1973 (8) TMI 15 - HC - Income Tax

Income-tax Officer, to have issued a notice, under section 148 of the Income-tax Act, 1961 validity of notice - Whether court can go into the sufficiency of reason for issue of such notice petition is dismissed

Summary

Issues: Validity of notice issued under section 148 of the Income-tax Act, 1961 for the assessment year 1960-61.

Analysis:
The judgment delivered by the High Court of Calcutta involved an appeal by a partnership firm against the judgment and order of a trial judge discharging a rule nisi obtained by the firm. The Income-tax Officer issued a notice under section 148 of the Income-tax Act, 1961 to the firm for the assessment year 1960-61, suspecting that the firm's income had escaped assessment. The firm challenged the validity of the notice, leading to the trial judge discharging the rule nisi. The appellant contended that the trial judge erred in finding sufficient reasons for the notice issuance. The appellant argued that the conditions precedent for assuming jurisdiction under section 148 were not satisfied. The reasons for the Income-tax Officer's belief were related to hundi loans and interest payments, which the appellant claimed were not genuine. The appellant relied on Supreme Court decisions to support their argument, emphasizing the need for proper reasons for initiating proceedings under section 148.

The court analyzed the reasons provided by the Income-tax Officer for issuing the notice, which were related to the genuineness of hundi loans and interest payments recorded in the firm's books. The court distinguished the present case from the cases cited by the appellant, highlighting that in the current scenario, there were sufficient materials indicating possible escapement of income due to the non-disclosure of material facts by the firm. The court emphasized the importance of fulfilling two conditions precedent for the Income-tax Officer to exercise jurisdiction under section 148, which were found to be satisfied in the present case. The court also discussed a previous judgment where the basis for forming beliefs was questioned, emphasizing the need for accurate and relevant information to support such beliefs.

In conclusion, the court found no reason to disagree with the trial judge's view and dismissed the appeal. The court concurred that the Income-tax Officer had valid reasons to issue the notice under section 148 for the assessment year in question. The judgment was delivered by Amiya Kumar Mookerji J., with agreement from Amarendra Roy J., and the appeal was dismissed with no order as to costs.