1971 (1) TMI 34 - HC - Income Tax

Petitioner prays for a writ in the nature of certiorari against the notice under section 148 of the Income-tax Act 1961 dated July 14 1967 and a writ in the nature of prohibition restraining the Income-tax Officer from taking proceedings pursuant to that notice

Issues Involved:
1. Validity of the notice under section 148 of the Income-tax Act, 1961.
2. Jurisdiction of the Income-tax Officer to initiate reassessment proceedings.
3. Full and true disclosure of material facts by the petitioner.
4. Applicability of section 297(2)(d)(ii) of the Income-tax Act, 1961.

Detailed Analysis:

1. Validity of the notice under section 148 of the Income-tax Act, 1961:

The petitioner contended that the income sought to be assessed had not escaped assessment due to any omission or default on their part but due to the Income-tax Officer's failure to take valid reassessment proceedings under section 34 of the Act of 1922. The court rejected this contention, stating that income can be said to have escaped assessment only if it could have been assessed in a valid proceeding. Since the Appellate Assistant Commissioner found the proceedings under section 34(1)(a) to be without jurisdiction, the reassessment was void, and the income could not have been included in that proceeding. Thus, the income did not escape assessment under section 34(1)(a).

2. Jurisdiction of the Income-tax Officer to initiate reassessment proceedings:

The petitioner argued that a full and complete disclosure was made during the original assessment proceedings, and the material on which the Income-tax Officer initiated the impugned proceedings could only give rise to suspicion. The court examined the report of the Income-tax Officer, which indicated that the petitioner had concealed Rs. 1,00,000 as income from undisclosed sources. The Appellate Assistant Commissioner's findings did not negate the validity of the materials used by the Income-tax Officer. The court concluded that the material served as a valid foundation for the notice under section 148, thereby rejecting the petitioner's contention.

3. Full and true disclosure of material facts by the petitioner:

The petitioner claimed to have disclosed all primary facts during the original assessment proceedings. The court referred to the Supreme Court's observation in Calcutta Discount Co. Ltd. v. Income-tax Officer, Calcutta, emphasizing that the disclosure must be full and true. The court found that the petitioner's disclosure was not consistent with the true factual position, thereby justifying the Income-tax Officer's jurisdiction under section 147(a). The court rejected this contention, stating that a representation of facts that is not true cannot be used to escape jurisdiction under section 147(a).

4. Applicability of section 297(2)(d)(ii) of the Income-tax Act, 1961:

The petitioner argued that since the reassessment proceedings under section 34 were pending on April 1, 1962, the Income-tax Officer could not initiate proceedings under section 147 of the 1961 Act. The court referred to section 297(2)(d)(ii), which allows for proceedings under section 147 if no valid proceedings under section 34 were pending at the commencement of the 1961 Act. The court held that the provision refers to valid proceedings, not those without jurisdiction. Therefore, this contention was also rejected.

Conclusion:

The court found no substance in any of the contentions raised by the petitioner. The petition was dismissed with costs, upholding the validity of the notice under section 148 and the jurisdiction of the Income-tax Officer to initiate reassessment proceedings.

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