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Issues Involved
1. Interpretation of the term "information" in Section 147(b) of the Income-tax Act, 1961. 2. Conditions under which a writ court can refuse relief based on the petitioner's conduct, lack of injustice suffered, or potential injustice resulting from granting relief. Detailed Analysis Issue 1: Interpretation of "Information" in Section 147(b) of the Income-tax Act, 1961 Petitioner's Argument: The petitioner argued that no income had escaped assessment because the interest paid on the loan taken from his provident fund was paid to the Government and became part of the Consolidated Fund of India, thus qualifying as expenditure incurred wholly and exclusively in connection with the transfer of the house under Section 48(1) of the Act. Additionally, the petitioner contended that the information regarding the interest payment was known to the Income-tax Officer at the time of the original assessment, and thus, the reassessment under Section 147(b) was not justified. Defense's Argument: The defense countered that the interest paid by the petitioner did not become the property of the Government but remained in the petitioner's provident fund account. Therefore, it did not qualify as expenditure incurred in connection with the transfer of the house. Furthermore, the Income-tax Officer was not aware of this fact at the time of the original assessment, and the true interpretation of Rule 7-E was brought to his notice by the Revenue Audit authorities and the Ministry of Law after the original assessment. Court's Analysis: The court examined whether the notice under Section 148 read with Section 147(b) was issued with jurisdiction. It was established that the Income-tax Officer must come into possession of "information" subsequent to the date of the assessment. The affidavit of the Income-tax Officer stated that he received information after the assessment that the interest was credited to the petitioner's provident fund account, not to the Government. This information was provided by the Revenue Audit authorities and the Ministry of Law. The court referred to the Supreme Court's ruling in Commissioner of Income-tax v. A. Raman & Co. [1968] 67 ITR 11 (SC), which clarified that "information" could consist of either fact or law. The court found that both factual and legal information regarding the interest payment came into the possession of the Income-tax Officer after the assessment. The court also discussed the externality of the source of information, agreeing with the Gujarat High Court's decision in Kasturbhai Lalbhai v. R. K. Malhotra, Income-tax Officer [1971] 80 ITR 188 (Guj), that information must come from a competent and authorized source. The court concluded that the Revenue Audit and the Ministry of Law had the power and duty to guide the Income-tax Officers, making their advice "information" under Section 147(b). Conclusion: The court held that the Income-tax Officer received valid "information" within the meaning of Section 147(b) after the assessment, justifying the issuance of the notice under Section 148. Issue 2: Conditions for Refusal of Relief by Writ Court Court's Consideration: The court considered whether the petitioner's conduct, lack of suffered injustice, or potential resulting injustice justified refusing relief. The court noted that the petitioner had misrepresented the interest payment as being made to the Government, leading to an unjust enrichment at the public's expense. The court emphasized that issuing a writ under Article 226 is discretionary and not automatic upon showing a legal infirmity in the impugned order. Legal Precedents: The court cited several precedents, including A. M. Allison v. B. L. Sen, where the Supreme Court held that writs are discretionary and may be refused if there is no failure of justice. The court also referred to Smt. Narayani Debi Khaitan v. State of Bihar, where the Supreme Court reiterated that relief under Article 226 is discretionary and may be denied if the petitioner is guilty of laches or if granting relief would result in injustice. Conclusion: The court found that all three conditions for refusing relief were present: the petitioner's conduct was misleading, no injustice was suffered by the petitioner, and granting relief would result in injustice by allowing the petitioner to retain an undeserved tax advantage. Consequently, the court exercised its discretion to refuse the relief sought by the petitioner. Final Judgment: The writ petition was dismissed with costs, and the court upheld the validity of the notice issued under Section 148 read with Section 147(b) of the Income-tax Act, 1961.
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