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Issues involved: Challenge to legality and validity of notice u/s 148 read with 147(a) of Income-tax Act for assessment year 1975-76.
Summary: The petitioners, a registered partnership firm, challenged the notice issued for their assessment for the year 1975-76. The original assessment was set aside, and a fresh assessment was completed. The Income-tax Officer issued the impugned notice due to incomplete details regarding the valuation of bonus shares. The reassessment resulted in a higher computed income under the head "capital gains." The main question was whether the reasons recorded for reopening the assessment had a direct link to the belief of escaped income. The reasons recorded by the Income-tax Officer highlighted the lack of details on the valuation of bonus shares as the basis for reopening the assessment. The court emphasized that mere non-disclosure of certain facts does not necessarily indicate escaped income. The court referred to previous decisions to support the view that more than just non-disclosure is required to form a belief of escaped income. Consequently, the court found the notice issued without jurisdiction and quashed it, leading to the quashing of the assessment made in response. In conclusion, the court ruled in favor of the petitioners, quashing the notice and the assessment made in pursuance of it. No costs were awarded in this matter.
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