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TMI Blog1988 (6) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... notices and as to why the Revenue has served the two notices on the firm. On June 6, 1968, the assessee was called upon to submit a return for the assessment year 1968-69 under sub-section (2) of section 139 of the Income-tax Act. In response to it, the assessee (the firm) filed the return showing an income of Rs. 46,465. This amount was later revised to Rs. 73,300. For the assessment year 1969-70, the assessee filed a return after a like notice by the Revenue showing an income of Rs. 1,08,030. In the inquiry held, the assessee produced books of account and filed the profit and loss account and balance-sheet for each accounting year of the main office and two branches. On September 27, 1971, the Income-tax Officer finalised the orders for the assessment years 1968-69 and 1969-70 and on that day also for the assessment year 1967-68. The impugned notices were served on the assessee by the Income-tax Officer to reopen the assessments for 1968-69 and 1969-70. Thereupon, the assessee approached this court to quash the two notices. What prompted the Revenue to reopen the assessments is connected with the events that had transpired in the Enforcement Branch of the Sales Tax Departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under clause (b) of section 147 of the Act. As far as the assessment order relating to 1969-70 is concerned, notice is not assailed as time-barred. We hold that no question of bar of limitation arises in either of the cases as the impugned notices are served on facts under clause (a) of section 147 and not under clause (b) of section 147. We may now consider the principal issue raised in the two cases. The issue raised is not res integra. As to when an assessment can be reopened is set out in the Income-tax Act. What principles govern the issues in reopening assessments and when assessments can be reopened have been explained by the courts. Nevertheless, whenever such issues are raised, the courts will have to apply the principles laid down to the facts of each case. In that sense, in the two cases, the issue has to be scrutinised from the perspective of account books which are not filed before the Income-tax Officer and the turnover relating to the assessments discovered to have been escaped. The principle in such cases is culled from the words in clause (a) of section 147 of the Income-tax Act. The words are whether the assessee disclosed "fully and truly all material facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 1 (SC). In that case, what can be done by the Income-tax Officer was further explained. What is not the duty of the assessee in the discussion of the case is explained with reference to the contention raised in that case (at p. 4) "the assessee contended that it has produced all the relevant accounts and documents necessary for completing the assessment and it was under no obligation to inform the Income-tax Officer about the true nature of the transaction and there was accordingly no failure on its part to disclose fully and truly all material facts necessary for its assessment ...... The assessee discharged his obligation, so it was held, when he tendered books of account and evidence from which material, facts could be discovered. It was for the Income-tax Officer to decide whether the documents produced by the assessee were genuine or false. All the aspects considered in the two earlier cases were explained and followed. Thus, once the assessee disclosed material facts necessary and assessment is finalised later on a different conclusion on the same facts, the assessment cannot be reopened. If this was not the law, as held by the Privy Council case from Australia in Hoyste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), that the assessee can question the jurisdiction of the Income-tax Officer in a proceeding under article 226 of the Constitution. That contention is well-founded. The Supreme Court in that case held : (at p. 642) "Jurisdiction of the Incometax Officer obviously arises when he has reason to believe that by reason of omission or failure on the part of an assessee to disclose fully and truly all material facts necessary for his assessment ... we are not seeking to lay down any rigid rule about the nature or quantum of enquiry which the High Court in a petition which seeks to challenge the issue of a notice under section 34(1)(a) of the Indian Income-tax Act may make . . . If there be other grounds which appear to the High Court to be adequate, such as delay or acquiescence, existence of an adequate alternative remedy which is equally efficacious, or failure to disclose all material facts which have a bearing on the question of misrepresentation of facts, jurisdiction of the High Court to dismiss a petition in limine cannot be denied." Again in CIT v. A. Raman and Co. [1968] 67 ITR 11, 16 (SC), the powers of the High Court were reiterated ...... the taxpayer may challenge the validit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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