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TMI Blog1997 (4) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... properties passed on his widow Lachhi Devi. The estate duty proceedings initiated in respect of the properties of late Shri Lakshmi Chand culminated in the order of assessment dt. 5th Oct., 1976. That was challenged by Smt. Lachhi Devi through the petitioner. The ACED partly accepted the appeal and reduced the principal value of the estate. Still not satisfied, the accountable person filed further appeal before the Tribunal which reduced the principal value of the property of late Shri Lakshmi Chand. Simultaneously the appeal filed by the Revenue was rejected. In the meantime, the Asstt. CED passed two orders revising the assessment. By the first order he valued the estate of Shri Lakshmi Chand at Rs. 9,23,412 and by the second order he revised it to Rs. 6,97,317. Smt. Lachhi Devi died on 2nd June, 1976. As her accountable person, the petitioner filed return disclosing the principal value of the estate of Smt. Lachhi Devi at Rs. 3,63,209. The Asstt. CED did not accept the same. Vide order dt. 1st April, 1980 the Asstt. CED determined the principal value of the estate at Rs. 6,22,101. Against this order, the petitioner filed an appeal before the CED(A). As on the date of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment at too low a rate or otherwise, or (b) has, in consequence of any information in his possession, reason to believe notwithstanding that there has not been such omission or failure as is referred to in cl. (a) that any property chargeable to estate duty has escaped assessment, whether by reason of under valuation of the property included in the account or of omission to include therein any property which ought to have been included, or of assessment at too low a rate or otherwise, he may at any time, subject to the provisions of s. 73 A, require the person accountable to submit an account as required under s. 53 and may proceed to assess or reassess such property as if the provisions of s. 58 applied thereto". A careful reading of the provisions quoted above clearly shows that the Controller is entitled to issue notice to the accountable person for assessment or reassessment of the property, if any of the contingencies enumerated in cls. (a) or (b) exists. One of these contingencies is where the accountable person fails to disclose fully and truly all facts necessary for assessment and as a result of which any property chargeable to estate duty has escaped assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the officer should record his reasons for initiating action under s. 34 and obtain the sanction of the CIT who must be satisfied that the action under s. 34 was justified. There is no requirement in any of the provisions of the Act or of any section laying down as a condition for initiation of the proceedings that the reasons which induced the CIT to accord sanction to proceed under s. 34 must also be communicated to the assessee. In The Presidency Talkies Ltd. vs. Addl. ITO (1954) 25 ITR 447 (Mad) : TC 51R.597, the Madras High Court has expressed a similar view and we consider that the view is correct. We accordingly reject the argument of the appellant on this aspect of the case". The above quoted observations of the Supreme Court show that the proceedings under s. 34 of the Act of 1922 are administrative in character till the issuance of notice to the assessee and they become quasi-judicial only after the notice is served and it is not obligatory for the ITO to communicate the reasons recorded for the purpose of initiating the action. In Thanthi Trust vs. ITO [1973] 91 ITR 261 (Mad) : TC 51R.755, a Bench of Madras High Court was called upon to examine a similar argum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcise of the jurisdiction of having 'reason to believe' by the ITO under s. 147. It would not be proper for the assessee without filing the return to ask this Court to call for the reasons recorded by the ITO. If the Supreme Court has held that reasons need not be furnished with the notice, the decision of the Supreme Court would be stultified if this Court were nevertheless to call for the reasons recorded by the ITO for the benefit of the assessee without the latter submitting the return. This could be virtually compelling the ITO to disclose his reasons along with the notice issued under s. 148(1), though according to the Supreme Court, this was not obligatory for the ITO to do". In K.M. Bansal (decd.) vs. CIT Anr. [1992] 103 CTR (All) 324 : [1992] 195 ITR 247 (All) : TC 51R.1882, a Division Bench headed by B.P. Jeevan Reddy, Chief Justice, as he then was, examined the challenge to the initiation of proceedings for reassessment under ss. 147 and 148 of the IT Act, 1961. After review of a large number of decisions of the Supreme Court and the High Courts, the Bench held : "A review of the decided cases shows that the function of the AO at the stage of issuance of notice u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning the issue. (iv) All the issues arising in the reassessment proceedings including the issue relating to the validity of reopening of assessment proceedings have to be gone into at the same time. Normally speaking, there ought not to be any piecemeal decision of issues. If, however, it turns out in a case that no reasons whatsoever were recorded under s. 148(2), it may be a case where proceedings can be terminated on that question itself without going into the merits of the case. We must also clarify that this Court, in a writ petition, does not sit in judgment over the adequacy or sufficiency of reasons recorded. This is a matter to be gone into in reassessment proceedings. This Court will interfere only in cases where no reasons are recorded or where the reasons recorded are ex facie irrelevant". Applying the ratio of the above referred decisions to this case I hold that : (a) The expression 'has reason to believe' used in s. 59 of the Act does contemplate the recording of reasons before notice is issued to the accountable person for assessment or reassessment but such reason need not be communicated to the accountable person along with the notice and the accountable pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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