# C.I.T., WEST BENGAL II, CALCUTTA v. M/S. ELECTRO HOUSE

- **Citation:** [1972] 1 S.C.R. 589
- **Court:** Supreme Court of India
- **Decided:** 1971-09-02
- **Case number:** Civil Appeals Nos. 2376 to 2379 of 1968
- **Bench:** K. S. Hegde, A. N. Grover
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/c-i-t-west-bengal-ii-calcutta-v-m-s-electro-house-5399
- **Pages:** 5

## Headnote

589
Income-tax Act (11 of 1922), s. 338--Whether jurisdiction of Com111issio11er depends on issue of proper notice to assessee,
The Commissioner of Income-taJC found that the orders of the Incometax Officer gr.;nting registration to the assessee firm and renewal of registration for the next year were erroneous and prejudicial to the interests
of ·revenue.
He therefore proceeded against the assessee under s. 33B of
the Incomc~tax Act, 1922, after issuing noti~e to the assessee.
The High Court, on re'ference, held that the notice was not valid and
that therefore, the Commissioner had no jurisdiction to proceed with the
enquiry.
Allowing the appeal to this Court,
HELD : Section 33B, unlike s. 34 of the Act does not prescribe any
notice to be given.
For the assumption of jurisdiction to proceed under
ii. 33B a notice is not a condition precedent. The section only requires
th~ Commissioner to give nn opportunity to the assessee before reaching
his decision and not before commencing the enquiry. The requirement
is only a principle of natural justice, and its breach may affect the legality
of the order, but does not affect the jurisdiction
of the Commissioner.
Therefore, the question as to what the notice given
in the present case
:-.hould have contained did not arise at all. [592 C-H]
Gita Devi Aggamal v.
C.l.T., West Bengal, 76 I.T.R.
496(8.C.),
followed.

## Text

A
B
c
D
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F
G
H
C.I.T., WEST BENGAL II, CALCUTTA
v.
M/S. ELECTRO HOUSE
September 2, 1971
(K. S. HEGDE AND A. N. GROVER, JJ.J
589
Income-tax Act (11 of 1922), s. 338--Whether jurisdiction of Com111issio11er depends on issue of proper notice to assessee,
The Commissioner of Income-taJC found that the orders of the Incometax Officer gr.;nting registration to the assessee firm and renewal of registration for the next year were erroneous and prejudicial to the interests
of ·revenue.
He therefore proceeded against the assessee under s. 33B of
the Incomc~tax Act, 1922, after issuing noti~e to the assessee.
The High Court, on re'ference, held that the notice was not valid and
that therefore, the Commissioner had no jurisdiction to proceed with the
enquiry.
Allowing the appeal to this Court,
HELD : Section 33B, unlike s. 34 of the Act does not prescribe any
notice to be given.
For the assumption of jurisdiction to proceed under
ii. 33B a notice is not a condition precedent. The section only requires
th~ Commissioner to give nn opportunity to the assessee before reaching
his decision and not before commencing the enquiry. The requirement
is only a principle of natural justice, and its breach may affect the legality
of the order, but does not affect the jurisdiction
of the Commissioner.
Therefore, the question as to what the notice given
in the present case
:-.hould have contained did not arise at all. [592 C-H]
Gita Devi Aggamal v.
C.l.T., West Bengal, 76 I.T.R.
496(8.C.),
followed.
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 2376
to 2379 of 1968 and 1168 to 1171 of 1971.
Appeals by certificate/special leave from the judgments and
orders dated May 2, 1968 of the Calcutta High Court in Incometax Reference Nos. 63, 112 and 113 of 1965.
Jagadish Swarup, Solicitor-Genera/, A. N. Kirpal, R. N. Sachtlte,v and B. D. Sharma, for the appella1nt (in all the appeals).
S. T. Desai and D. N. Mukherjee, for the respondent (in all the
appeals).
The Judgment of the Court was delivered by
Hegde, J. Civil Appeals Nos. 1168-1171 of 71
are by
'Pccial leave and Civil Appeals Nos. 2376-2379 of 68 are by
certificate. These appeals arise from the decision of the Calcutta
High Court in certain tax references.
In those references the
High Court was considering the one question referred to it by
the Tribunal under section 66(1) of the Indian Income-tax Act,
1922 (in brief 'the Act') and two other questions referred to it
hy the Tribunal in accordance with the directions given by that
590
SUPREME COURT REPORTS
(1972] 1 S.l'.R.
Court under section 66(2) of the Act.
The High Court has
only an,wered the question referred to it by the Tribunal under
section 66 ( 1) of the Act and it has not answered the other two
questions as being unnecessary.
The question referred under
section b6(i) .is:
''Whether on the facts and in the circumstances of
the case, the notice issued under section 33B of the
Indian Income-tax Act, 1922 met the requirements of
the law and whether the Commissioner of Income-tax
validly exercised jurisdiction under section 33B of the
Indian Income-tax Act, 1922?
The facts of the case lie within a narrow compass.
The
concerned assessment years are 1959-60 and 1960-61, the corresponding accounting years having ended on December 31 of
each of the years 1958 and 1959.
The assessee M/s. Electro
House claimed to be a firm comtitutcd under a deed of partnership dated January 2, 1958.
The business of that firm was
started by Baidyanath Gorai sometimes in the year 1949 and
.up to the assessment year 1958-59 he was assessed as the sok
proprietor thereof.
On January 2, 19 5 8 he purported to enter
into a partnership with his mother-in-law and son-in-law. Under
that partnership he had 40% share and his mother-in-law and
son-in-law had 30% share each in the profits and losses of the
firm.
The Income-tax Officer accorded registration of the partnership in question under section 26 A of the Act for the two
assessment years with which we are concerned in these appeals.
The Commissioner of Income-tax, West Bengal, however appears
to have found on an examination of the records that the orders
·Of the Income-tax Officer granting registration to the asscssec
firm for the assessment year 1959-60 and renewal of registration
for the assessment year 1960-61 were erroneous and prejudicial
to the interests of the revenue.
He therefore proceeded against
the assessee under section 33B of the Act. Before doing so, he
issued a notice to the firm on Jufy 18, 1962 which reads thus :
"From
To
Shri F. H. Vallibhoy
Commissioner of Income Tax,
West Bengal.
Mis. Electro Hou>e
G. T. Road,
Asansol.
Gentlemen,
A
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E
F
G
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A
B
c
D
E
F
G
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C.!.T. v. ELECTRO HOUSE (Hegde, I.)
591
SVB.-lncome
Tax
Assessment-1959-60
and
1960-61 M/s. Electro House-Registration
u/s 26A of the Income Tax Act-Wrongly
granted-Proposal u/ s 338 to cancel orders
u/s 26A-notice regarding:-
On a perusal of the orders u/ s 26A passed
by
Income Tax Officer, "A" Ward Asansol on 5th October,
1960 and 25th February, 1961 for the assessment years
1959-60 and 1960-61 respectively in the above case
and the connected records, I consider that the said
orders are erroneous and prejudicial to revenue, inasmuch as registration u/s 26A of Income Tax Act 1922,
for the assessment year 1959-60 and renewal of registration u/s 26A of the said Act for the assessment
year 1960-61 should not have been granted as there
are prima facie reasons and grounds to hold that the
partnership brought into existence by the
partnership
deed dated 2nd January, 1958 is not a genuine one.
I, therefore, propose to cancel the orders u/ s 26A
of the Income-tax Act, 1922 for the assessment years
1959-60 and 1960-61 under powers vested in me under
section 33B of the Income Tax Act 1922, unless you
show cause whv the orders should not be so cancelled.
I am prepared to hear your objections, if any, at
11 AM. On 3rd August, 1962 at my office as noted
above. . Obje~tions in writing, if any submitted on or
before the above date will also be duly considered.
Yours faithfully,
Sd./- F. H. Vallibhoy,
Commissioner of Income Tax
West Bengal."
The question for ,consideration is whether this notice is an
invalid notice and consequently the Commissioner had no jurisdiction to proceed under section 33B.
The Tribunal can1e to
the conclusion that the notice issued was not one required to be
issued by the Act and hence its validity or invalidity did not
affect the jurisdiction of the Commissioner.
It also held that
it was a valid notice.
But the High Court differing from the
conclusions reached by the Tribunal opined that the
notice
issued was not valid and therefore the Commissioner had no
jurisdiction to proceed with the enquiry. In that view it thciughl
1t unnecessary to consider the remaining questions.
592
SUPREME COURT REPORTS
[ l 972] 1 S.C.R.
Section 33B ( 1) reads :
'The Commissioner may call for and examine the
record of any proceeding under this Act and if he
considers that any order passed therein by the Incometax Officer is erroneous in so far as it is prejudicial to
the interests of the revenue, he may, after giving the
assessee an opportunity of being
heard
and
after
making or causing to be made sueti enquiry
as
he
deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the
assessment and directing a fresh assessment."
This section unlike section 34 does not prescribe any notice
to be given. It only requires the Commissioner to give an opportunity to the assessee of being heard.
The section does not
speak Qf any notice. It is unfortunate that the High Court failed
to notice the difference in language between section 33B and
34. For the assumption of jurisdiction to proceed under section
34 the notice as prescribed in that section is a condition precedent.
But no such -notice is contemplated by section 33B.
The
jurisdiction of the Commissioner to proceed under section 33B
is not dependent on the fulfilment of any condition precedent.
All that he is required to do before reaching his decision and not
before commencing the enquiry, he must give the assessee an
opportunity of being heard and make or cause to make such
enquiry as he deems necessary.
Those requirements have nothing to do with the jurisdiction of the Commissioner.
They
pertain to the region of natural justice. Breach of the principles
of natural justice may affect •the legality of the ord·~r made but
that does not affect the jurisdiction of the Commissioner.
At
present we are not called upon to consider whether the order
made by the Commissioner is vitiated because of the contravention of any of the principles of natural justice.
The scope of
these appeals is very narrow. All that we have to see is whether
before assuming jurisdiction the Commissioner was required tc
issue a notice and if he was so required what that notice should
have contained ? Our answer to that question has already been
made clear.
In our judgment no notice was required to be
issued by the Commissioner before assuming jurisdiction to proceed under section 33B. Therefore the question what that notice
should contain does not arise for consideration. It is not necessary nor proper for us in this case to consider as to the nature
of the enquiry to be held under section
33B.
Therefore
we
refrain from spelling out what principles of .natural
justice
should be observed in an enquiry under section 33B. This Court
in Gita Devi Aggarwal v. Commissioner of Income-tax, Wesr
c
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A
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D
C.J.T. v. ELECTRO HOUSE (Hegde, J.)
593
Bengal and others( 1 ) ruled that section 33B does not in express
terms require a notice to be served on the assessee as in the case
of section 34. Section 33B merely requires that an opportunity
of being heard should be given to the assessee and the stringent
requirement of service of notice under section 34 cannot, therefore, be applied to a proceeding under section 33B.
For the reasons mentioned above, we allow Civil Appeal Nos.
1168 to 1171 of 71, discharge the answer given by the High
Court to the question set out earlier and answer that question as
follows:-
The notice issued did not contravene section 33B and the
Commissioner validly exercised his jurisdiction under section 3313.
But as the ·High Court . has not considered the other questions
referred to it, these cases will now go back to the High Court
for considering those questions.
Civil Appeals Nos. 2376 to 2379 of 68 are dismissed as being
not maintainable, as the certificates on the basis of which those
appeals were brought to this Court are not in accordance with
law. But in those appeals there will be no order as to costs.
V.P.S.
(I) 761.T.R. p. 496.
4-L3Sup.CJ./ 72
C.A. Nos. 1168-1171/71 allowed.
C.A. Nos. 2376-2379/68 dismissed.