1964 (8) TMI 94 - HC - Income Tax

Summary

Issues Involved:
1. Legality of the notices issued under section 148 of the Indian Income-tax Act, 1961.
2. Disclosure of material facts by the petitioner during the original assessment.
3. Jurisdiction of the Income-tax Officer under section 147(a) of the Act of 1961.

Detailed Analysis:

1. Legality of the Notices Issued Under Section 148:
The petitioner challenged the notices issued under section 148 of the Indian Income-tax Act, 1961, dated the 2nd of March, 1964. The petitioner sought a writ of certiorari to quash these notices and a writ of prohibition to restrain the reassessment for the assessment year 1955-56. The court examined whether the petitioner had fully and truly disclosed all material facts necessary for the original assessment. The court found that all primary facts were disclosed, and the Income-tax Officer had considered these facts during the original assessment. Therefore, the issuance of notices under section 148 was deemed without jurisdiction.

2. Disclosure of Material Facts by the Petitioner:
The petitioner was assessed for the year 1955-56, and during this assessment, a claim for partition under section 25A of the Act of 1922 was made based on a partition deed dated the 26th of February, 1952. The Income-tax Officer, during the original assessment, considered this partition deed and concluded that there was no complete partition of the business assets, thus rejecting the application under section 25A. However, he did not include any property income in the assessment, indicating that he accepted the partial partition of the house and shops. The court noted that the petitioner had disclosed all primary facts, including the partition deed and the properties' ownership, during the original assessment.

3. Jurisdiction of the Income-tax Officer Under Section 147(a):
The court scrutinized whether the conditions under section 147(a) of the Act of 1961 were met for reopening the assessment. The department argued that the petitioner failed to return the property income, thus justifying the issuance of notices. However, the court held that the petitioner was only required to disclose primary facts and not necessarily return the income not admitted to be his. The court cited the Supreme Court's decision in Calcutta Discount Co. Ltd. v. Income-tax Officer, emphasizing that the petitioner had placed all primary facts before the Income-tax Officer. The court concluded that the Income-tax Officer had no jurisdiction to issue the notice under section 147(a) after four years had elapsed since the original assessment.

Conclusion:
The court directed that a writ of certiorari be issued to quash the notices dated the 2nd of March, 1964, and allowed the petition with costs. The court found that the petitioner had disclosed all necessary primary facts during the original assessment, and the Income-tax Officer had no jurisdiction to issue the notices under section 147(a) of the Act of 1961. The petition was accordingly allowed.