TMI Blog1970 (1) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowing the claim for the said loss of Rs. 2,41,472 on the ground that the said loss did not arise in the normal course of the assessee's business. On the assessee's appeal from the said assessment order, by his order dated the 11th December, 1964, the Appellate Assistant Commissioner allowed the entire claim for loss of Rs. 2,41,472 on the ground that the said loss arose in the normal course of the assessee's business. On the 28th July, 1965, the respondent-Income-tax Officer passed necessary orders under section 31/154 of the Income-tax Act, 1961, giving effect to the aforesaid appellate order. Thereafter, by a letter dated the 19th April, 1967, the respondent-Income-tax Officer purported to give notice to the petitioner under section 154 of the 1961 Act for rectifying the assessment for 1959-60 as the profit from the sale of the said bonus shares to the extent of the face value thereof, viz., Rs. 1,39,300, had been under-assessed. Against the aforesaid notice the petitioner moved this court tinder article 226 and a rule was obtained on the 16th November, 1967, which was finally made absolute by me on the 26th August, 1969. After the service of the aforesaid rule on the respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of determination of the issues raised in the present application. In the first of such letters dated the 25th October, 1962, the respondent-Income-tax Officer had asked for various information from the petitioner in regard to its assessment for the year 1959-60 and one of such queries was for full details of the bonus shares, the date and source of acquisition, the parties to whom they were sold, the date of sale and the value thereof. This letter was accompanied by a notice under section 22(4) of the 1922 Act. In its reply dated the 8th November, 1962, the assessee gave full particulars in answer to the queries raised in the aforesaid letter of the respondent and so far as bonus shares were concerned it gave the following information : One item, viz., 1,939 bonus shares, out of sale of 2,786 shares of Hastings Mills Ltd. were sold on January 24, 1959, to Messrs. Ramala Co. Ltd. at the rate of Rs 105. These shares were acquired in March, 1951, from the Hastings Mills Ltd., on issue of bonus shares and necessary adjustments in the books have been made in respect of cost of these bonus shares being taken at their face value. The proceedings purported to have been taken unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the purpose of its assessment so far as the loss arising from the bonus shares were concerned, there can be no application of section 147(a) and the notice must be struck down. Mr. S. Sen, learned counsel for the respondents, argued two points in his attempt to sustain the impugned notice. His first contention was that if the Income-tax Officer had jusisdiction to initiate the assessment proceedings under section 147 in consequence of the information received from the aforesaid judgment of the Supreme Court, then he had initial jurisdiction to issue the ntice. Whether clause (a) or clause(b) of section 147 would apply would be a question of limitation and this court in an application under article 226 would not go into such a question. Mr. Sen referred me to a decision of B.C. Mitra J. in Pilani Investment Corporation Ltd. v. Income-tax Officer, "A"Ward, Companies District II. In that case a notice under section 23A of the 1922 Act requiring an assessee to show cause why an order under that section should not be passed against him was challenged under article 226 of the Constitution on the ground that, as the period of limitation for an assessment as provided in section 34(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no such notice could be-issued if eight years have elapsed from the end of that year, and in cases falling under section 147(b) at any time after the expiry of four years from the end of the relevant assessment year. It is further provided in section 151(2) that no such notice shall be issued after the expiry of four years from the end of the relevant assessment year, unless the Commissioner is satisfied on the reasons recorded by the Income-tax Officer that it is a fit case for the issue of such notice. As the impugned notice, in the present application states that it was being issued after obtaining the necessary satisfaction of the Commissioner of Income-tax, Central, Calcutta, it must be accepted that the notice was issued under section 147(a) of the Act. It is now well-settled by several decisions of the Supreme Court that the foundation of the Income-tax Officer's jurisdiction to make a reassessment either under section 34 of the repealed Act or under section 147 of the 1961 Act is the issue and service on the assessee of a valid notice under the aforesaid sections. If the notice is not in conformity with the provisions of either of these sections the Income-tax Officer woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hares during the relevant assessment year had been disclosed to the Income-tax Officer before the original assessment was made. I have not the least hesitation in holding that the assessee's letter dated the 8th November, 1962, in answer to the queries in the respondent-Income-tax Officer's Letter dated the 25th October, 1962, mentioned above gave all the primary facts necessary for the above purpose. It must therefore be held that the Income-tax Officer had no jurisdiction to issue the impugned notice. In regard to the averment made in the affidavit-in-opposition that the respondent-Income-tax Officer was not required to disclose to the petitioner the reasons for issuing the impugned notice until the petitioner had complied with the notice under section 143 and disclosed its books of accounts and other documents required to be produced under that notice. Mr. Sen drew my attention to a decision of a Division Bench of this court in Rungta Engineering Construction Co. Ltd Income. v. Income-tax Officer, Central Circle XIII. This and several other decisions but of this court and of the Supreme Court have been considered by me in a recent judgment I have delivered in Umapat Ganguli' ..... X X X X Extracts X X X X X X X X Extracts X X X X
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