1972 (5) TMI 14 - HC - Income Tax

Application under article 226 of the Constitution is directed against a notice under section 148 of the Income-tax Act, 1961, as it is alleged that the assessee s income chargeable to tax for the assessment year 1954-55 had escaped assessment within the meaning of section 147 of the Act

Summary

Issues:
Jurisdiction of the Income-tax Officer to issue notice under section 148 of the Income-tax Act, 1961 for the assessment year 1954-55 based on alleged under-assessment due to inaccurate particulars provided by the assessee.

Detailed Analysis:

The judgment pertains to an application under Article 226 of the Constitution challenging a notice issued by the Income-tax Officer under section 148 of the Income-tax Act, 1961, alleging that the assessee's income for the assessment year 1954-55 had escaped assessment. The notice was issued based on grounds that the assessee had furnished inaccurate particulars regarding purchases of disposal goods from non-existent firms, leading to under-assessment. The Commissioner of Income-tax had given necessary satisfaction for initiating proceedings under section 147 of the Act.

The petitioner, a private limited company, objected to the notice on jurisdictional grounds, contending that the officer had no authority to issue it. The Income-tax Officer, in response to the objections, maintained his stance and requested specific information from the assessee. The court granted a stay on the proceedings, and the matter came before the High Court for adjudication.

The Income-tax Officer's reasons for issuing the notice included the discovery of fictitious purchases and bogus loans after the completion of the original assessment for the year in question. The officer believed that the assessee had failed to disclose fully and truly all material facts necessary for assessment, justifying the initiation of proceedings under section 147 of the Act.

The court analyzed previous decisions cited by the petitioner's counsel to distinguish cases of change of opinion from instances where there is a lack of full and true disclosure by the assessee. Referring to the Supreme Court's observations in Calcutta Discount Co. Ltd. v. Income-tax Officer, the court emphasized the duty of the assessee to disclose all material facts necessary for assessment.

The court rejected the petitioner's reliance on various precedents, including decisions of both the High Court and the Supreme Court, as they did not align with the circumstances of the present case. It was held that the reasons provided by the Income-tax Officer justified the belief that income had escaped assessment due to the assessee's failure to disclose accurate information.

In conclusion, the court dismissed the petition, discharged the rule nisi, vacated the stay order, and made no order as to costs. Both judges concurred with the decision, affirming the validity of the notice issued by the Income-tax Officer based on the grounds of inaccurate particulars provided by the assessee leading to under-assessment for the relevant assessment year.