9911796707
TMI Blog1976 (2) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... cer, thereupon, determined the total income as Rs. 7,95,575. This income was assessed. The total income was ascertained by the Income-tax Officer having allowed Rs. 20,000 under the head "Workmen and staff welfare expenses". The deduction of Rs. 20,000, it is alleged in the impugned notice, resulted "in the escape of" tax which is sought to be remedied by the revenue through the impugned notice. The assessment order in regard to some minor particulars was rectified on October 25, 1967, and on December 7, 1967, by separate orders of the Income-tax Officer. On appeal, by the petitioner-assessee, the Income-tax Appellate Tribunal allowed the appeal on October 3, 1969, in some aspects (the particulars are not necessary to be specified in these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax Officer at the time of assessment that staff welfare expenses include lump sum amount spent by its vice-president as per his discretion. Had the assessee brought this fact to the notice of the Income-tax Officer, the Income-tax Officer would have disallowed the same". The expenditure, according to the department, was not incidental to business. This fact, they assert, the department found when they scrutinised the assessee's accounts for purposes of 1968-69 Assessment. The claim for similar expenditure by the assessee was disallowed and the Appellate Assistant Commissioner confirmed the order of the Income-tax Officer. In the orders of assessment in 1972-73 and 1973-74, such an expenditure was disallowed. Based on this record, the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd, which "cannot be lightly treated" and therein a duty cast on the Commissioner to be satisfied before the notice under section 147 is issued, and to note "yes" was, in the words of Hegde J., to discharge that duty only in form. The dicta in Calcutta Discount Co. Ltd. v. Income-tax Officer [1961] 41 ITR 191 (SC) was relied on in S. Narayanappa v. Commissioner of Income-tax [1967] 63 ITR 219 at 222 (SC). Ramaswami J. observed in that case that the "existence (of reasons) is different from sufficiency of the reason". In Gemini Leather Stores v. Income-tax Officer [1975] 100 ITR 1 (SC), the Supreme Court stressed that once the authorities are shown the primary facts, it is for them to be circumspect and make enquiries and draw "proper infe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even before the return is filed by them, for, they say, in R. C. No. 22/70 on November 22, 1970, this court held that assessment when made "in pursuance of the notice after full enquiry" cannot be questioned as such a notice "merged in the order of assessment and ceased to be open to challenge". Further, the Bench posed and answered the question : ". . . the issue of notice without reasonable belief would be illegal or irregular exercise of jurisdiction. But, would the issue of such an illegal notice render the subsequent proceedings so totally lacking in jurisdiction so as to make them void ? We think not." With great respect, if I may say so, to state so is to state rather widely. These observations, in fact, impelled me to go into the m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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