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Issues Involved:
1. Issuance of notice after more than four years from the end of the assessment year. 2. Requirement of "reason to believe" by the Income-tax Officer. 3. Relevance and rational connection of the reasons disclosed for the contemplated action. 4. Satisfaction of the Commissioner of Income-tax for the issuance of the impugned notice. Summary: Issue 1: Issuance of Notice After More Than Four Years The petitioner contended that the impugned notice was issued after more than four years from the end of the assessment year 1967-68. However, the court found that as per section 151, a notice u/s 148 can be issued after four years but before eight years with the prior sanction of the Commissioner. The notice dated March 27, 1976, was within this eight-year period, making it timely and valid. Issue 2: Requirement of "Reason to Believe" The petitioner argued that the Income-tax Officer lacked "reason to believe" that income had escaped assessment due to omission or failure on the part of the assessee to disclose fully and truly all material facts. The court held that the Income-tax Officer had sufficient reason to believe, based on information obtained from search and seizure operations, that the petitioner had been assessed at a lower rate due to non-disclosure of material facts. This justified the issuance of the notice. Issue 3: Relevance and Rational Connection of Reasons Disclosed The petitioner claimed that the reasons disclosed for the contemplated action had no relevant bearing or rational connection to the belief formed by the Income-tax Officer. The court found that the material facts, including letters and correspondence seized during the raids, indicated that the petitioner had suppressed information about the shareholdings of its parent company, O.C.M. (London) Ltd. This non-disclosure was material and justified the Income-tax Officer's belief that income had escaped assessment. Issue 4: Satisfaction of the Commissioner of Income-tax The petitioner contended that the Income-tax Officer failed to obtain the necessary satisfaction of the Commissioner of Income-tax for the issuance of the notice. The court found that the Commissioner had enough material before him to record his satisfaction for the issuance of the notice. The approval was granted based on an exhaustive note by the Income-tax Officer, detailing the background and the tentative conclusion that the assessee had failed to disclose all necessary facts. Conclusion: The court dismissed the petition, finding no merit in the arguments presented by the petitioner. The impugned notice was deemed valid, and the petitioner was ordered to pay costs amounting to Rs. 1,000.
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