1974 (3) TMI 16 - HC - Income Tax

Summary

Issues Involved:
1. Validity of the notice under section 148 of the Income-tax Act, 1961.
2. Jurisdiction of the Income-tax Officer to issue the notice under section 148.
3. Applicability of section 147(a) and 147(b) of the Income-tax Act, 1961.
4. Compliance with section 153(2) of the Income-tax Act, 1961.
5. Duty of the assessee to disclose fully and truly all material facts.

Detailed Analysis:

1. Validity of the Notice Under Section 148 of the Income-tax Act, 1961:
The petitioner challenged the validity of the notice issued under section 148 of the Income-tax Act, 1961. The notice was issued by the Income-tax Officer, "A" Ward, Jorhat, for the assessment year 1958-59. The petitioner argued that the notice was bad in law and without jurisdiction. The court examined whether the conditions precedent laid down in section 147(a) of the 1961 Act were existent in the instant case for the issue of notice under section 148.

2. Jurisdiction of the Income-tax Officer to Issue the Notice Under Section 148:
The respondent claimed that the petitioner failed to disclose fully and truly all material facts necessary for the purpose of assessment, leading to income chargeable to tax escaping assessment. The court referred to sections 147 and 148 of the 1961 Act, which allow the Income-tax Officer to assess or reassess income if there is reason to believe that income chargeable to tax has escaped assessment due to the omission or failure of the assessee to disclose all material facts.

3. Applicability of Section 147(a) and 147(b) of the Income-tax Act, 1961:
The petitioner contended that the case did not fall under section 147(a) and that the proposed assessment was barred under section 153(2). The court noted that section 147(a) is similar to section 34(1)(a) of the Indian Income-tax Act, 1922, and that the Income-tax Officer must have reason to believe that income chargeable to tax has escaped assessment due to the assessee's failure to disclose all material facts. The court found that the Income-tax Officer had reason to believe that the loans shown by the petitioner were from bogus lenders, thus justifying the issuance of the notice under section 148.

4. Compliance with Section 153(2) of the Income-tax Act, 1961:
The court examined whether the notice was issued within the time limits prescribed by section 153(2). The notice under section 148 was issued on May 12, 1969, which was after the expiry of eight years from the end of the relevant assessment year. The court noted that the satisfaction of the Commissioner and the Board was necessary, and both had stated that they were satisfied that it was a fit case for the issue of notice under section 148.

5. Duty of the Assessee to Disclose Fully and Truly All Material Facts:
The court referred to the Supreme Court's observations in Calcutta Discount Co. Ltd. v. Income-tax Officer and Commissioner of Income-tax v. Burlop Dealers Ltd., emphasizing the duty of the assessee to disclose all primary facts necessary for assessment. The court found that the petitioner had shown loans from parties that were later found to be bogus lenders. This failure to disclose fully and truly all material facts justified the issuance of the notice under section 148.

Conclusion:
The court concluded that the Income-tax Officer had jurisdiction to issue the impugned notice under section 148 of the Income-tax Act, 1961, as the petitioner had failed to disclose fully and truly all material facts necessary for its assessment. The petition was dismissed, and the rule was discharged. No order as to costs was made, and the stay order stood vacated.