1. This petition under Article 226 of the Constitution has been filed by M/s. Sidh Gopal Gajanand, described as an "alleged association of persons" and by Budhoolal Mehrotra and Sidh Gopal Kapur.

2. The petitioners say that M/s. Sidh Gopal Gajanand was a partnership firm, constituted under an instrument of partnership dated April 1, 1948, with its head office at Bombay and a brunch business at Kanpur styled as M/s. Ganga Textiles. The partnership firm is said to have consisted of 19 members, two of whom are the petitioners, Budhoolal Mehrotra and Sidh Gopal Kapur. The petitioners allege that the firm carried on wholesale cloth business from March 13, 1948, to July 1, 1949, and was dissolved on the latter date. The firm was registered under Section 26A of the Indian Income-tax Act, 1922, for the assessment year 1949-50 and was assessed to income-tax accordingly. For the assessment year 1950-51, however, it was assessed as an unregistered firm. The firm was assessed at Bombay.

3. On February 26, 1958, a notice under Section 34 was served upon the second and third petitioners as partners of the dissolved firm stating that the income of the firm for the assessment year 1949-50 had been under assessed and that the several partners were jointly and severally liable to assessment under Section 44 of the Income-tax Act in respect of the income of the firm and called upon them to furnish a return of the income of the firm. It was also recited that the Commissioner of Income-tax, Bombay, was satisfied that the notice should be issued.

4. It appears that the Central Board of Revenue considered it desirable to transfer the case of the firm from Bombay to Kanpur and the Commissioner of Income-tax, U.P., and the Commissioner of Income-tax, Bombay, were directed to submit a report as to any objections which the firm could have against the proposal. Accordingly, the Commissioner of Income-tax, U.P., issued a notice to the members of the firm, stating that the Central Board of Revenue was of opinion that the case of the firm should be transferred from the Income-tax Officer, Bombay, to the Income-tax Officer, B-Ward, Special Circle, Kanpur, and invited objections to the proposal. The Commissioner of Income-tax, Bombay, similarly notified the members of the firm of the proposal to transfer its case to Kanpur and invited objections. On September 4, 1958, the Central Board of Revenue made an order under Section 5(7A) of the Indian Income-tax Act, 1922, transferring the case of the dissolved firm from the First Income-tax Officer, A-B Ward, Bombay, to the Income-tax Officer, B-Ward, Special Circle, Kanpur. It was stated that the transfer had been made for facility of investigation and proper assessment and the order had been passed after giving the partners of the firm an opportunity of being heard and after considering their representations objecting to the transfer.

5. After the proceedings under Section 34 in respect of the firm had been commenced, it appears that the income-tax department came into information that another group of 18 persons, who included some of the members of the firm, had been carrying on business under the same name, M/s. Sidh Gopal Gajanand and had applied to the Chartered Bank of Australia and China, Kanpur, on July 26, 1948, for opening an account in their name. As the constitution of this entity was materially different from that of the firm the Income-tax Officer considered it reasonable to believe that this group of 18 persons was a different entity. They included the second and third petitioners. As no return had been filed by this entity and it had not been assessed to tax, the Income-tax Officer, A-B Ward, Bombay, issued a notice under Section 34 to the second petitioner calling upon him to file a return for the assessment year 1949-50. Apparently as the notice was issued to the petitioner in his individual capacity, a second notice dated January 5, 1962, was issued under Section 34 by the said Income-tax Officer to the second petitioner as member of an association of persons, M/s. Sidh Gopal Gajanand. The notices recited that the Commissioner of Income-tax, Bombay, was satisfied that it should be issued. A similar notice was served upon the third petitioner. As this notice also appeared to be invalid, a fresh notice dated February 28, 1962, under Section 34 was issued by the Income-tax Officer, A-B Ward, Bombay, to the second and the third petitioners "for and on behalf of the association of persons M/s. Sidh Gopal Gajanand" and recited that it was issued after obtaining the necessary sanction of the Central Board of Revenue, New Delhi. On March 27, 1962, a notice in the same terms addressed to 18 persons, including the second and third petitioners, was published in the Times of India.

6. While the proceedings in respect of the association of persons were pending, the Central Board of Revenue on July 30, 1963, issued a notice under Section 5(7A) to the second petitioner and other members of the association of persons informing them of a proposal to transfer the case of the association of persons from the Income-tax Officer, A-B Ward, Bombay, to the Income-tax Officer, Special Circle-C, Kanpur, and invited objections to the proposal. Objections were filed. On October 22, 1963, the Central Board of Revenue made an order under Section 5(7A) transferring the case of the aforesaid association of persons to the Income-tax Officer, Special Investigation Circle-C, Kanpur. Assessment proceedings were not taken by the Income-tax Officer, Special Investigation Circle-C, Kanpur, in respect of the aforesaid association of persons. On August 9, 1955, he issued a notice under Section 22(4) and under Section 23(2) and by a letter of the same date also clarified the reasons for the proceedings against the association of persons. He stated that there was material indicating that the association of persons which carried on extensive cloth business at Bombay and Kanpur had earned profits amounting to nearly Rs. 80 lakhs during the previous year relevant to the assessment year 1949-50. He called upon the second petitioner to show why the profit of Rs. 80 lakhs should not be assessed as the income of the association of persons and informed him that he could inspect the evidence in possession of the income-tax department. Another letter, dated September 1, 1965, by the Income-tax Officer, further clarified the position. He stated that the firm had been originally assessed in 1954, on the basis of the partnership deed. It was found subsequently that substantial income had escaped assessment and, therefore, proceeding under Section 34 was taken. During the course of investigation it was discovered that the partnership deed was a sham document and was executed much later than the date which appeared on it and from a perusal of a large volume of documentary evidence it emerged that apart from the 19 persons there were other persons who were participating in the business and enjoying its profits. As a partnership firm could not have 20 members, proceedings were taken against the entity as an association of persons. Then on November 2, 1965, in response to enquiries made by the petitioners, the Income-tax Officer, Special Investigation Circle-A, Kanpur, to whom the case had meanwhile been transferred disclosed that as many as 32 persons had been found so far to be members of the association of persons and informed them that the witnesses mentioned in the letter had been summoned by him and were available for cross-examination. Thereafter, it appears that the case was transferred to the Income-tax Officer, Central Circle III, Kanpur.

7. Meanwhile, by an order dated October 10, 1963 (as subsequently corrected by an order dated December 2,1963), the Commissioner of Income-tax transferred the case of the dissolved firm from the Income-tax Officer, Special Investigation Circle, B-Ward, Kanpur, to the Income-tax Officer, Special Investigation Circle, C-Ward, Kanpur. This case also, it appears, was later on transferred to the Income-tax Officer, Central Circle III, Kanpur.

8. Finally, a third set of proceedings was commenced. On March 16, 1966, notices under Section 148 of the Income-tax Act, 1961, were issued by the Income-tax Officer, A-B Ward, Bombay, to the second and the third petitioners respectively for and on behalf of an association of persons, M/s. Sidh Gopal Gajanand, in respect of the assessment year 1949-50. The notice recited that the necessary sanction of the Central Board of Revenue had been obtained.

9. The petitioners pray for the quashing of the notices dated January 5, 1962, the notices dated February 28, 1962, the notices dated March 21, 1962, all being notices under Section 34 of the Indian Income-tax Act, 1922, and the notices dated March 16, 1966, under Section 148 of the Income-tax Act, 1961, and for prohibiting the proceedings taken consequent to these notices.

10. The connected writ petition No. 3339 of 4966 has been filed by the dissolved firm, M/s. Sidh Gopal Gajanand, and the aforesaid Budhoolal Mehrotra and Sidh Gopal Kapur. The allegations contained in the petition correspond substantially to those already set out above. By this petition, certiorari is claimed against the notice under Section 34 of the Indian Income-tax Act, 1922, served upon the petitioners on February 26, 1958, stating that under Section 44 they and the other members of the dissolved firm were jointly and severally liable to assessment in respect of the income of the firm and calling upon them to file a return accordingly. Reference has already been made above to this notice. The petitioners also pray for prohibition against the proceedings consequent to that notice.

11. We may at this stage dispose of the contentions raised upon in Writ Petitions Nos. 3338 and 3339 of 1966.

12. The first contention is that the order dated September 4, 1958, transferring the case of the dissolved firm from the Income-tax Officer, A-B Ward, Bombay, to the Income-tax Officer, Special Investigation Circle, B Ward, Kanpur, and the order dated October 22, 1963, transferring the case of the association of persons from the Income-tax Officer, A-B Ward, Bombay, to the Income-tax Officer, Special Investigation Circle-C, Kanpur, are invalid because (a) the petitioners were not afforded an oral hearing before the impugned orders were made, (b) no proceeding was pending when the transfers were effected and (c) the reasons for effecting the transfers were not stated. In our opinion, there is no substance in the contention. In the first place, it is not incumbent upon the income-tax authorities to afford an opportunity to an assessee of being heard before his case is transferred. That was the position under the Indian Income-tax Act, 1922. There is nothing in that Act requiring the said opportunity to be given. In Pannalal Binjraj v. Union of India, [1957] 31 I.T.R. 565 (S.C.) the Supreme Court merely recommended, not as a matter of law but as a rule of prudence, that the principles of natural justice should be followed where circumstances permit before the order of transfer is made. In any event an opportunity was given to the members of the dissolved firm and association of persons to file objections against the transfer of the respective cases. An oral hearing was not mandatory. The statute did not provide for an oral hearing. It has been pointed out by the Supreme Court that even where a quasi-judicial tribunal is required to observe the principles of natural justice before making an order a personal hearing is not necessary and may be by written representation. Whether the opportunity should be given by written representation or by personal hearing depends upon the facts of each case and ordinarily that is a matter in the discretion of the Tribunal I Madhya Pradesh Industries v. Union of India, A.I.R. 1966 S.C. 671. So far as the order transferring the case of the dissolved firm is concerned, paragraph 11 of the counter-affidavit of P. C. Gandhi states that an oral hearing was given to the petitioners by the Commissioner of Income-tax, Bombay, when he invited objections to the proposed transfer. As regards the order transferring the case of the association of persons, in paragraph 9 of the said counter-affidavit it is stated that no oral hearing was necessary as the written objections submitted by the petitioners were not relevant to the question of transfer. Nothing has been shown to us to indicate that the circumstances of the case rendered it necessary to give an oral hearing to the petitioners before the transfers were effected.

13. The argument that no proceeding was pending when the transfers were made is clearly incorrect because, as is evident from the foregoing, proceedings under Section 34 had been initiated in respect of the income of the dissolved firm by the notices dated February 26, 1958, served upon the second and third petitioners and other members of the dissolved firm and the order of transfer was made thereafter on September 4, 1958, while proceedings in respect of the income of the association of persons were initiated under Section 34 on February 28, 1962, when notices under Section 34 were issued and the order of transfer was made subsequently.

14. The third submission that reasons were not stated in the impugned orders of transfer cannot also be accepted because a perusal of the said orders clearly discloses that they were made for facility of investigation and proper assessment.

15. Accordingly we reject the contention that the impugned orders of transfer are invalid.

16. The next contention is that the Income-tax Officer was not definite as to the constitution of the entity earning the income said to have escaped assessment and this is evidenced by the initiation of proceedings under sections 34 and 148, first in respect of the dissolved firm, and thereafter in respect of the association of persons. It is also pointed out that after taking proceedings against an association of persons numbering 19 members, the Income-tax Officer disclosed that the number of members had been found to be 32. This, according to the petitioners, establishes that there was no definite information on the basis of which the impugned notices under Section 34 and Section 148 were issued. Reliance has been placed upon Calcutta Discount Co. v. Income-tax Officer, [1961] 41 I.T.R. 191 (S.C.). Now it seems to us that the validity of a notice under Section 34 of the Act of 1922, or under Section 148 of the Act of 1961 must be determined by reference to the information in the possession of the Income-tax Officer at the time when the proceeding is initiated. It is not inconceivable that upon a given set of facts coming into the possession of the Income-tax Officer he applies for and obtains the sanction of the Commissioner of Income-tax or the Central Board of Revenue and issues notice accordingly, and that thereafter in the investigation which ensues during the course of assessment proceedings further facts come to light which appear to indicate that the income could have been earned by another entity. The further discovery of facts cannot, in our opinion, invalidate the notice under Section 34 or Section 148 which when issued was a valid notice. In Chhotalal Haridas v. M.D. Karnik, [1961] 43 I.T.R. 387, 392 (S.C.).

a notice under Section 34 issued against Chhotalal was impugned on the ground that an assessment proceeding was already pending in respect of the same income against his brother, Lalji Haridas. The Supreme Court, accepting the plea of the income-tax department that, until the question of liability to pay tax in respect of the income in question is finally determined, it may not be possible to safely predicate that it is the income of the one and not of the other, observed :

" In cases where it appears to the income-tax authorities that certain income has been received during the relevant assessment year but it is not clear who has received that income and, prima facie, it appears that the income may have been received either by A or B or by both together, it would be open to the relevant income-tax authorities to determine the said question by taking appropriate proceedings both against A and B."

17. The validity of the notice initiating reassessment proceedings in respect of the dissolved firm and the association of persons cannot, therefore, be successfully assailed on the ground urged by the petitioners. But we would, while disposing of this contention, refer the income-tax authorities to the further observations made by the Supreme Court in the same case.

In the proceedings taken against Lalji the Income-tax Officer should make an exhaustive enquiry and determine the question as to whether Lalji is liable to pay the tax on the income in question. All objections which Lalji may have to raise against his alleged liability would undoubtedly have to be considered in the said proceedings. Proceedings against Chhotalal may also be taken by the Income-tax Officer and continued and concluded, but until the proceedings against Lalji are finally determined no assessment order should be passed in the proceedings taken against Chhotalal. If in the proceedings taken against Lalji it is finally decided that it is Lalji who is responsible to pay tax for the income in question it may not become necessary to make any order against Chhotalal. If, however, in the said proceedings Lalji is not held to be liable to pay tax or it is found that Lalji is liable to pay tax along with Chhotalal it may become necessary to pass appropriate orders against Chhotalal.

18. That is so far as the proceedings initiated by the notices served on February 26, 1958, and the notices dated February 28, 1962, and March 27, 1962, are concerned. As regards the proceedings initiated by the notices dated March 16, 1966, it may be in the interest of justice that the cases be transferred from Bombay to Kanpur so that the Income-tax Officer already taking assessment proceedings in respect of the dissolved firm and the association of persons may take cognizance of these cases also in order that a comprehensive examination in respect of all the cases may be had.

19. The only impugned notices left are those dated January 5, 1962, issued under Section 34 of the Indian Income-tax Act, 1922. In regard to them we may record the statement in all the three writ petitions of the learned Advocate-General, who appears for the respondents, that the proceedings consequent upon those notices have been dropped.

20. A contention was faintly raised on behalf of the petitioners that service of the notices under sections 34 and 148 in respect of the association of persons was invalid because they were not served upon the principal officer of the said association. That is not a ground which has been specifically and clearly taken in the writ petitions and, in any event, there is no averment in the writ petitions that the individuals upon whom the notices were served were not the principal officers of the association. We, therefore, decline to entertain that contention.

21. In the result, all the contentions raised in respect of Writ Petitions Nos. 3338 of 1966 and 3339 of 1966 are rejected.

22. In Civil Misc. Writ Petition No. 39 of 1967, the petitioners are the dissolved firm, Sidh Gopal Gajanand, the alleged association of persons by the same name, and Pooran Chand Kapur. Pooran Chand Kapur, the third petitioner was a member of the dissolved firm and is said to be a member of the association of persons to which reference has already been made when considering the earlier two writ petitions. The allegations are that notices similar to those served upon Budhoolal Mehrotra and Sidh Gopal Kapur were also served upon Pooran Chand Kapur and the case set out in the petition is substantially the same as in the, previous two petitions. What is stated further in this petition is that no income had escaped assessment because the amount had already been assessed at Bombay in the hands of the India United Mills Ltd. and in the hands of its managing agents, M/s. Agarwal & Co., and probably also in the hands of selling agents. It is pointed out that in the assessment order against M/s.

Agarwal & Co. an amount of about Rs. 76 lakhs has been added on account of sales of cloth during the period April, 1948, to August, 1948. The petitioners pray for certiorari against the notice received on February 26, 1958, in respect of the income of the dissolved firm, the notice dated January 5, 1962, received by Pooran Chand Kapur as a member of the association of persons, the further notice dated February 28, 1962, received by Pooran Chand Kapur for and on behalf of the association of persons, and the notice published in the Times of India dated March 27, 1962, all being notices under Section 34 of the Indian Income-tax Act, 1922, and the notice dated March 16, 1966, under Section 148 of the Income-tax Act, 1961. The petitioners have also prayed for prohibition restraining the respondents from continuing the proceedings consequent to the aforesaid notices,

23. The submissions on behalf of the petitioners in the two earlier writ petitions have been adopted by the petitioners in this case. They are disposed of accordingly.

24. It is further submitted that, as the amount has been assessed in the hands of the manufacturers, M/s. India United Mills Ltd. and also in the names of the managing agents, M/s. Agarwal & Co., the same item of income cannot be assessed in the hands of the petitioners. So far as the case in respect of M/s. India United Mills Ltd. is concerned, an appeal by the company has been allowed by the Income-tax Appellate Tribunal and the amount deleted from its assessment. As regards the petitioners, the respondents maintain that they have unimpeachable material in their possession to show that by transactions effected by them a large volume of income was earned by them during the previous year relevant to the assessment year 1948-49, which income was never disclosed by them for assessment. At the time when the respective notices were issued under Section 34 of the Act of 1922 or under Section 148 of the Act of 1961, there was material in the possession of the Income-tax Officer issuing the notices upon which he had reason to believe that income had escaped assessment. As we have pointed out already, the validity of a notice for reassessment must be examined by reference to the information in the possession of the Income-tax Officer when he issued the notice. The discovery of fresh facts during the course of subsequent investigation will not invalidate the notice which when issued was a good notice. If the discovery of fresh facts discloses that the income in question was not earned by the entity against whom the notice for reassessment has been issued, the Income-tax Officer will at the stage of making the assessment order determine whether he will assess any income in the hands of the entity at all. Moreover, we are not satisfied that the matters respecting which the impugned assessment proceedings are being taken refer to the very transactions taxed in the hands of M/s. India United Mills Ltd. or M/s. Agarwal & Co. It is urged that all the material upon which the assessment proceedings are being taken against the petitioner was available to the Income-tax Officer when he made the original assessment against the dissolved firm or could have made an original assessment in respect of the association of persons and that the period of limitation of four years prescribed under Section 34(1)(b) applies. That is a matter which the petitioners can more appropriately agitate before the Income-tax Officer. So far as the proceedings before us are concerned, the petitioners have been unable to establish before us that all the materials upon which the successive notices under Section 34 of the Act of 1922 and under Section 148 of the Act, 1961, were issued was with the Income-tax Officer when he made the original assessment against the dissolved firm or could have made an original assessment against the association of persons.

25. All the contentions raised in this writ petition also fail.

26. Accordingly Civil Misc. Writ Petitions Nos. 3338 of 1966, 3339 of 1966 and 39 of 1967 are dismissed with costs.