1990 (11) TMI 45 - HC - Income Tax

Summary

Issues:
Challenge to notices issued under section 148 of the Income-tax Act for assessment years 1971-72 and 1972-73.
Validity of the reasons for reopening the assessment.
Jurisdiction of the Income-tax Officer under sections 147 and 148 of the Income-tax Act.
Interference by the writ court in the decision-making process.

Analysis:

The petitioner, a private limited company owning a hotel, challenged notices issued under section 148 of the Income-tax Act for assessment years 1971-72 and 1972-73. The petitioner contended that there was no failure to disclose necessary facts during the original assessment and that the notices were based on a mere change of opinion. It was argued that the Income-tax Officer did not have reasonable grounds to believe there was underassessment. The petitioner asserted that the jurisdictional conditions under sections 147 and 148 of the Act were not satisfied.

In response, the respondents contested the writ petition by filing an affidavit with detailed reasons for issuing the notices. The court noted the formation of a private limited company by S. P. Jaiswal and his sons, observing the company's activities related to the construction of a hotel building. After analyzing the expenses and costs debited in the accounts, the court found discrepancies and upheld the Income-tax Officer's decision to reopen the assessment under section 69B due to the understated investment value.

The court emphasized that it was not sitting in appeal over the decision of the statutory authority but examining the decision-making process. Referring to a Supreme Court decision, the court stated that interference by the writ court was warranted only if the reasons for initiating proceedings were prima facie perverse. The court found sufficient materials on record to support the belief that there was suppression or omission by the assessee, justifying the reopening of the assessment.

Ultimately, the court dismissed the writ petition, ruling that there was no merit in the petitioner's challenge. The court discharged the rule and vacated all interim orders, with no order as to costs.