1990 (4) TMI 35 - HC - Income Tax

Summary

Issues Involved:
The jurisdiction of the Income-tax Officer to issue notices u/s 148 read with section 147(a) for the assessment years 1977-78 and 1978-79 is challenged by the petitioners.

Assessment Year 1978-79:
The Income-tax Officer reopened the assessment based on an appraisal report indicating non-disclosure of necessary material by the petitioner. The reasons recorded for reopening were deemed vague by the petitioner's counsel, citing Supreme Court decisions emphasizing the obligation of the assessee to disclose all material facts. The court noted that the information provided was vague and did not establish a nexus for believing income had escaped assessment. Referring to previous Supreme Court judgments, it was concluded that the belief that income escaped assessment due to the petitioner's failure to disclose material facts was not justified. The impugned notices were quashed.

Assessment Year 1977-78:
Similar to the assessment for 1978-79, the reasons recorded for reopening were found to be vague and lacking in substantial information. The court highlighted that the information provided did not establish a connection to support the belief that income had escaped assessment. Citing previous Supreme Court decisions, it was concluded that the belief that income escaped assessment due to the petitioner's failure to disclose material facts was unfounded. The notices for this assessment year were also quashed.

Conclusion:
The High Court allowed the petition, quashing the impugned notices for both assessment years, as they were issued without proper assumption of jurisdiction. The rule was made absolute in favor of the petitioners.