriate orders should
not be passed under that section in respect of the. assessment year
1960-61 as the enquiries revealed that the assessee neither resided
nor carried on any business from the address given in the return,
that the Income-tax Officer was not justified in accepting the initial
capital, the sale of ornaments, the income from business, the investments etc. without any· enquiry or evidence whatsoever and that
the order of assessment wt$ erroneous and prejudicial to the
intere$ts of revenue. In response to the aforesaid notice, '.he assessee showed cause on June 24, 1963 and after considering the
objections of the assessee, the Commissioner passed an order cancelling the assessment for 1960-61 and directing the. Income-tax
Officer to make a fresh assessment according to law after making
enquiries wi·th regard to the jurisdiction and the business carried
on by the assessee, the possession oi initial capital, acquisition
and sale of ornaments, purchase of plot of land and· resources and
the money invested in tl:e name of 1he assessee. In his order the
Commissioner held that the assessments m'ade by the. Income-tax
Officer were made in post haste without making any enquiry or
imvestilrntion into the antecedents of the assessee. He further held
that on enquiry i1 had bjeen
ascertained that the Income-true
Officer 'J' Ward, District 1(1) Howrah had no jurisdiction over
the assessee, the assessments made by them were ab initio void
inasmuch as the departmental enquiries revealed that the assessee
never resided nor carried on any business either at premises 5 I A
Bysack Street, Calcutta or at No. 1 Gunsala Road, Lillooah, Howrah. Jn fact the assessee had been living with her husband ever
since her marriage in 1946 a1 Raniganj and for that reason he was
of opinion that the Income-tax Officer was not justified in accepting
the claim of initial capital oi Rs. 13,500/- without any evidence
placed on record nor was he justified in accepting that the assessee
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TARA DEVI v. C.I.T. (Jaganmohan Reddy, ].)
1039
being a married lady was carrying on spec~lative business
at
Calcutta. The Commissioner refused to believe the sale of gold
ornaments of the value of Rs. 6R,000/- during the years 1955-56
and 1956-57 as genuine as no details of such
or~aments were
given. He further stated that the departmental enqwry had subsequently revealed that the firm orKeshardeo Aggal'Wal & Co., of
29, Burtolla Street, Calcutta through whom the ornaments were
sold was not a genuine finn and that the assessee's husb~d wa~ a
partner in a firm of M/s Kaluram Prahladrai of Asansol ID which
the assessee is allowed to have made an investment of two sums of
R;. 50,000/- on 26th and 28th November 1957. In the result,
having regard to the fact 1hat the assessments for the years 195556 10 1959-60 were· already beyond time for taking action, he cancelled the assessment for 1960-61 and directed the Income-tax
Officer 10 make a fresh assessment as stated atlove.
The assessee appealed to the Tribunal agtinst tlie aforesaid
order of the Commissioner and it was urged that under s. 33-B the
Commissioner could only call for and examine the proceedings of
any particular assessment year if he considered that any order
passed thereir. by the Income-tax Officer was erroneous and prejudicial to the interests of the revenue.
This
contention was
accepted by the Tribunal on the ground that as 1he assessment
orders for the years 1955-56 to 1959-60 could not be interfered
with by the Commissioner under s. 33-B, he could not rely on those
very orders for coming to a conclusion that 1he assessment order for
1960-61 was erroneous and prejudicial to the interests of revenue.
The Tribunal further held that if the orders for 1955-56 to 195960 were left out and the assessment order for 1960-61 was considered by itsel.f, it could not be said that the assessment
order was prejudicial to
the interests of revenue.
It
was
also observed that the factum of advance of initial capital, realisation c-f amounts ~y sale of gold ornaments and the carrying on
of the money lendltlg and speculative business had already been
accepted and assessed in the previous years, that even in the vear
of assessment in ques1ion the Inco1Re-tax Officer had added
Rs. 1,499/- to the disclosed income from
speculative business
and Rs. 1,270/- to the disclosed income from interest and made
the assessment on a total income of Rs. 9.037; as such it could
not bie said that the assessment was prejudicial to the interes1s of
revenue and that at the moS>t it could be said that the assessee
could not have carried on any business at the addresses given by
her blllt where an assessment has been made without territorial
jurisdiction it could not be said to be prejudicial to the interests of
revenue. On these findngs the questions that were referred to the
High Co·Jrt were as follows :-
1. Whether on the facts and in the circumstances of the case,
in taking action under s. 33-B(l) of the Income-tax Act, 1922
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1040
SUPREME COURT REPORTS
(1973) 2 S.C.R.
for the assessment year 1960-61, the Commissioner of Income-tax
was entitled to take into cQnsideration the records of the pi;:oceedings relating to the assessment of the assessee (or the assessment
years 1955-56 to 1959-60?
2. Whether, on the facts and in the circumstances of the case,
the Tribunal was right in holding that there were no materials
before the Commissioner to justify his finding that the 'assessment
order for 1960-61 was erroneous insofar as it was prejudicial to
the interests of the revenue?
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Apart from these, a further question which will be referred to
as the third question, was also referred, at the instance of the
assessee, namely,
Whether the Commissioner of Income-tax could lawfully
initiate proceedings under section 33-B of the Indian Income-tax
. Act, 1922 on 1he 25th June, 1963, notwithstanding the repeal of
the aforesaid Act by the Income-tax Act, 1961 with effect from the
1st of April, 1962?
The High Court declined to answer the first question as in its
view it was merely academic. The assessee did not press for an
answer on the third question. The only other question, therefore,
was the second one which was answered against the assessee on
the ground that the Income-tax Officer had no jurisdiction to make
the order which itself would have been sufficient for the Commissioner to set aside the assessment.
In this view of the matter, it
held that there were materials before the Commissioner to justify
his finding that the order of assessment for the year 1960-61 was
·~rroneous insofar as it is prejudicial to the interests of revenue.
It however did not pronounce any opinion on the question whetlier
the Commissioner could have considered materials of the previous
year in arriving at his conclusion in respect of the assessment for
the year 1960-61.
The learned advocate for the assessee contends that under
s. 33B the Commssioner had.no jurisdiction to cancel the assessment made b:y the Income-tax Officer inasmuch as it cannot . be
said that where an assesse.e has been assessed to tax it was prejudicial to the interests of revenue on the ground that no assessment
couln have been made in respect of the income of which she made
a voluntary return. This contention in our view is unwarranted
by the language of s. 33B. The words of the section enable the
Commissioner to call for and examine the record of any proceeding under the Act and to pass such orders as he deems necessary
as the sircumstances of the case justify when he considers the order
passed was erroneous insofar as it is prejudicial 'to the interests
of the revenue. It is not, as submitted by the learned advocate,
prejudicial to 'the interests of the revenue only if it is found that
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TARA DEVI v. C.!.T. (Jaganmohan Reddy, J.)
1041
the assessment for the year was disclosed on the basis that an in,
come had been e'imed which is assessable. Even where an income
has not been earned and is not assessable, merely because the
assessee wants it to be assessed in his or her hands in order to
enabie someone el1e who would have beea assessed to a larger
amount, an assessment so made can certainly be erroneous aind
prejudicial to the interests of the revenue. If so-and we think
it is so-the Commissioner under s. 33B has ample jurisdiotion to
cancel the assessment and may initiate proceedings for assessment
under the provisions of the Act against some other assessee who
according to the income-tax authorities is liable for the income
thereof.
Rampyari Devi Saraogi v. Commis~ioner df
/ncometax(1) lends support to this view.
In that case, this Court in
similar circumstances held that the Commissioner had jurisdiction
under s. 33B of the Act. It appears the Commissioner of Lncometax West Bengal had on enquiries made by the department stated
in the notice to the assessee th~t he neither resided nor carried on
any business declared in the returns and had found that the Incometax Officer was not justified in accepting the initial capital, tl:ie gift
received and sale of jewellery and the income from business without any enquiry or evidence whatsoever. It appeared in that case,
as in this case, the assessee had given a fictitious address in order
to invest the jurisdiction on a particular Income-tax Officer to make
the assessmen1. While agreeing with the High Court that all this
material was supporting material and did not constitute the basic
grounds on which the order under s. 3 3B were passed by the Commissioner, this Court held that there was ample material to show
that the Income-tax Officer made the assessment in undue hurry;
that the assessee was a new assessee and filed voluntary returns in
respect of a number of years i.e. from assessment years 1952-53 to
1960-61. The other circumstances also were similar in nature to
those in this case.
The learned advocate further referred to the case of Commr.
of lncomP-tax v. Rao Thakur Nara.van Singh( 2 ) in support of his
submission that past assessments against the assessee were final
and cannot be relied upon for the purpose of exercising jurisdiction under s. 33B. A reference to the case cited by hin1 however
would show that no steps had been taken under s. 35 to rectify
the mistake in 1he order of. the Appellate Tribunal nor was any
reference to the High Court sought against that order, but nonetheless, the Income-tax Officer initiated fresh assessment proceedings
under s. 34 with respect to interest income and made a fresh assessment to include· that income. In these circumstances it was held
that where the order of the Appellate Tribunal became final the
·rncomc-tax Officer could not initiate re-assessment proceedings
(!). 87 I.T.R. 8•.
(2i 56 l.T.R. ~34.
1042
SUPREME COURT REPORTS
[1973] 2 S.C.R.
even in respect of interest income which was binding on hlm and
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he could not therefore re-open the ·assessment to include that income. "If that were not the legal position", this Court observed,
it "would be placing an unrestricted power of review in the hands
of the Lncome-tax Officer to go behind the findings gi'{jln by a
hierarchy of Tribunals and even those of the High Court and
Supreme Court with its changing moods." This case therefore is
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of little assistance. In ti)e view we have taken, the answer given
by the High Court cannot be disturbed and the appeal is accordingly dismissed with costs.
V.P.S.
Appeal dismissed.
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