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Issues:
Jurisdiction of assessing authority to issue notice under section 143(2)(b) of the Income-tax Act, 1961 based on information acquired from seized records. Analysis: The petitioner, an assessee under the Income-tax Act, 1961, filed a return for the assessment year 1985-86, which was accepted by the Assessing Officer. Subsequently, a search and seizure operation was conducted at the petitioner's premises, leading to the discovery of stock registers indicating discrepancies in closing stocks and gross profits. The Inspecting Assistant Commissioner of Income-tax concluded that there was a suppression of gross profit amounting to Rs. 66,84,993.95 for the period from February 1, 1972, to January 31, 1985, based on the seized records. The petitioner contended that the information provided by the authorities did not consider certain factors, such as losses in transit, and argued that the original return was accurate and no further scrutiny was warranted. The petitioner challenged the jurisdiction of the assessing authority to issue a notice under section 143(2)(b) of the Act, arguing that once an assessment is completed under section 143(1) after due scrutiny, it cannot be reopened unless the original assessment is incorrect, inadequate, or incomplete. The petitioner also raised concerns about the authorities resorting to section 143(2)(b) instead of other available provisions like sections 147, 148, and 263, due to limitations. After hearing arguments, the court found that the notice issued by the assessing authority lacked due application of mind. The court noted that the amount allegedly suppressed spanned a period from 1972 to 1985, while the notice pertained to the assessment year 1985-86. The court emphasized that the assessing authority should have been specific about the suppressed amount relevant to the specific assessment year, rather than combining amounts from different periods. As a result, the court quashed the notice, stating that it included extraneous material and did not comply with legal requirements. In conclusion, the court allowed the petition, directing the respondents to take appropriate steps. It ruled that no further proceedings should be initiated based on the flawed notice issued by the assessing authority.
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