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Issues Involved: Validity of reopening of assessment u/s 148 of the Income Tax Act.
Summary: The petitioner, a registered partnership firm engaged in the business of decorticating groundnut and manufacturing groundnut oil, filed its return for the assessment year 1978-79. The Income-tax Officer (ITO) completed the assessment u/s 143(3) of the Income Tax Act of 1961. Subsequently, the ITO issued a notice under s. 148 to reopen the assessment, which the petitioner challenged under article 226 of the Constitution, arguing that the reopening was without jurisdiction. The ITO's reasons for reopening the assessment were based on a claimed excessive driage of groundnuts, suggesting that income had escaped assessment. The petitioner contended that the notice was an attempt to change the ITO's opinion on the previous assessment, which is impermissible. The ITO, however, argued that the notice was issued based on new information received u/s 147(b) of the Act. The court examined the reasons recorded by the ITO and noted that the "notes" prepared by the ITO could not be considered as recording reasons under s. 148 of the Act, which is a statutory requirement for reopening assessments. The court emphasized that it could only review the reasons recorded by the ITO and not go beyond them. Referring to a previous case, the court highlighted that sustaining a notice should be based on the reasons recorded by the ITO and not on any accompanying "notes." As the "notes" were excluded, it was concluded that there were no valid reasons recorded by the ITO to justify the reopening of the assessment under s. 147(b) of the Act. Therefore, the court quashed the impugned notice. The court did not delve into the argument that the "notes" did not constitute information as to a fact justifying reopening under s. 147(b) as the notice was quashed on the primary ground. Consequently, the court held the impugned notice to be quashed, directing the parties to bear their own costs.
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