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Issues:
Challenging the validity of notice under s. 147(a) read with s. 148 of the I.T. Act, 1961 for assessment year 1960-61. Analysis: The petitioner, a company, challenged the notice issued by the second respondent under s. 147(a) read with s. 148 of the I.T. Act, 1961, regarding the purchase of land from Pt. Lila Ram. The petitioner entered into agreements for land purchase at different prices, leading to discrepancies in the transaction details. The Income Tax Officer (ITO) raised concerns about the inflated purchase price and undisclosed income. The ITO issued a notice in 1969 based on discrepancies in the sale proceeds claimed by Pt. Lila Ram and market rates. The petitioner contended that all necessary facts were provided during the original assessment and subsequent requests. However, the ITO found grounds for action under s. 147(a) based on discrepancies in sale proceeds and cash loans from Pt. Lila Ram. The court disagreed with the petitioner's contentions, stating that sufficient grounds existed for action under s. 147(a). The ITO had only examined the pricing aspect during the original assessment, which the petitioner explained satisfactorily. However, subsequent information revealed discrepancies in the sale proceeds claimed by Pt. Lila Ram, indicating possible income concealment by the petitioner. The court emphasized that the ITO had valid reasons to reopen the assessment based on new information, even if not verified during the original assessment. The court cited a similar case where the Supreme Court upheld action under s. 147(a) due to undisclosed income, despite initial acceptance by the ITO. The court held that the ITO had grounds to believe income had escaped assessment due to the petitioner's misrepresentation of material facts, justifying the notice under s. 147(a). In conclusion, the court dismissed the writ petition, ruling in favor of the respondent. The petitioner was ordered to bear the costs, including counsel fees. The judgment highlighted the importance of disclosing all material facts during assessments and upheld the ITO's authority to initiate reassessment proceedings based on new information indicating potential income concealment.
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