1. ' SAEEDUZZAMAN SIDDIQUI, J.--This order will govern the disposal of C.P. Nos. 722 and 723 of 1978 as in both these petitions common questions of law and facts are involved. Petition No,722/78 is filed by M/s. Bliss Industries Limited while Petition No,723/78 is instituted by M/s. Bliss and Co. Ltd. In both the cases the Income-tax Officer issued notices under section 34 of the Income-tax Act, 1922 on 9- 4-1978 to the petitioners directing them to file return of income-tax. In Petition No,722/78 the notices issued to assessm ent years 1974-75, 1975-76 while in Petition No,723/78 it related to the assessment years 1974-75 and 1975-76. The petitioners in both the cases were required to file the returns of income tax by 12-4-1978. The case of the petitioners jointly is that the notices issued by the Income-tax Officer were mala fide and were based on consideration which were not relevant under section 34 of the Act. It is urged that these notices were issued at the behest of Martial Law Authorities who had earlier directed the petitioner to reinstate some dismissed employees of petitioner which the petitioner refused to comply and, therefore, as a retaliatory action the Martial Law Authorities directed the Income-tax Authorities to initiate action against the petitioner. In support of their contention that the notices were issued under section 34 of the Income-tax Ordinance to the petitioners by the Income-tax Officer for reasons which were extraneous to section 34 of the Income-tax Ordinance, they have placed on record the exchange of correspondence between them and the Labour Directorate in the first instance prior to the issuance of the notices under section 34 of the Income-tax Act and thereafter, the letters exchanged between them and the Income-tax Authorities after issuance of notices under section 34 of the Income-tax Act. The learned counsel for the department has refuted the allegations of petitioner that the notices issued under section 34 of Income-tax Act was a follow up of the dispute between the petitioners and Labour Directorate. We will therefore, for purposes of present petitions only refer to the correspondence exchanged between the petitioners and the income-tax authorities to ascertain whether the action initiated by them was at the instance of Martial Law Authorities and it was an independent action under the Income-tax Laws. The notices issued by the Income-tax authorities under section 34 of the Income-tax Act are dated 9-41978. On 10th April, 1979 the petitioner's Tax adviser wrote a letter to the Income-tax Officer requesting for extension of time by one month as well as for disclosure of the reasons which led to the taking of the proposed action under section 34 of the Income-tax Act against the petitioner. It may be mentioned here that the notices issued to petitioners under section 34 of the Income-tax Act are on the cyclostyled forms and time printed on the forms allowable or filing of returns in response to notice is 35 days which was scored off and in its place 12-4-1978 was mentioned. It is therefore, quite obvious that the petitioner in both these cases was required to file returns in respect of 3 years in Petition No,722/78 and in respect of two years in Petition No,723/78 within 3 days of the notice. The request made by the legal adviser of the petitioner for extension of time by one month in his letter dated 10-4-1978 was considered and time for filing return was extended upto 18-4-1978 by the Income- tax Officer. With regard to the second part of the request of the petitioner to disclose the reasons for the proposed action against them under section 34 of the Act it was stated in reply that after filing of the income-tax return by the petitioner the relevant information will be disclosed to them and they will be given opportunity to defend themselves against such material, if necessary.
2. Notwithstanding, above extension of time the petitioner's legal adviser repeated his request for extension of time upto one month by another letter dated 18th April, 1978 which was refused by the Income-tax Officer on 20th April, 1978. After refusal of the request for extension of time by the Income-tax Officer as aforesaid, petitioner approached the Inspecting Asstt. Commissioner, Range 3, Karachi and once again repeated his request for extension of time for filing the returns under section 34 for the assessm ent years mentioned in the notice under section 34. He also repeated his request that he may be intimated the reasons for initiating action under section 34 against the petitioners. It will be advantageous at this stage to reproduce here the reply received by petitioners from the Inspecting Asstt: Income-tax Commissioner to the letter dated 27-4-1978, it reads as under: Dated 27-4-1978.
3. ' M/s F.R. Merchant and Co.601, Muhammadi House, Karachi.
4. ' Sub: Filing of returns u/s 34 M/s. Bliss and Co. LtdAssessment years 1974-75 and 75/76 and M/s. Bliss Industries Ltd. Assessm ent years 74-75 to 76-77.
5. ' Ref: Your letters No,IT/B-17/78 and II/B-29/78 dated 24th April, 1978.
6. ' Reference above I regret that I cannot interfere in Income-tax Officer's actions for the reasons already made known to you. Report in the matter is to be submitted to Martial Law Authorities.
7. Sd./ N.R. Choudhary."
8. ' After receipt of the above letter from Inspecting Asstt: Commissioner, the petitioner once again repeated their request for extension of time to file return of income-tax and disclosure of reason for initiating action against them under section 34 of the Income-tax Act to the Commissioner of Income-tax Range F but it appears that no reply was sent to the petitioners in response to their letter.
9. ' Thereafter the above two petitions were filed in this Court challenging the issuance of notice under section 34 of the Income-tax Act.
10. ' Mr. AA. Fazed, learned counsel for the petitioner has, firstly, contended that the notices issued by the Income-tax authorities under section 34 directing the petitioners to file return of income-tax in respect of the aforesaid assessm ent years is mala fide and based on reasons which are totally extraneous to section 34 of the Act. The second contention of the learned counsel is that in spite of request having been made specifically by the petitioner to the Income-tax Officer. Inspecting Asstt.
11. Commissioner and Commissioner of Income-tax to disclose the reasons and the material on the basis of which action was proposed against the petitioner under section 34 of the Act the Authorities failed to communicate the same and as such the proposed action under section 34 could not be sustained in law. In support of his second contention Mr. AA. Fazeel, referred to the cases of M/s. Mahaliram Ramjidas (AIR 1938 Ca1.557), Commissioner of Income-tax Bombay City v.
12. Remsukh Motilal (1955 (27) I T R (54), Calcutta Discount Co. Ltd. v. Income-tax Officer, Companies, District 1, Calcutta and another (1961 41 I T R 191). The last mentioned case was decided by the Indian Supreme Court and it supports the contention of Mr. AA. Fazeel. However, the case reported in AIR 1938 Cal. Page 557 was overruled by Commissioner of Income-tax Bengal v. Mahaliram Ramjidas (AIR 1940 Privy Council page 144). This case is also referred by the learned counsel for the respondent in his argument which is also reported in 1940 (8) I T R 442). The cases in which contrary opinion is expressed, namely that it is not necessary for the Income-tax Officer to state reasons and material in the notice issued under section 34 of the Income-tax Act are also very fairly referred by Mr. AA. Fazeel. They are Commissioner of Income-tax v. Pakistan Refrigeration (PLD 1966 Lah. 509), Escorts Ltd. v. Income-tax Officer, Lahore PLD 1975 Lah. 443), Paramount Electric Company v. Commissioner of Income-tax (PLD 1976 Lah. 1147 and Begum Nusrat Bhutto v. Income- tax Officer Circle v. (PLD 1980 Lah. 449). The first noted case does not deal with the point in issue before us directly but the remaining three cases are exactly on the point and one of them namely Paramount Electric Company v. Commissioner of Income-tax was decided by a Division Bench of Lahore High Court. The learned counsel for the Department also drew our attention to the case of M/s. Burhan Engineering Co. Ltd. v. Income-tax Officer, Companies Circle II Karachi and another (1985 PTD 465) decided by a Division Bench of this Court in which the view taken by this Court is the same as is expressed in the above mentioned Lahore case. The controversy in our view however stands settled by the pronouncement of the Supreme Court in the case of Satluj Cotton Mills Limited v. Commissioner of Income-tax (PLD 1965 Supreme Court 443) which is also reported in 1965 PTD page 465. Following observation of the Supreme Court appearing at page 450 of the report are reproduced below to conclude the discussion: "In such a case, it is sufficient if the notice contains no more than a statement that income has escaped assessm ent or has been under assessed etc. And calls upon the assessee to furnish a return of his income for relevant period."
13. In view of above legal position we find no force in the submission of Mr. AA. Fazeel that the notices issued by the Income-tax Officer under section 34 of the Income-tax Act are illegal or without lawful authority for the reason that in the aforesaid notice neither any reason nor the material for initiating the action under section 34 of the Income-tax Act was disclosed. However, this does not conclude the matter finally as it is not disputed by the learned counsel for the respondents that the record before the Income-tax Officer must however, be such as would justify the initiation of action under section 34 of the Act and that the Court while considering such matter in exercise of its constitutional jurisdiction can always call upon the authorities to produce the material which formed basis of the proceedings under section 34 of the Act in order to satisfy itself the reasonableness of the proposed action. We accordingly asked Mr. Shaikh Haider the learned counsel for the Department to produce before us the material on the basis of which notices were issued to the petitioner under section 34 of the Income-tax Act. We may state here that our anxiety to see the record was much more in these cases as the petitioner had levelled serious allegations of mala fides against the authorities and the last letter on record from the Inspecting Asstt.
14. Commissioner of Income-tax which is already reproduced above in this order at least lends support to the contention of petitioner that the action by income-tax authorities was not an independent one and that they were acting at the instance of Martial Law Authorities for reasons which were extraneous to section 34 of the Income-tax Act. Mr. Shaikh Haider, in response to our query whether he could place before us the material on the basis of which action under section 34 of the Act was initiated against the petitioner, very frankly stated that in spite of his instructions to the department to produce the material they have not supplied the same to him for production in Court. Learned counsel also stated that for today's hearing he had specially notified the concerned officer to bring the record of the case but he failed to attend the Court. In these circumstances we have anxiously gone through the counter-affidavit of respondent in the case to find out if any such material or information was disclosed but we failed to find the same. In the absence of such material we hold that there was no material available before the Income-tax Officer for initiating action against the petitioners under section 34 of the Act and accordingly declare the notices issued in both the cases as having been issued without lawful authority and of no legal effect.
15. However, we will make no order as to costs in the circumstances of the case.