9911796707
TMI Blog1982 (4) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment year 1974-75, for which the accounting year ended 25-10-1973, the assessee furnished his return on 29-6-1974 declaring an income of Rs. 5,65,170. The original assessment was completed by the IAC (Assessment) on 14-8-1974 under section 143(1) of the Income-tax Act, 1961 ('the Act'), on a total income of Rs. 5,65,790. The assessee had advanced a loan of Rs. 1,75,000 on 6-5-1967 to Bhagwan Das Shobha Lal Jain. The assessee became a partner in the said firm on 22-10-1968, relevant to the assessment year 1969-70. The interest which accrued to the assessee in respect of the said loan was credited to his loan account every year and was also added to his total income in the assessments made for the assessment years 1968-69 to 1973-7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HARAN SE CHHUT GAI HAI.' (Furnish the return for the income of Rs. 31,000 which accrued as interest on Rs. 1,75,000, which has ascaped assessment.) In pursuance of the said notice, the assessee filed a return declaring an income of Rs. 5,65,788 as originally assessed. The assessee also protested through a letter accompanying the return that the notice issued under section 148 was invalid and bad in law. The assessee also explained that as he had become a partner in the firm, Bhagwan Das Shobha Lal Jain, the question of charging interest on the loan amount did not arise. He also contended that all the relevant information has been furnished during the original assessment proceedings and no new facts or materials having been brought on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasons in the notice itself, it satisfied the provisions of section 148(2) as the IAC (Assessments) had recorded the reasons in writing and had applied his mind to the facts before issuing the notice. Next, he held that the audit note was 'information' on the basis of which assessment was validly reopened under section 147(b) as the original assessment was completed under section 143(1) without considering the said information. On merits too, he took the view that interest up to 24-10-1973 was taxable. Accordingly he dismissed the appeal filed by the assessee. 4. The assessee being still aggrieved, came up in further appeal before the Appellate Tribunal. With the consent of the learned counsel for both the parties, arguments were heard o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as 'information', the IAC (Assessments) had reason to believe that income chargeable to tax had escaped assessment for the assessment year in question. The scheme contained in sections 147 and 148(2) is that first the reasons are to be recorded under section 148(2), next the notice is to be issued to the assessee under section 148(1) and lastly the reassessment is to be made. The recording of reasons in support of the belief formed by the reassessing office is an extremely important circumstance to find out whether he had jurisdiction. The formation of the required belief is a condition precedent. The recording of reasons under section 148(2) is not an idle formality but a mandatory prerequisite to the assumption of jurisdiction by the offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is no proof of application of mind by the reassessing officer on any reasons. In any case, the reasons had to precede the issue of the notice and they could not be contemporaneous or subsequent thereto. Thus the second prerequisite which is not established in this case is that reasons were recorded prior to the issue of the notice. The department has placed on the paper book a copy of the audit note dated 17-3-1978, a perusal whereof shows that the assessee had disclosed all the particulars at the time of the original assessment and that there was no new information. It also shows that the department had not brought the amount in question to tax for reasons mentioned there. The audit did not agree with that reasoning. Therefore, the rea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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