1969 (12) TMI 34 - HC - Income Tax

Notice for reassessment u/s 148 - no omission or failure on the part of the assessee to disclose fully or truly the material facts - validity of fresh assessment

Summary

Issues:
Challenge to notices under section 148 of the Income-tax Act for assessment years 1956-57 to 1960-61.

Analysis:

The petitioner challenged the notices issued under section 148 of the Income-tax Act for the assessment years 1956-57 to 1960-61. The challenge was based on the contention that the notices, issued beyond four years from the end of the relevant assessment years, needed justification under section 147(1)(a) of the Act. The petitioner's counsel argued that for such notices to be valid, the Income-tax Officer must have reasons to believe that income chargeable to tax had escaped assessment due to the assessee's omission or failure to disclose all material facts necessary for assessment. This argument was supported by references to relevant Supreme Court cases.

The petitioner further contended that there was no omission or failure on her part to file a return or disclose material facts, especially considering the cancellation of the assessment orders by the Commissioner of Income-tax under section 33B of the old Act. The petitioner's challenge remained uncontradicted on the affidavits presented, emphasizing the lack of substantial material supporting the issuance of the impugned notices.

The Income-tax Officer's reasons for reopening the assessments were primarily based on the cancellation of the original assessments under section 33B. The materials provided did not indicate any failure on the part of the assessee to disclose necessary facts during the initial assessment proceedings. This lack of evidence led to the conclusion that the jurisdiction to issue the notices under section 148 of the Act was not justified for the assessment years in question.

Additionally, the argument that the original returns were filed before an Income-tax Officer lacking jurisdiction was dismissed, as it was considered an irregularity that did not render the returns null and void. The Income-tax Officer's inability to justify the notices based on any omission or failure on the part of the petitioner further weakened the validity of the notices.

Ultimately, the court held that the conditions precedent for assuming jurisdiction were not fulfilled in this case, leading to the conclusion that the Income-tax Officer lacked jurisdiction to issue the notices under section 148 for the assessment years 1956-57 to 1959-60. However, no challenge was raised regarding the notice for the assessment year 1960-61, which could be justified under a different provision of the Act.

As a result, the court granted the application, issuing a writ to recall, cancel, and withdraw the notices for the specified assessment years, while also prohibiting the respondents from taking any action based on those notices. The respondents were permitted to proceed according to law, and no costs were awarded in the matter.