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Writ Petition No. 823 of 1972, decided on 21st October 1974,

Income tax Act (XI of 1922)-

--S. 34-Escaped income-Notice under S. 34-Income-tax Officer not required by S. 34 to intimate nature of alleged escapement nor factum that he has obtained approval from his superiors for initiating proceedings.

The Income-tax Officer is not required by section 34 of the Income-tax Act to intimate the assessee the nature of the alleged escapement or to provide him a hearing before he decides to operate the powers conferred upon him by this section. In interpreting a section of a taxing Act which deals merely with the machinery of assessment and does riot impose a charge on the subject, that construction should be preferred which makes the machinery workable, utres valeat pollus quam pereat.

The Income-tax Officer is not required to disclose information in the notice and the factum that he has obtained any approval from his superiors. All official acts are presumed to have been done in accordance with law unless the contrary is proved.

Calcutta Discount Co. Ltd. v. Income-tax Officer, Companies District 1, Calcutta and another (1961) 41 1 T R 191 not relied upon.

Madan Mohan Lai v. Commissioner of Income-tax, Punjab -etc. (1935) 3 I T R 438 and Commissioner of Income-tax, Burma v. U. L. U. NYO (1933) 1 I T R 373 distinguished.

Commissioner of Income-tax, Bengal v. Messrs Mahallram Ramjidas (1940) 8 I T R 442 fol.

Muhammad All Khan with Saadat Ali Khan for Petitioner.

Sh. Abdul Haq for Respondent.

Date of hearing: 21st October 1974.

This petition under Article 201 of the Interim Constitution of Islamic Republic of Pakistan (1972) challenges the notice issued by the Income-tax Officer dated 4th May 1972, under section 3,4 of the Income-tax Act to the petitioners.

2. The facts of the case are that the petitioners' Company was assessed for the year ending 30th June 1969, by the -Income-tax Officer Company Circle V on 29th April 1972. On. 4th May 1972, he issued notice under section 34 of the Income-tax Act to the petitioners. This notice was impugned. Mr. Muhammad Ali Khan learned .counsel for the petitioners referred to third proviso to section 34 of the Income-tax Act and argued that there are two pre-requisites for initiating proceedings. It reads:-

"Provided further that unless definite information has come into his possession 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."

He submits that both the requisites are not mentioned in the notice and in fact it is invalid. He relied on Calcutta Discount Co. Ltd. v. Income-tax Officer Companies District I, Calcutta and another ((1963) 411 T R 191) a majority judgment by Supreme Court of India, in support of his contention. Reference was also made to Madan Mohan Lal v. Commissioner of Income-tax, Punjab etc. ((1935) 3 1 T R 438) a Full Bench judgment of this Court which considered the authority of the Income-tax Officer under section 34 of the Income-tax Act. Dalip Singh, J. wrote a dissenting judgment. The Full Bench approved the Rangoon case reported as Commissioner of Income-tax, Burma v. U. L. U. NYO ((1933) 11 T R 373). In this case the successor of Income-tax Officer reviewed the assessment made by his predecessor of certain goods at different rates. This judgment. was approved by .the Full Bench. Both the Lahore case and the Rangoon case are distinguishable and are not applicable to the facts of the instant case. We are left with the Supreme Court judgment of India which was delivered after Partition on November 1, 1960. I am of the view that the Income-tax Officer is not required by section 34 to intimate the assessee the nature of the alleged escapement or to provide him a hearing before he decides to operate the powers conferred upon him by this section. In interpreting a section of a taxing Act which deals merely with the machinery of assessment and does not impose a charge on the subject, that construction should be preferred which makes the machinery workable, ut res valeat potius quam pereat. I am fortified in my view by a judgment of the Privy Council in Commissioner of Income-tax, Bengal v. Messrs Mahaliram Ramjidas ((1940) 8 1 T R 442) which is binding on the Courts in Pakistan since) the judgment was delivered before the Abolition of Privy Council Jurisdiction Act, 1950. I am. however, not persuaded to agree with the judgment from Indian jurisdiction mentioned above, Since the Judges of the Supreme Court of India were of divided views. Learned counsel has been unable to cite any judgment of our own Supreme Court on this point.

3. The Income-tax Officer is not required to disclose information in the notice and the factum that he has obtained any approval from his superiors. All official acts are presumed to have been done in accordance with law unless the contrary is proved. Section 114 of the Evidence Act is referred. In any case this writ petition is premature, for, the petitioners can take these objections before the Income-tax Officer and they may succeed if there is some merit in them.

4. For the foregoing reasons this petition is disposed of accordingly.

Parties to bear their own costs.

K. B. A. Petition dismissed.

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