PARAMOUNT ELECTRIC COMPANY, LAHORE Versus COMMISSIONER OF INCOME-TAX, LAHORE ZONE LAHORE

MUHAMMAD AKRAM, J.‑This is a reference application made under section 66(1) of the Income‑tax Act directly to the High Court in accordance with the law prevailing at the time. The circumstances leading to this reference are briefly stated hereunder

2. Sh. Nazir Ahmad is a dealer in electrical equipments and is running his business under the name and style of M/s Paramount Electric Company, Brandreth Road, Lahore, as its sole proprietor. He was assessed to tax in his status as an individual. In respect of the assessment year 1967‑68 he filed his return and the assessment against him was completed on the 28th of February 1967 under the self assessment scheme on the returned income of Rs. 8,000 only. Afterwards the Income‑tax Officer, D‑Circle, Lahore (now renamed as Circle II, Lahore) issued a notice to the petitioner in Form I.T.‑90 under section 34 of the Income‑tax Act, 1922. In the notice it was generally alleged by the Income‑tax Officer that:‑

"Whereas I have reason to believe that your income assessable to income tax for the year ending 30th of June 1968 has (a) escaped assessment, (b) been under‑assessed (c) been assessed at too low a rate and (d) been the subject of excessive relief. I, therefore, propose to re‑assess the said income that has (a) escaped assessment, (b) been under‑assessed,

(c) been assessed at too low a rate, and (d) been the subject of excessive relief. I hereby require you to deliver to me not later than or within 35 days of the receipt of this notice, a return in the attached form of your total income and total world income assessable for the said year ending 30th of June 1968."

On the face of it the notice issued by the Income‑tax Officer indicates that he had definite information in his possession of that he already obtained prior approval of the Inspecting Assistant Commissioner of Income‑tax in writing before initiating these proceedings.

3. In pursuance to this notice on the 15th of July 1971 the assessee fled a return stating therein that his income was the same as already declared in his original return. In the course of the proceedings the Income‑tax Officer also issued a notice under section 22(4A) to the assessee. In response to it be filed the statements of his assets and liabilities as on the Ist of April 1948 and on 30th of June 1967. The Income‑tax Officer analysed and compared the two wealth statements and concluded that there was an accretion of Rs. 94,800 during this period over a span of 20 years about which no valid explanation was submitted by the assessee to his satisfaction. He, therefore, treated the accretion of Rs. 94,800 between 1st April, 1948 to June 1967 as concealed income from undisclosed sources of the assessee for the previous year relevant to the charge year 1967‑68 and after adding it to his already declared income of Rs. 8,000 through the original assessment, determined the total income of the asssessee at Rs. 1,02,800 charged to tax.

4. Dissatisfied, the assessee went up in appeal against the order which was disposed of by the Income‑tax Appellate Tribunal, Lahore on 14th of September, 1973. Before the Tribunal an objection was raised against the validity of the notice issued under section 34 on that ground that it was too vague. It did not furnish the relevant details indicating the date when the income had allegedly escaped or the precise reason for issuing the notice. It was issued in the usual aterotyped form with none of alternatives not appl icable to the assessee scored off. Moreover, according to the assessee there was no definite information in possession of the Income‑tax Officer about any escaped income and the Income‑tax Officer had not obtained the prior approval of the Inspecting Assistant Commissioner in accordance with the proviso to section 34(3) of the Act. None of these pre‑requisites were even mentioned in the notice which was singularly silent about them. It was alleged that in these circumstances the very initiation of the proceedings against the assessee under section 34 of the Act was ab initio void and without jurisdiction. Alterna tively it was agued before the Tribunal that the assessee had not made an investment during the assessment year 1967‑68 in question and there was no information much less definite information in possession of the Income‑tax Officer, to show that any escapement of tax had occurred during this assess ment year. The Departmental Representative controverted these allegations. He submitted that the order passed by the Income‑tax Officer itself showed that he had aced on definite information in his possession about the acquisi tion of properties beyond the means and returned income of the assessee. It was further alleged that the Inspecting Assistant Commissioner's approval was also obtained as a matter of abundant caution. Finally he also relied on sections 63(3) and 66‑B of the Act to raise the objection that the assessee having complied with the notices without any protest, he was debarred from questioning their validity afterwards. At any rate the defect or mistakes, if any, in the notices were formal and not at all substantial in nature and thereby no prejudice was caused to the assessee as he knew and was aware of the reasons for the issue of these notices and had complied with them. After hearing the parties the Tribunal repelled the contentions advanced by the assessee and observed that the acquisition of properties beyond the disclosed means of the assessee was not denied at any stage of the proceedings either before the Income‑tax Officer or before them. In the circumstances, in the opinion of the Tribunal, the Income‑tax Officer had definite information in possession to initiate proceedings for re‑opening the already completed assess ment. The Tribunal further observed that the Departmental Representative's contention that as a precautionary measure Inspecting Assistant Commis sioner's approval had also been obtained before the initiation of the proceed ings, was not even controverted. In conclusion the Tribunal held that the notice under section 34 was properly issued by the Income‑tax Officer and his jurisdiction was rightly invoked in the matter. As to the alleged defect in the notice the Tribunal observed:‑

"So far as the defects in the notices are concerned there may have been some force in view of the rulings relied upon by the appellant, but for the provision of section 66(3) which lays down that the validity of notice issued under section 22(2) or section 34 of the validity of ser vice of any such notice shall not be called in question after the return in response to such notice has been filed. The appellant could not deny the factual position that the return in response to the alleged incompetent notice was duly filed and that no protest regarding the in validity of notice issued at any stage was made before the assessing officer. We are quite conscious of the appellant's argument that there could be no estoppel against the law and that the compliance by the appellant, of an invalid notice, could not cast any obligation for accep ting the illegally initiated proceedings but we find that under the very statutory provisions of section 66(3) the appellant is totally barred from questioning the validity of the notices after complying with the terms thereof. Moreover, we find that the Departmental Representa tive has rightly placed reliance on the provisions of section 66‑B. which clearly lay down that no assessment etc. shall be void or other wise inoperative merely for want of form or for a mistake, defect or omission in case such want of form, mistake, defect or omission is not of a substantial nature, prejudicially affecting an assessee. In the present case the appellant was not in any manner prejudicially affected on account of the alleged omissions or defects in the notices issued because he knew the assessment year for which the notices were issued and he also knew that the same was issued for the escapement or under‑assessment of income, and by filing the return he sought to maintain his stand that there was no such escapement or under‑assessment. The rulings relied upon by the learned counsel, in face of these statutory provisions some of which were brought on the statute on dates later than the pronouncements of the above decisions, would not, therefore, be of any help. On facts and law we must, therefore, hold that the notices issued were valid and hence fully operative."

The Tribunal also repelled the contention that the notice issued to the assessee under section 22(4‑A) was invalid. At the same time the Tribunal noticed that while working out the surplus the Income‑tax Officer compared the wealth statement of the assessee as on the Ist of April 1948, with his wealth statement as on the 30th of June 1967. Admittedly some of these properties under consideration forming part of the assets of the assessee on the 30th of June 1967, were acquired before the beginning of the financial year relevant to the assessement year in question. The investments in those pro perties must have come from earnings before the previous year relevant to this assessment. The income so earned could not, therefore, be treated as income earned during the present year, no other data was available on the record to work out the actual unexplained accretions for the years under consideration, neither the Income‑tax Officer nor the tax payer made any effort to make out a statement of assets as on 50‑6‑1966, to enable the Tri bunal to compare the same with the wealth statement as disclosed or worked out by the Income‑tax Officer as on 30‑6‑1967. In these circumstances the Tribunal felt that it was not in a position to determine the extent of the surplus investment and the undisclosed income for the year under consideration. At the same time the Tribunal observed that there was positive evidence on the record to show that some of the properties included in the assets as on 30‑6‑1967 were acquired on 5‑5‑1966, before the beginning of the previous year relevant to the present assessment year. As such the, acquisition, having been admittedly made during the previous years relevant to the earlier assessment years' could not be brought to tax during the assessment year in question. The Tribunal, therefore, vacated this part of the order passed by the Income‑tax Officer and directed him to obtain the wealth statement of the assets of the assesee as on 30‑6‑1966 for comparison with his wealth statement as on 30‑6‑1967 to precisely gauge the extent ‑of the suppressed income for the assessment year 1967‑68.

5. In these circumstances the assessee has filed the above application referring the following questions of law said to arise out of the appellate order dated 14th of September 1973, passed by the Tribunal, under section 66(1) of the Income‑tax Act:‑ 1

(1) Whether on the facts and in the ci,cumstances of the case, the learned Tribunal was justified in holding that the assumption of jurisdiction through initiation of proceedings under section 34 was justi fied?

(2) Whether on the facts and in the circumstances of the case the learned Tribunal was justified in holding that the issuance of notice under section 34 could not be challenged in view of section 63(3) (misquoted in the Tribunal's order as section 6613) of the Act)?

(3) Whether on the facts and in the circumstances of the case, the omission to state in the notice under section 34 that it was issued on the basis of definite information and/or that prior approval of the Inspecting Assistant Commissioner had been obtained and the reasons which led to its issuance, could validly be treated as defects curable under section 66‑B of the Act?

(4) Whether on the facts and in the circumstances of the case notices under section 22(4‑A) could validly be issued requiring the filing of statements of assets and liabilities as on 1‑4‑1948 and as on 30‑6‑1967?

(5) Whether on the facts and in the circumstances of the case, the learned Tribunal was justified in issuing directions which tantamount to a finding that some income chargeable in 1967‑68 had escaped assess ment in the absence of any evidence or material on record?

6. We have heard the learned counsel for the parties appearing before us. In this case at the preliminary hearing doubts were expressed is to whether the income‑tax Officer was justified in invoking his jurisdiction under section 34 of the Act and thus lawfully initiated the proceedings against the assessee for reopening the already completed assessment again. Accordingly a representative of the Department was summoned to appear in Court with the record of the Income‑tax Officer as well as the Appellate Tribunal. On the 27th of September, 1974, Sh. Abdul Haque, Advocate appeared alongwith the Departmental Representative and produced a note from the Income‑tax Officer, Circle II, Lahore, which was placed on the record. It appears from this note that the Commissioner of Income‑tax vide his letter No. Con. C‑45/6458 dated 8th June, 1971, had directed that :‑

"Under the circumstances notices under section 34 for the charge years 1967‑68, 1968‑69, 1969‑70 and 1970‑71 may be immediately issued to re‑start proceedings. Wealth statements may be obtained and assessments finalized keeping in view the enquiry report dated 14‑5‑1971 (copy enclosed). Prior approval of the I A C may also be obtained before releasing these orders. This office may be kept informed about the developments in the case."

The Commissioner of Income‑tax had merely directed that the approval of the Inspecting Assistant Commissioner may be obtained before releasing the assessment order. It was admitted that his approval for issuance of the notices was not taken. Even otherwise, it is evident from the order of the Income‑tax Officer framing the re‑assessment that "on receipt of definite information that the assessee had made huge investment in property etc. he had issued the notice to the assessee under section 34 of the Act. Similarly the Tribunal in its appellate order dated 14‑9‑73 stated that the Income‑tax Officer had come to know of certain acquisitions of immovable property by the assessee disproportionate with his earned income and consequently issued the notice under section 34 of the Act to him. From all this it is manifest that in this behalf the Income‑tax Officer acted on definite information that had come into his possession in issuing the notice under section 34 of the Act to the assessee and in the circumstances he did not need the prior approval of the Inspecting Assistant Commissioner in writing before initiating the proceedings against him.

7. But before us the learned counsel for the assessee laid stress to object against the form of the notice served under section 34 of the Act. In this connection he submitted that in the notice served on the assessee it was nowhere mentioned that the Income‑tax officer was proceeding against the assessee on the basis of definite information in his possession or after having obtained the previous approval of the Inspecting Assistant Commissioner in writing. The notice was conspicuously silent on the point. At any rate the notice did not even disclose the definite information in possession of the Income‑tax Officer on the basis of which he had decided to initiate the proceedings against the assessee under section 34 of the Act. Moreover, the learned counsel contended that the notice actually issued to the assessee was altogether vague and much too general. It was neither precise nor specific in its tenor. As already noticed above, beyond a mere reproduction of the wordings of section 34 in general in the notice. It did not contain any concise statement of the facts on which it was based. Therefore, according to the assessee, for all these reasons the proceedings taken in pursuance to this notice were vitiated and must be struck down.

8. We have heard and carefully considered the arguments addressed before us. for the purposes of our present discussion it is necessary to reproduce below in extenso subsection (1) of section 34 and the third pro viso to this subsection of the Income‑tax Act, 1922:‑

"If for any reason income, profits or gains chargeable to income‑tax have escaped assessment in any year, or have been under‑assessed, or have been assessed at too low a rate, or have been the subject of excessive relief or refund under this Act, the Income‑tax Officer may serve on the person liable to pay tax on such‑income, profits or gains or, in the case of a company, on the principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under subsection (2) of section 22, and may proceed to assess or re‑assess such income, profits or gains, and the provisions of this Act, shall so far as may b, apply accordingly as if the notice were a notice issued under that subsection, .

Provided further that unless definite information has come into his posses sion the Income‑tax Officer shall not initiate proceedings under this subsection without obtaining the previous approval of the Inspecting Assistant Commissioner of Income‑tax in writing."

9. Section 34 of the Act has a chequered history since 1939 and amend ments were introduced into it from time to time. But suffice it to briefly mention here that in 1939 the main provision was amended and in the context instead of the words "for any reason," the phrase "in consequence of definite information which has come into his possession" were substituted. However, in 1948 as a result of a further amendment the main provision was restored to what it was before 1939, and the third proviso reproduced above was added to the subsection.

10. There is no statutory form of the notice prescribed under section 34 of the Act or the rules. The notice in question was issued to the assessee in Form I. T. 90 (copy Annex. `B' ) which is in vogue for the sake of adminis trative convenience only. Otherwise it has no statutory sanction behind it. But subsection (1) of section 34 of the Act itself sufficiently indicates the requirements of this notice. In terms it empowers the Income‑tax Officer that if for any reason, income, profits or gains chargeable to income‑tax have escaped assessment in any year, he may serve on the person liable to pay tax on such income, a notice containing all or any of requirements which may be included in a notice under subsection (2) of section 22, and may proceed to re‑assess the income, profits or gains of the assessee and the provisions of the Act shall so far as may be applied accordingly as if the notice were a notice issued under subsection (2) of section 22 of the Act. There are no other pre‑requisites of the notice issued under section 34 of the Act. Their Lordships of the Supreme Court in Messrs Sutlaj Cotton Mills Ltd., Okara v. The Commissioner of Income‑tax North Zone (West Pakistan), Lahore ( P L D 1965 S C 443 ) after reproducing the extracts from section 34(1) & (2) of the Act observed that "if a part of the assessee's income is thought to have escaped assessment, the Income‑tax Officer may serve a notice in conformity with section 22(2) and may proceed to assess or reassess such income." In this connection, the Supreme Court seems to have suggested a departure in this form of the notice issued under section 34 (1) only after the lapse of four years from the last date of the year. In the opinion of the Supreme Court there was room for the view that if, for the first time In such a case, the Income‑tax Officer issues the notice after the lapse of four years, then indeed he would be acting with out jurisdiction, unless it was shown that he had reasons to believe that the necessary conditions for the exercise of his jurisdiction after four years did in fact exist. This is the only case of departure made in the usual form of the notice issued under section 34(1) of the Act.

11. In essence the Income‑tax Officer, armed with the powers conferred on him under section 34, is required to serve a notice upon the assessee requir ing him to furnish a return in the prescribed form setting forth his total income in accordance with section 22(2) of the Act. Strictly speaking it is not necessary that the notice under section 34 calling for a return, should itself specify the definite information in possession of the Income‑tax Officer on whiob he has decided to act or contain particulars of the income, profits or gains that have prima facie escaped assessment, or were under‑assessed or were assessed at too low a rate or were subject of excessive relief. As a matter of strict interpretation in a case falling under the third proviso, it nowhere lays down that the notice under it must also contain a recital to the effect that the proceedings were being initiated by the Income‑tax Officer after obtaining the previous approval of the Inspecting Assistant Com missioner in writing.

12. Section 34 lays down that if for "any reason" income, profits or gains chargeable to tax have escaped assessment etc. etc. the Income‑tax Officer may serve a notice on the person liable, calling for a return from him. It is in the subjective satisfaction of the Income‑tax Officer, after he is in possession of definite information, that he may for "any reason" issue the notice under this section and his action taken in this behalf is not under the ordinary circumstances justiciable. But it is of utmost importance that he must always act in good faith. In this connection in The Commissioner of Income‑tax, Bengal v. Messrs Mahallram Ramjidas ( AIR 1540 P C 124 ) their Lordships of the Privy Council obsereved that "to enable the Income‑tax Officer to initiate proceedings under section 34 it is enough that the Income‑tax Officer on the information which he has before him and in good faith considers that he has good ground for believing that the assessee's profits have for some reason escaped assessment or have been assessed at too low a rate. The Income tax Officer is not required by the section to convey to the assessee, or to intimate to him the nature of the alleged escapement, or to give him an opportunity of being heard, before he decides to operate the powers conferred by the section." So that for initiation of these proceedings it is "enough" that Income‑tax Officer in good faith has reasons to believe that there has been an escapement of the tax. The Income‑tax Officer may act only after he is in possession of some material to justify a reasonable and honest belief in him that escapement of income has taken place Bhimraj Pannalal v. C. L T. ( (1957) 32 1 T R 289 ). But he is not entitled to embark upon a fishing and a roving enquiry of his own in the hope of collecting some material against the assessee to justify his action.

13. Under subsection (1) of section 34 of the Act the power to re‑open the assessment is solely vested in the Income‑tax Officer concerned. If "for any reason" income, profits or gains have escaped assessment he may initiate the proceedings against the assessee by issuance of the statutory notice. Read ing this subsection with the third proviso, it appears that if the Income‑tax officer is in possession of definite information then that may in itself consti tutes a sufficient reason for him to initiate the proceedings against the assessee for reopening the assessment. The proviso also contains a prohibition that in case the Income‑tax Officer is not in possession of any definite information he shall not initiate the proceedings under this subsection without obtaining the previous approval of the Inspecting Assistant Commissioner of Income‑tax in writing. If for example the Income‑tax Officer is in possession of some information which is not definite, he may initiate the proceedings after obtain ing the previous approval of the Inspecting Assistant Commissioner. This safeguard was introduced in the interest of the public to safeguard the asses sees from unnecessary harassment. Even in a case covered by the second part of this proviso the Income‑tax Officer is not entitled to initiate the pro ceedings under subsection (1) of this section capriciously and without any reason. In this respect the proviso is itself subordinate to the main subsec tion and the Income‑tax Officer is entitled to initiate these proceedings only if for any "reason" income, profits or gains chargeable to tax have escaped assessment etc. etc. It is only in this bona fide belief that he may decide to proceed under this subsection.

14. As already stated above there is no standard form of the notice prescribed under section 34 of the Act and the rules. In this connection, In re : Messrs Burn & Company ( 1934 1 T R 30 ) the Calcutta High Court observed that "section 34 does not prescribe any standard form of notice; all that the section requires is that a notice containing all or any of the requirements which may be included in a notice under subsection (2) of section 22 shall be served." Also in J'awala Prasad Chobey v. Commissioner of Income‑tax, Bengal (1933 1 T R 295) the Calcutta High Court held that "a notice under section 34 of the Indian Income‑tax Act is not to be in any prescribed or statutory form, and therefore, so long as it brings to the attention of the person to whom it is served the matters required to be answered or dealt with or the things required to be furnished it is sufficient." In re: Indian National Tannery ( (1941) 9 1 T R 618 ) the Allahabad High Court held that to enable the Income‑tax Officer to initiate proceedings under section 34 of the Income‑tax Act it is enough that the Income‑tax Officer on the information which he has before him and in good faith considers that he has good ground for believing that assessee's profits have for some reason escaped assessment or have been assessed at too low a rate. The Income‑tax Officer is not required by the section to convene the assessee, or to intimate to him the nature of the alleged escapement, or to give him an opportunity of being heard, before he decides to operate the powers conferred by the section." In H. M. Istifa Khan v. Commissioner of Income‑tax C. P. & U. P. ((1942) 101 T R 435) the Oudh Chief Court was of the opinion that in a notice under section 34, the Income‑tax Officer is not obliged to specify the income or the sources of income which had escaped assessment. In the Presidency Talkies Ltd. v. First Additional Income‑tax Officer. City Circle II, Madras ( (1954) 251 T R 447 ) it was observed that: "The scheme of sec tion 34 of the Act is that, if the conditions of the main section are satisfied a notice has to be issued to the assessee containing all or any of the require ments which may be included in a notice under subsection (2) of section 22. But before issuing the notice, the proviso requires that the officer should record his reasons for initiating action under section 34 and obtain the sanction of the Commissioner who must be satisfied that the action under section 34 was justified. There is no requirement in any of the provisions of the Act or any section laying down as a condition for the initiation of the proceedings that the reasons which induced the Commissioner to accord sanction to proceed under section 34 must also be communicated to the assessee. The requirement regarding the communication of the reasons to the Commissioner is, in our opinion, intended to safeguard the interests of the assessee against any hasty action on the part of the Income‑tax Officer under section 34 or an action without any justification. It is not intended by the proviso that the reasons should be communicated to the assessee." In P.R. Mukherjee v. Commissioner of Income‑tax, West Bengal ( (1956) 301 T R 535 ) it was held that: "it is not necessary or imperative that a notice under section 34 must specify under which of the two clauses of the section, namely, clause (a)‑ or clause (b), the notice is issued. The main notice to be issued in a case under section 34 is the notice under section 22 (2); section 34 merely authorises the issue of such a notice."

15. The Bombay High Court in Radhakant Jagannath Prasad v. V. K. Johri and another ((1960) 39 1 T R 182) observed that section 34 imposed no charge on the citizen but merely created machinery for reassessment and the Court was, therefore, bound to construe notices issued under that section in a manner that would make the machinery of reassessment workable. The condition prece dent as to the belief which the Income‑tax Officer must have to proceed under section 34 (1) was the subjective satisfaction of the Income‑tax Officer. There was no statutory or other requirement that the source of income escaping assessment should be referred to or mentioned in the notice under section 34 and that there was nothing in this section which entitles the assessee to a notice of the case which he has to meet. In Messrs Rungta Engineering & Construc tion Co. Ltd. v. Income‑tax Officer, Central Circle ( A I R 1960 Cal. 619 ) the Court observed that when an Income‑tax Officer comes to believe that part of the assessee's income amounting to over a lac of rupees had escaped assessment and calls upon the assessee to make a return under S. 34 (1‑A) he is not bound to disclose to the assessee the materials upon which his belief is based before the assessee files his return and produces his books. Not only this in that case the Court has gone a step further in observing that it was not desirable that the assessee should be informed of those materials before he has filed his return and that there was no violation of natural justice if the Income‑tax Officer has not disclosed to the assessee the source of information upon which he came to entertain the belief before the assessee filed his return. In the reported case of the Commissioner of Income‑tax v. Sundaran & Company (Pvt.) and another ( (1971) 24 Taxation 183 ) the Madras High Court observed that:‑

"If, on record, material is available to act under one or the other of the limbs of section 34 (1) (b), the fact that the notice issued by the Income‑tax Officer mentioned only one of such situations does not matter. The substance of the matter should govern and not the administrative form which has no statutory sanction behind it. Section 34 (1) (b) postulates the various channels through which the jurisdic tion can be exercised. It may be a case of escapement of assessment, under‑assessment, or assessment at too a low rate or have been made the subject of excessive relief under the Act, etc. But if in communi cating with the assessee the Income‑tax Officer adopts a wrong channel and makes a reference to one of the situations postulated in section 34 (1) (b), when it ultimately transpires that that is not the correct situation, there is no embargo on him to proceed under proper limb of the section. Once the jurisdiction is assumed and exercised, it is not to be iron jacketed to one of the situations, erroneously, mistakenly referred to in the notice issued by the officer."

16. In conclusion as a result of the above discussion we are of the considered opinion that it is not at all necessary that the notice issued under section 34 of the Act must indicate on the face of it either that it was issued on the basis of definite information that had come into the possession of the Income‑tax Officer or that prior approval of the Inspecting Assistant Com missioner of Income‑tax had been obtained in writing, or for the matter of that the precise reasons which led the Income‑tax Offcer in impelling him to issue the notice. Indeed, in terms of subsection (1) of section 34, it is suffi cient if the notice addressed to the assessee merely indicates that the Income‑tax Officer has "reason to believe" that his assessable income (a) has; escaped assessment (b) been under‑assessed, (c) been assessed at too low ai rate, (d) been subject to excessive relief. This belief in the Income‑tax Officer, may be due to the reason that he has definite information to that effect:' But in case this belief in the Income‑tax Officer is not based on an information which is ‑not definite then he cannot initiate the proceedings under the section' against the assessee without the prior approval of the Inspecting Assistant Commissioner obtained in writing. In law it is not necessary that the notice should itself specify that all these requirements for initiating the proceedings under this section have been fulfilled. But at the same time it is a condition precedent and of the essence of jurisdiction that from the record of the Income‑tax Officer it must appear either that he had definite information in his possession or that he had already obtained the prior approval of the Inspecting Assistant Commissioner before initiating the proceedings under this section. In case one or the other requirement is not to be found in the record of the Income‑tax Officer, he has no jurisdiction whatever to even initiate these proceedings.

17. The learned counsel for the petitioner‑assessee in support of his contention that the impugned notice issued in this case was contrary to section 34 of the Act, relied on two reported cases of the Department v. Assessee ( (1961) 4 Taxation 94 (Trib.) ) decided by the Income‑tax Appellate Tribunal, Karachi and Barnnla Com mission Shop v. The Income‑tax Officer, B‑Ward, Loyllpur ( P L D 1963 Lah. 311 ). In the first mentioned case the assessee derived income from house property. The original assessments for the charge years 1951‑52 to 1953‑54 were made by the Income tax Officer on the basis of annual letting value as adopted by the Municipal authorities. Subsequently he initiated proceedings under section 34 of the Income‑tax Act for those years on the ground that the assessments should have been made on the basis of actual rental. Notices under section 34 of the Act were issued in that case by the Income‑tax Offcer in the usual printed form 1. T.

90. According to the notices the Income‑tax Officer initiated the proceedings on the grouud that he has "reason to believe" that income assessable to tax had escaped assessment etc. etc. A question arose as to whether the notices issued under section 34 (1) were notices in pursuance of "definite information" and as such did not require the previous approval in writing of the Inspecting Assistant Commissioner. In that case the Income tax Appellate Tribunal observed that the words "definite information" were conspicuously absent in the body of the notices. From this circumstance the Tribunal concluded that these notices were never issued by the Income‑tax Officer in pursuance to any "definite information." In support of this conclusion the Tribunal also relied on some other printed forms of notices under section 34 in which the words "in consequence of definite information which has come to my possession" were distinctly employed. The Tribunal repelled the contention of the Departmental Representative to the effect that only one printed form was in use in which no distinction was made whether the notice was issued in consequence of "definite information" or otherwise. In the result the Tribunal held that the notices initiating the proceedings under section 34 were not issued in pursuance to "definite information" and since previous approval of the Inspecting Assistant Commissioner was not obtained for the purpose the Income‑tax Officer had no jurisdiction to issue them. But we find that this case is distinguishable on facts. In that case the question raised before the Tribunal for determination was as to "whether the notices issued under section 34 (1) were notices in pursuance of `definite information' and as such did not require the previous approval in writing of the Inspecting Assistant Commissioner"? As already seen above in that case the Income‑tax Officer had served the notice under section 34 in Form I. T. 90 to the effect that he had "reason to believe" that income assessable to tax has escaped assessment. The Tribunal observed that apart from this there was another printed form of the notice under section 34 in use by the Income‑tax Officer "in consequence of definite information which has come into his possession" to show that income assessable to tax has escaped assessment, But no notice in this form was actually issued to the assessee in that case. From this circumstance and on the facts in that case the Tribunal concluded that the notice was not issued to the assessee in consequence of definite information in his possession. Nor was it in fact issued with the previous approval of the Inspecting Assistant Commissioner of Income‑tax in writing. In these circum stances the Tribunal held that the Income‑tax Officer had no jurisdiction to issue the notice under section 34 of the Act. This case is no authority for the proposition that the notice must on the face of it show either that it was issued on the basis of definite information that had come into the possession of the Income‑tax Officer or that prior approval of the Inspecting Assistant Commissioner had been obtained in writing before its issuance or for the matter of that the precise reason which led the Income‑tax Officer to issue the notice.

18. In the other reported case of Barnala Commissioner Shop v. The Income‑tax Officer. B‑ Ward, Lyallpur ( P L D 1963 Lah. 311 ) cited by the learned counsel for the petitioner, a similar notice under section 34 of the Act in form I. T. 90 was issued by the Income‑tax Officer to the effect that he has "reason to believe" that the assessable income has escaped assessment. The assessee in that case eventually filed a writ petition to challenge the validity of this notice on the ground: "that the notice under section 34 (1) was given without complying with a condition precedent which was necessary for its validity, and for that reason, all proceedings consequent upon it including the order of assessment, are without legal effect."

Before the High Court on behalf of the assessee it was successfully submitted that the printed form on which notice in the case had been given, was the one in use by the Department when no "definite information" was available with the Income‑tax Officer. In this connection the Court relied on the reported case in (1961) 4 Taxation (Trib.) 94=1961 P T D (Trib.) 211 discussed above. Our comments on that case recorded above are enqually applicable here. It is also evident that the question (reproduced above) raised before the High Court in the case under discussion was wholly different from the one raised in the instant case before us.

19. The learned counsel for the petitioner‑assessee also relied on the observations made by another Division Bench of the High Court of West Pakistan in Commissioner of Sales Tar v. Sheikh Inayat Ullah (1) to the effect that notice under section 34 of the Act must indicate the grounds on which the assessment or reassessment is proposed and that the particulars set out in it are necesssary conditions for preceeding to assess or reassess. In a way these observation go to lend support to the contention advanced before us by the learned counsel. But with due deference it is submitted that these were just passing remarks and the observations altogether obiter dicta. That was a case under sections 10(4) and 28 of the Sales Tax Act III of 1951 and the Court was examining the validitly of notices issued under those provisions. In that context the Court even observed that the provisions of section 28 of the Sales Tax Act were materially different from those of section 34 of the Income‑tax Act, 1922. There was no question directly raised in that case as to the validity of any notice served under section 34 of the Income‑tax Act. Nor was it even discussed at any length in that case.

20. Let us now examine in greater detail the findings recorded by the Appellate Tribunal in its order under reference before us. On behalf of the asesssee it was argued before the Tribunal that the notice in question was vague. It did not furnish any details indicating the date when the income had allegedly escaped assessment or the precise reason on which the notice was based. It was further argued that there was no definite information in possession of the Income‑tax Officer about the escaped income and that he had not obtained prior approval of the Inspecting Assistant Commissioner before initiating the proceedings in accordance with the proviso to section 34 (1). As such the notice issued by the Income‑tax Officer was ab initio void and without jurisdiction. For the assessee reliance was also placed on the reported cases in (1961) 4 Taxation 91 (Trib.) and P L D 1966 Lah. 509 (discussed above) to contend that the notice served on the assessee was prima facie invalid inasmuch as it did not on the face of it show that it was issued in pursuance to any definite information that had come in possession of the Income‑tax Officer. However the Departmental Representative controverted these allegations. He submitted that there was definite information in posses sion of the Income‑tax Officer about the acquisition of the properties by the assessee beyond his means and returned income. He also contended that as a matter of abundant caution the approval of the Inspecting Assistant Commissioner had also been obtained for initiating the proceedings against the assessee in the case. On behalf of the Department an objection was also raised to the effect that the assessee, having filed the return and complied with the terms of the notice without any protest, .was debarred from questioning its validity under section 68 (3) of the Income‑tax Act. In this connection, reliance was also placed on section 66‑B of the Act to contend that even if the notice suffered from any mistake, defect or omission, it did not invalidate the assessment made in pursuance thereto because thereby no prejudice was caused to the assess in completing the re‑assessment against him. After hearing both the Tribunal held that there was definite information in posses sion of the Income‑tax Officer to the effect that the income of the assessee was under assessed and had escaped assessment and, therefore, he was justified in reopening the assessment. The Tribunal further observed that the assessee did not controvert the contention of the Departmental Representative that as a precautionary measure the approval of the Inspecting Assistant Commissioner was also obtained for initiating the proceedings. The Tribunal also observed that, in view of the ruling relied upon by the assessee, there may be some force in the defects pointed out in the notice. But that under the provisions of subsection (3) of section 63 (wrongly mentioned as a section 66 (3) in the order passed by the Tribunal) the validity of the notice issued under section 22 (2) and section 34 could not be called in question after the return in response to the notice was actually filed by the assessee without any protest. As such he was totally barred from questioning the validity of the notice after having complied with it. The Tribunal also relied on section 66‑B to the effect that no assessment, warrant, or other document made, issued or execu ted, or purporting to be made, issued, or executed under this Act, shall be void or otherwise inoperative merely for want of form or for a mistake, defect or omission therein, if such want of form, or mistake, defect or omission is not of a substantial nature prejudicially affecting the assessee, and held that in the instant case the assessee was not at all prejudiced on account of the alleged omission or defects in the notice served on him. Therefore these formal objections were not tenable according to the Tribunal.

21. The Income‑tax Officer has held that he had definite information in his possession before initiating the proceedings for reopening the already completed assessment against the assessee. This finding was also affirmed in appeal by the Tribunal. This is a concurrent finding of fact borne out from the record. It is nowhere stated in the re‑assessment order passed by the Income‑tax Officer that he had also obtained the prior approval of the Inspecting Assistant Commissioner of Income‑tax in writing before initiating the proceedings against the assessee. However, in this connection the Tribu nal, in its order, observed that before it at the hearing the Departmental Represesntative had raised the contention that as a precautionary measure the approval of the Inspecting Assistant Commissioner in this behalf was also obtained for initiating these proceedings and that this contention was not controverted by the assessee. But before us the learned counsel for the assessee has taken an objection to the suggestion that these remarks were meant to convey that the assessee had impliedly admitted that as a precautio nary measure the Income‑tax Officer had also obtained the prior approval of the Inspecting Assistant Commissioner in writing. At the hearing of this reference in l1mine this Court called for a Departmental Representative to appear before it with the record. In pursuance to it on the 27th of September, 1974 the Departmental Representative duly put in his appearance along with record and filed a report made by the Income‑tax Officer. From this report the there was no doubt left in our mind that prior approval of the Inspecting Assistant Commissioner was never obtained in writing by the Income‑tax Officer before initiating the proceedings. As such this part of the finding recorded by the Tribunal was based on no evidence and cannot be sustained. But this finding does not alter the fate of this case. As already observed above the Income‑tax Officer had definite information in his possession before lawfully initiating the proceedings under this section 34 of the Act against the assessee. On the concurrent finding recorded by the Income‑tax Authorities in this behalf it cannot be held that the proceedings under section 34 of the Act initiated against the assessee were ab initio void and without jurisdiction. In the light of our detailed discussion above there is no force in the contention advanced by the assessee that notice itself was vague and because it did not contain sufficient and precise facts on which it was based. In this connection reliance placed by the Tribunal on the reported cases in (1961) 4 Taxation 94 (Trib.) and P L D 1966 Lah. 509 !s misconceived. As already stated above both these cases relied upon by the assessee are distinguishable and not attracted to the facts and circumstance of this case. Therefore, in our opinion the Tribunal was not justified in observing that so far as the defects in the impugned notice in question are concerned there may have been some force in the contention advanced for the assessee, in view of these rulings relied upon for him. Indeed in this connection the finding recorded by the Tribunal is also somewhat contradictory because while concluding under para. 4 of its order the Tribunal has also held that the notices issued to the assessee were valid and hence operative, although on certain other considerations. As a result of our discussion and for reasons of our own, we are of the opinion that on the facts and in the circumstances of this case, the Tribunal was justified in holding that the Income‑tax Officer had rightly assumed the jurisdiction by initiating these proceedings against the assessee under sec tion 34 of the Act. We; therefore return our answer to question No. 1 above in the affirmative.

22. The Tribunal in proceeding on the basis that the impugned notice in question was defective and invalid, was nonetheless of the opinion that those defects were not of substantial nature and they did not alter the fate of the case. He observed that in this case in pursuance to the notice under sec tion 34 the assessee had actually filed the return before the Income‑tax Officer. As such according to the Tribunal, the assessee was totally debarred under section 63 (3) (wrongly quoted as section 66 (3)) from questioning the validity of the notice. Similarly the assessee was in no way prejudiced by the alleged defects in the notice and as such the assessment made in pursuance to the notice could not be avoided merely for want of form or any defect or omission in it, In this respect we are of the opinion that these findings by the Tribunal were recorded on the basis that the impugned notice issued to the assessee was defective and invalid. We have already held that that finding by the Tribunal was based on a wholly erroneous assumption. In this view of the matter questions Nos. 2 and 3 do not really arise before us.

23. Before us the appellant also argued that in the circumstances of this case the Income‑tax Officer had no lawful authority to issue the notice under section 22 (4‑A) of the Act calling upon the petitioner to file his wealth statement giving particulars of his total assets and liabilities. This precise objection was also unsuccessfully raised by the appellant before the Tribunal. Section 22 (4‑A) of the Act in terms lays down that the Income‑tax Officer may serve on any "assessee" a notice requiring him to furnish a statement in the prescribed form and in the prescribed manner giving particulars of his total assets and liabilities. According to the learned counsal strictly speaking the petitioner was not at all an "assesee" and, therefore, he could not have been called upon to file his wealth statement. The term "assessed" is defined) in section 2 (2) of the Act to mean a person‑ a) by whom income‑tax or other sum of money is payable under this Act;

(b) in respect of whom any proceedings under this Act have been taken for assessment of his income, and

(c) every person who is required to file a return of income under sec tion 22.

24. In the context of this definition it was argued that the petitioner having already paid the income‑tax was not a person by whom income‑tax or any other sum of money was payable under this Act, nor was he a person in respect of whom any proceedings under this Act have been taken for the "assessment" of the income‑tax. In this connection distinction was sought to be made between the assessment and re‑assessment of a person. Nor was he a person who was required to file a return of income under section 22. In this behalf reliance was placed on the Income‑tax Officer, Central Circle II, Karachi and another v. Cement Agencies Ltd. ( P L D 1969 S C 329 ) to the effect that the return filed in reply to notice under section 34 cannot be deemed to have been filed under section 22 (2) of the Act. But we are of opinion that in the context, the term "assessment" has not been used in the narrower sense and it also includes re‑assessment. In A.N. Lakshman Shenoy v. Income‑tax Officer, Eranakulam and another ((1958) 34 1 T R 275) the Supreme Court of India held that the three expressions "levy," "assessment" and "collection" are of the widest significance and embrace in their broad sweep all such proceedings for raising money by the exercise of the power of taxation, and the word "assessment" is capable of bearing the comprehensive meaning to include re‑assessment. In another case in the Commissioner of Income‑tax, Madras/Bombay v. Express Newspapers Ltd. ( (1960) 401 T R 38 ) the term assessment was construed in the wider sense to mean not only the computation of income but the entire process of computation of income and tax payable including the reassessment under section 34. In our opinion, therefore, on the facts and circumstances of the case the notice under section 22(4‑A) was validly issued by the Income‑tax Officer requiring the petitioner‑assessed to file a statement of assets and liabilities as on 1st of April, 1948 and as on 30th of September, 1967. Our answer, therefore, to question No. 4 is returned in the affirmative.

25. Question No. 5 reproduced above is misleading and is based on a misconception. It is wholly incorrect to suggest that the Tribunal has issued any directions tantamounting to any expression of opinion or finding that some income chargeable in 1967‑68 had escaped assessment. The Tribunal has merely remitted the case to the Income‑tax Officer for recording his finding in this behalf.

26. During the course of the hearing before us the learned counsel for the petitioner also raised a new plea to the effect that the Income‑tax Officer, in initiating the proceedings under section 34 of the Act, had acted under the dictation of the Commissioner of Income‑tax and failed to apply his own independent judicial mind before initiating the proceedings against the assessee. In support of this contention the learned counsel relied on letter No. Con‑C‑45/6458 sent by the Commissioner of Income‑tax addressed to the Income‑tax Officer reproduced in the report filed in this Court. In that letter the Commissioner of Income‑tax directed that the Income‑tax Officer may issue notice under section 34 of the Act. In this connection, the learned counsel also relied on "Judicial Review of Administration Action" by S. A. de Smith (Second Edition), page 292 to the effect that "an authority entrusted with a discretion must not in the purported exercise of its discretion act under the dictation of another body or person." In B. S. Industries v. The Deputy Registrar, Trade Marks and another ( P L D 1969 Dacca 451 ) it was held that, when a statute conferred a certain duty on an officer it was that officer who had to make up his mind and pass the order in accordance with law and exercise his discretion uninfluenced by any opinion of his superior officers, and even an Executive Officer when he performed a statutory function, was not to be influenced by any direction from any quarter. But, as already stated above, this precise objection was never raised either before the Income‑tax Officer or the Tribunal at any stage. Nor was it specifically taken up in the statement of the case referred to the High Court. Nor is there any question referred to this Court bearing on this contention. The question sought to be raised bafore us at this stage is not one of pure law.

Its answer must depend on certain disputed facts. The real question that arises is as to how far if at all, the competent authority has surrendered its own discretion which was vested in him. In the instant case it cannot be positively held that the Income‑tax Officer bad altogether abdicated and surrendered its own discretion vested in him under section 34 of the Act in favour of the Commissioner of Income‑tax. Indeed it appears to us in this case that the Commissioner had received a complaint against the assesses. After some enquiry he forwarded the papers to the Income‑tax Officer and brought the facts, as far as he could ascertain, to his notice for proper action. In that connection he also gave his advice to him that he may proceed under section 34 against the assessee. Otherwise the Income‑tax Officer was left quite free to initiate the proceeding and complete his re‑assessment in the exercise of his own discretion and judgment. This objection has, therefore, no force and is overruled.

27. For the foregoing reasons this reference is disposed of accordingly. But there shall be no order as to costs in the circumstances of the case. s. A. H. Reference disposed of.