1978 (6) TMI 42 - HC - Income Tax

Affidavit By ITO Assessment Notice Income From Property Original Assessment Reassessment Notice

Summary

Issues:
1. Validity of notice issued under section 148 of the Income Tax Act, 1961 for the assessment year 1969-70.
2. Whether the income had escaped assessment due to the omission or failure of the assessee to disclose relevant facts.
3. Application of section 147(b) of the Income Tax Act, 1961 for reopening the assessment.
4. Interpretation of the term "information" under section 147(b) for reopening the assessment.

Analysis:
1. The High Court of Calcutta addressed the challenge to a notice issued under section 148 of the Income Tax Act, 1961 for the assessment year 1969-70. The original assessment was completed in February 1972, and the notice was based on the alleged non-disclosure of rental income from a property on Sarat Bose Road. The assessee had informed the Income Tax Officer (ITO) about the dispute with the tenant and non-receipt of rent, both in writing and during a personal interview before the original assessment.

2. The court examined whether the income had escaped assessment due to the assessee's failure to disclose relevant facts. It noted that the reasons for reopening the assessment did not establish any failure or omission on the part of the assessee to disclose material facts. The court cited previous decisions to support the conclusion that there was no justification for reopening the assessment under section 147(a) of the Income Tax Act, 1961.

3. The court then analyzed the application of section 147(b) of the Income Tax Act, 1961 for reopening the assessment. It discussed the requirement of "information" for invoking section 147(b) and highlighted that mere change of opinion without fresh facts or materials did not justify reopening under this provision. The court referred to various judicial decisions to emphasize the need for new and important information from an external source to reopen an assessment under section 147(b).

4. Lastly, the court interpreted the term "information" in the context of section 147(b) and concluded that as there was no evidence of new information coming into the possession of the ITO, the notice issued under section 148 could not be sustained. The court quashed the notice dated January 4, 1974, for the assessment year 1969-70 and restrained the respondents from giving effect to the notice. If any assessment had been made based on the notice, it was also quashed. The court stayed the operation of the order for six weeks and made no order as to costs.