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Issues involved: Challenge to notice u/s 143(2) of the Income-tax Act, 1963 regarding deposits in a firm under the Amnesty Scheme for assessment years 1984-85 to 1986-87.
Summary: The High Court of Madhya Pradesh considered a case where a partnership firm and one of its partners challenged a notice issued by the Income-tax Officer under section 143(2) of the Income-tax Act, 1963. The notice questioned deposits made by individuals in the firm, which were declared under the Amnesty Scheme for assessment years 1984-85 to 1986-87. The petitioners argued that once these amounts were declared and assessed under the Amnesty Scheme, the Income-tax Officer had no authority to issue the notice challenging the nature of these deposits. The petitioners relied on a previous court decision but the High Court disagreed, citing Supreme Court judgments that emphasized the need to investigate the true nature and source of credits, especially if the amounts were not the income of the declarants. The court highlighted that the Income-tax Officer was justified in issuing the notice based on the belief that the amounts credited to the firm were actually the firm's income. The court clarified that the provisions of the Finance (No. 2) Act, 1965 did not override the Income-tax Act, 1961, in cases involving persons other than the declarants. Ultimately, the court dismissed the petition, stating that the petitioners could still demonstrate to the Income-tax Officer that the deposits in question were their own income and not that of the firm. The judgment emphasized the importance of investigating the true sources of income and upheld the jurisdiction of the Income-tax Officer in such matters.
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