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TMI Blog1983 (5) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... na Karkhana, Jind, and made intensive searches. Certain documents were seized in this raid. Bhim Singh, petitioner, and Shri Dwarka Dass, were the partners in this Purana Karkhana. On May 25, 1966, the petitioner approached the Commissioner of Income-tax, Patiala-II, Patiala, respondent No. 2, with a disclosure statement of his escaped income along with that of his partners and offered to be taxed in accordance therewith. A copy of this petition for settlement has been appended as annex. P-1 to this petition. It is mentioned therein that for the assessment year 1958-59, the total profits of the petitioner along with the other partners was Rs. 99,994. On the basis of this offer, which was accepted by respondent No. 2, a communication dated 27th March, 1967, was addressed by him to the Income-tax Assistant Commissioner, Ludhiana, to levy tax in accordance with the various directions issued in the said letters. Copy of the same is annex. P-2. It was specifically directed that the profit of Rs. 99,994 for the assessment year 1958-59, be divided between the partners as under : Sarvshri : Rs. (i) Bhim Singh 6 annas 37,498 (ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-tax (including penalty) may be received from the applicants in proportion to their share which is 0-10-0 in the case of Bhim Singh and 0-6-0 in the case of Dwarka Dass and each of us will be liable to discharge the liability created in the said proportion. The Income-tax Officer may please be directed to issue separate challans in the light of the liability (including penalty) created against each of us under this settlement." From this letter, the Department inferred that Sham Lal was benamidar for Bhim Singh, whereas Radhey Kishan was benamidar for Shri Dwarka Dass. It was contended that it was as a result of the material seized by the Department in the raid of Purana Karkhana, Jind, that the settlement petition and its subsequent modifications were filed by the petitioner. It was further contended that it is clear from the subsequent letter dated 21st March, 1967, that not only the recovery but also the assessment had to be made against the petitioner and Dwarka Dass as partner in proportion to their shares of 10 annas and 6 annas, respectively, and demands were to be created accordingly. It was admitted that the assessment for the years 1959-60, 1960-61 and 1961-62 was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capement was of more than Rs. 50,000 and more than eight years had elapsed, the necessary approval of the CBDT was obtained. Thereafter, notice, annex. P-3, was issued. The receipt of the objection-petition from the petitioner has also been admitted. It was averred that from the supplementary settlement petition (annex. R-1) the concealed share of the petitioner's income worked out to Rs. 62,496 and not Rs. 37,498 as mentioned in the settlement petition. It was reiterated that no return was made by the petitioner in respect of the assessment year 1958-59 and an income of Rs. 62,496 had escaped assessment. Mr. Bhagirath Dass, the learned counsel for the petitioner, has argued : (i) that there was no material before the ITO, respondent No. 2, to entertain a belief, much less a reasonable belief, that income exceeding Rs. 50,000 had escaped assessment because of failure on the part of the petitioner to make a return under s. 139 of the Act; and (ii) that the CBDT did not investigate the facts of the case and passed the order granting sanction to respondent No. 2 to reopen the assessment proceedings in a mechanical manner without applying their mind to the facts of the case. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounted to Rs. 50,000 or more. It is not disputed that the petitioner submitted a settlement petition to the Commissioner, Patiala. It was mentioned therein that in the accounting year 1957-58, a profit of Rs. 99,994 was earned by the petitioner and his three other partners, Rs. 37,498 fell to the share of Bhim Singh, petitioner. He did not file a return for the assessment year 1958-59 and ex parte proceedings under s. 144 of the Act were taken against him and he was assessed on, the best judgment assessment basis for income of Rs. 37,498. Bhim Singh, petitioner, and Dwarka Dass, his partner, addressed a letter dated March 21, 1967, to the Commissioner, in which they stated that incometax (including penalty) may be received from them in proportion of their shares which was 10 annas in the case of Bhim Singh and 6 annas in the case of Dwarka Dass. Taking it to be an admission of Bhim Singh, the ITO, with the prior sanction of the Board of Direct Taxes, issued notice under s. 148 of the Act to the petitioner for reopening the assessment on the ground that the share of Bhim Singh comes to Rs. 62,496. So, the ITO formed a belief that because of the non-filing of the return by the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 226." It is apparent from the facts of Lalji Haridas's case [1965] 55 ITR 415 (SC), that notice was issued to the assessee calling upon him to make a return of his income for the relevant year. He made a return in compliance with the notice. The ITO discovered such sums which were not treated by the assessee to be his income. The ITO was not satisfied with the explanation of the assessee. He passed an order of assessment. The assessee went up in appeal against that order. The appeal was, partly allowed on grounds which are not germane to the present issue and the case was remanded to the ITO for a fresh decision on certain points. On remand the ITO required the assessee to appear before him and produce his evidence. Instead of complying with the requisition, the assessee filed a writ petition in the Gujarat High Court. The High Court summarily rejected the writ petition. The assessee went up in appeal to the Supreme Court. So, it was sought to be argued before their Lordships of the Supreme Court that the notice issued to the assessee, on the face of it, was invalid, because it was barred by time. Their Lordship s did not allow this point to be raised because such a plea must ord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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