1992 (1) TMI 171 - AT - Income Tax

Summary

Issues Involved:
1. Validity of re-opening the assessment under section 148 of the Income-tax Act.
2. Validity of service of notice on the assessee's husband.
3. Basis for initiation of proceedings under section 148/147(a) of the Income-tax Act.
4. Lack of sufficient opportunity given to the assessee.
5. Validity of affidavits submitted by the assessee.
6. Alleged confusion regarding the figure of cash mentioned by the assessee.

Issue-wise Detailed Analysis:

1. Validity of Re-opening the Assessment under Section 148 of the Income-tax Act:
The main objection in this appeal concerns the re-opening of the assessment. The counsel for the assessee argued that the Income-tax Officer (ITO) had no material or reason to believe that the assessee's income had escaped assessment at the time of issuing the notice under section 148 of the Income-tax Act. The conditions precedent for the issue of notice under section 148 were not satisfied as the information or material was only available from the wealth-tax assessment completed on 10-2-1986, which was after the notice was issued on 27-2-1982. The Tribunal found that there was no material available with the ITO on 27-2-1982 to believe that income liable to assessment had escaped assessment. The notice under section 148 was issued without proper jurisdiction, and hence the proceedings initiated and based on that notice were quashed.

2. Validity of Service of Notice on the Assessee's Husband:
The learned counsel for the assessee argued that the service of notices on the assessee's husband was not valid. However, the Tribunal found no merit in this objection because the assessee accepted it as a valid service and made necessary compliance in response to those notices.

3. Basis for Initiation of Proceedings under Section 148/147(a) of the Income-tax Act:
The Tribunal noted that the ITO mentioned in the assessment order that the basis for initiating proceedings under section 148/147(a) was the facts and information collected during the wealth-tax assessments. However, at the time of issuing the notice under section 148, the ITO had no material or reason to believe that the assessee's income had escaped assessment. The Tribunal agreed with the assessee's counsel that the ITO had no basis to believe that income liable to tax had escaped assessment on 27-2-1982.

4. Lack of Sufficient Opportunity Given to the Assessee:
The assessee argued that sufficient opportunity was not given to explain the sources of investment and cash disclosed in the wealth-tax return. The Tribunal found that the ITO had fixed the hearing for 15 times, and even if proper opportunity was not given by the ITO, the assessee was given an opportunity by the Commissioner of Income-tax (Appeals) [CIT(A)].

5. Validity of Affidavits Submitted by the Assessee:
The assessee had filed an affidavit affirming that the assets were received at the time of marriage. The Tribunal noted that affidavits have no value until the deponent is produced for cross-examination. The CIT(A) had dealt with the contents of the affidavits in the appellate order, which was not permissible.

6. Alleged Confusion Regarding the Figure of Cash Mentioned by the Assessee:
The assessee argued that the figure of Rs. 25,000 being cash had been considered twice by the Wealth-tax Officer (WTO). The Tribunal noted that this point had been considered by the CIT(A), and hence it could not be said that there was any confusion.

Conclusion:
The Tribunal concluded that the notice under section 148 was issued without proper jurisdiction, and the proceedings initiated and based on that notice were quashed. The assessment framed by the Income-tax Officer under section 148 dated 17-3-1986 was annulled, and the appeal filed by the assessee was allowed.