9911796707
TMI Blog1978 (8) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order is annex. 1 to the writ application. It has been asserted that in the course of assessment proceedings for that year the petitioner had disclosed fully and truly all material facts necessary for the assessment. In spite of that the impugned notice dated January 8, 1974, has been issued directing the petitioner to submit a return for that very assessment year 1963-64. Having received the notice, the petitioner requested for a copy of the reasons which had formed the basis for the proceeding. In reply to that, on March 30, 1974, the petitioner received from the respondent-ITO a letter, enclosing therewith a statement containing the reasons for initiating the proceedings in question. A copy of the said letter along with the enclosed statement containing the reasons for the belief about the escaped assessment, has been marked as annex. 4 to the writ application. According to the petitioner, the respondent-ITO, on the materials aforesaid, could not have reasons to believe that income chargeable to tax has escaped assessment in the year in question. According to the petitioner, all the material facts having been fully and truly disclosed before the passing of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of each clause must be satisfied; otherwise, the ITO's action would be without jurisdiction. In the instant case, we are not concerned with cl. (b) of s. 147, because no notice can be issued in respect of cases falling under cl. (b) after the expiry of four years, from the end of the relevant assessment year. Admittedly, that period is over. As such, the only question which has to be examined in the present case is as to whether the case falls under cl. (a) of s. 147 or not. Sub-s. (1) of s. 149 prescribes that no notice under s. 148 shall be issued in cases falling under cl. (a) of s. 147 for the relevant assessment year, if 8 years have elapsed from the end of that year, but not more than 16 years have elapsed unless the income chargeable to tax which has escaped assessment, amounts to or is likely to amount to Rs. 50,000 or more for that year. Before any such notice is issued, the Board should be satisfied on the reasons recorded by the ITO, that it was a fit case for issue of such notice. Learned counsel appearing for the petitioner has submitted that in the instant case none of the two conditions were fulfilled before the ITO concerned issued the notice. In the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isdiction. In that case, while construing the words " omission or failure to disclose fully and truly all material facts necessary for his assessment for that year ", it was observed (p. 200) : " It postulates a duty on every assessee to disclose fully and truly all, material facts necessary for his assessment. What facts are material and necessary for assessment will differ from case to case. In every assessment proceeding, the assessing authority will, for the purpose of computing or determining the proper tax due from an assessee, require to know all the facts which help him in coming to the correct conclusion. From the primary facts in his possession, whether on disclosure by the assessee, or discovered by him on the basis of the facts disclosed, or otherwise, the assessing authority has to draw inferences as regards certain other facts ; and ultimately, from the primary facts and the further facts inferred from them, the authority has to draw the proper legal inferences, and ascertain on a correct interpretation of the taxing enactment, the proper tax leviable. " It was further observed that while it was the duty of the assessee to disclose all primary facts relevant to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o material at all before him for believing that there had been such non-disclosure. On behalf of the petitioner in support of this assertion reference was made to the reasons recorded by the ITO, a copy whereof was forwarded to the petitioner (annex. 4). It appears from the reasons stated that during the relevant year, i.e., 1963-64, the aforesaid firm " Magniram Baijnath " had shown purchase of 4,44,800 shares of British India Corporation Ltd. It had been stated then that the shares had been purchased from the borrowed funds. At the time of assessment, the petitioner had produced confirmation letters from the alleged creditors. Now, according to the ITO, it has transpired, (i) that the petitioner had disclosed dividend in respect of 3,44,800 shares only and no dividend was disclosed in respect of remaining one lakh shares. As such an amount of Rs. 35,000, which was received as dividend by the petitioner was not disclosed and it has escaped assessment, and (ii) that it has also transpired that the aforesaid purchase of 4,44,800 shares on the basis of the borrowed funds from the creditors was not correct because those creditors did not have any reliable source of funds in their book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prima facie grounds for thinking that there had been some non-disclosure of material facts. Learned standing counsel made reference to the two Bench decisions of the Calcutta High Court in the cases of ITO v. Mahadeo Lal Tulsian [1977] 110 ITR 786 and ITO v. Mahadeo Lal Tulsyan [1978] 111 ITR 25 and a Bench decision of the Patna High Court in the case of Bihar State Road Transport Corporation v. CIT [1976] 103 ITR 736, in support of his contention that merely because on an earlier occasion the case of credit had been accepted, it will not be a bar in every case for exercise of power under s. 148 and notice under s. 148 should not be quashed in the exercise of writ jurisdiction by this court. Reference was also made to sub-cl. (3) of art. 226 of the Constitution of India (42nd Amendment) Act, 1976, on the basis of which a Full Bench of the Punjab and Haryana High Court in the case of Jai Hanuman Trading Co. Pvt. Ltd. v. CIT [1977] 110 ITR 36 took the view that an assessee should not be allowed to agitate the validity of a notice under s. 148 and he should first avail of the remedy provided under the Act. Learned standing counsel also placed reliance on an observation of the Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s which were untrue, then certainly the matter can be re-examined in exercise of the power under s. 147. In my view, it is not one of those cases where the petitioner has been able to establish that the ITO had no material at all before him for believing that there had been such non-disclosure. As such, in the facts and circumstances of the case, it cannot be held that the notice has been issued without jurisdiction, so that it can be quashed by this court in exercise of its writ jurisdiction. Of course, I hasten to add that my observation while rejecting the prayer to quash the notice should not be interpreted to mean that the two conditions requisite for exercise of the power under s. 147 of the Act have been fulfilled. My finding aforesaid is only for the purpose as to whether the notice should be quashed in exercise of the writ jurisdiction of this court or not. The respondent-ITO has to consider now on the materials which are on the record of the case or which may be produced on behalf of the petitioner as to whether the two conditions precedent for exercise of jurisdiction under s. 147 of the Act have been fulfilled or not. In the result, the writ application fails and it i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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