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Issues:
1. Validity of notice under section 148 of the Income Tax Act, 1961. 2. Existence of materials for the formation of belief by the Income Tax Officer (ITO). Analysis: 1. The judgment challenges a notice issued under section 148 of the Income Tax Act, 1961, addressed to a partnership firm regarding the assessment year 1957-58. The main contention was that the notice was vague and unclear, as it did not specify whether it was intended for the bigger Hindu Undivided Family (HUF), the smaller HUF, or the partnership firm. Reference was made to previous court decisions emphasizing the importance of a valid notice being served to initiate proceedings. The court held that the notice lacked clarity on whom it was served and what income was alleged to have escaped assessment, leading to the notice being quashed. 2. The second issue raised was the lack of materials before the ITO to form a belief for reopening the assessment. The reasons provided for reopening the assessment were based on loan transactions with a name-lender, but it was not clear how the ITO knew the lender was a name-lender or what inquiries were made to form the belief. The court highlighted the necessity for the ITO to have a belief not only on income escapement but also on the assessee's failure to disclose material facts. Citing a Supreme Court decision, the court concluded that there were insufficient materials for the formation of belief, leading to the notice being quashed. In conclusion, the High Court of Calcutta quashed the notice under section 148 of the Income Tax Act, 1961, issued to the petitioner, a partnership firm, due to its vagueness and lack of clarity on the intended recipient. Additionally, the court found that there were no adequate materials for the ITO to form a belief for reopening the assessment. The court issued writs of mandamus and certiorari, restraining the respondents from giving effect to the notice and quashing any assessment made pursuant to it. The rule was made absolute with no order as to costs, and a stay of operation of the order was granted for six weeks.
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