1980 (5) TMI 10 - HC - Income Tax

Summary

Issues:
1. Validity of notice under s. 148 of the I.T. Act, 1961 for reopening assessment.
2. Consideration of materials by the ITO to form a belief of escaped income.
3. Admitted interpolation of records and its impact on the case.
4. Production and consideration of a list forwarded by Bombay ITO.

Analysis:
The judgment pertains to an appeal challenging the order quashing a notice issued under s. 148 of the I.T. Act, 1961 for reopening the assessment of the assessee for the year 1963-64. The main contention was whether the ITO had sufficient materials to reasonably believe that income had escaped assessment due to non-disclosure of material facts by the assessee. The court noted the absence of a crucial list forwarded by the Bombay ITO, which was claimed to contain the necessary information for reopening the assessment. The respondent argued against considering this list due to admitted interpolation in the records, questioning its reliability. The court highlighted the lack of explanation for the non-production of the list during the initial proceedings, leading to doubts about its authenticity and admissibility.

The judgment emphasized established principles regarding the reopening of assessments and the importance of credible and unaltered records in forming the basis for such actions. The court refused to entertain the list due to doubts surrounding its integrity, especially in light of the admitted interpolation in the records. The absence of the list and the failure to provide a satisfactory explanation for its non-production led the court to uphold the decision to quash the notice under s. 148. The court also noted the absence of references to the list in the Commissioner's affidavit, further weakening the case for reopening the assessment based on the disputed document.

In conclusion, the court dismissed the appeal, upholding the decision to quash the notice, citing the lack of credible evidence and the questionable nature of the records in question. The judges declined to grant a certificate for appeal to the Supreme Court, deeming the issue regarding the power of the appeal court to consider an unproduced document as not of sufficient general importance to warrant further review. The judgment, concurred by both judges, highlighted the significance of maintaining the integrity of records and the need for transparency in assessments to ensure fair and lawful proceedings.