1975 (12) TMI 17 - HC - Income Tax

Assessment Proceedings, Disclose Materials Necessary For Assessment, Dissolved Firm, Failure To Disclose, Reassessment Proceedings, Service Of Notice

Summary

Issues: Challenge to notice under section 148 of the Income-tax Act, 1961 for the assessment year 1964-65 based on the firm's dissolution and lack of disclosure of relevant facts leading to income escaping assessment.

Analysis:

The judgment by SABYASACHI MUKHARJI J. addressed the challenge against a notice dated 27th March, 1973, issued under section 148 of the Income-tax Act, 1961, for the assessment year 1964-65. The first contention raised was regarding the firm's dissolution at the time of notice issuance and the alleged improper addressing of the notice. It was argued that since the firm was dissolved, the notice should not have been addressed to the firm itself. The judge, however, opined that permissive provisions allowed a notice to be addressed to a dissolved firm, citing relevant case laws such as Ramnivas Hanumanbux Somani v. S. Venkataraman and others. The judge dismissed the contention of improper addressing based on this interpretation of the law.

The second contention raised was the lack of materials supporting the claim that income had escaped assessment due to the assessee's failure to disclose all relevant facts. The judge examined the recorded reasons for reopening the assessment, which highlighted the introduction of cash credit in the books as income from an undisclosed source. The judge reviewed the evidence presented, including the affidavit of Sanat Kumar Roy and the annexed evidence of R.A. Goel. Based on the materials available, the judge concluded that there were sufficient grounds for the Income-tax Officer to believe that there was a failure on the part of the assessee to disclose all relevant facts, leading to the income escaping assessment. The judge emphasized that the determination of whether there were enough materials for such belief is a factual inquiry specific to each case. In this instance, the judge found that the materials presented were adequate to support the belief of omission or failure on the part of the assessee.

Consequently, the judge dismissed the application challenging the notice, ruling that the challenge could not be sustained based on the grounds presented. The application was dismissed, and the rule nisi was discharged, with no order as to costs. Additionally, a stay of operation of the order was granted for six weeks.