1998 (9) TMI 17 - HC - Income Tax

Summary

Issues Involved:
1. Validity of notice u/s 148 of the Income-tax Act, 1961 for assessment year 1989-90.
2. Applicability of proviso to section 147 regarding escapement of income.

Validity of Notice u/s 148:
The petitioner, a registered partnership firm, challenged a notice issued by the Assistant Commissioner of Income-tax u/s 148 of the Act for assessing income for the year 1989-90. The notice was challenged as it did not disclose the amount escaping assessment or the basis for such belief. The petitioner objected to the notice and later filed a writ petition seeking to quash the proceedings initiated u/s 147 of the Act. The court noted that the notice was issued after the expiry of four years from the end of the relevant assessment year, and held that unless the escapement of income was due to the assessee's failure to disclose fully and truly the necessary facts, the notice could not be upheld.

Applicability of Proviso to Section 147:
The court analyzed the proviso to section 147 which states that no action shall be taken after four years from the end of the relevant assessment year unless income has escaped assessment due to the assessee's failure to disclose fully and truly all material facts. The court found that the assessee had filed a return under section 139 and the books of account were seized by the Revenue, making the particulars easily verifiable. The court emphasized that the alleged escapement of assessment was not due to the failure of the assessee to disclose necessary facts. It was observed that allowing the Revenue to issue notices based on seized books of account years later would lead to an unending process, and the proceedings initiated were held to be without jurisdiction.

Conclusion:
The court allowed the writ petition, quashing the impugned notice u/s 148 and the proceedings u/s 147, stating that the provisions of section 147 did not apply to the facts of the case. The judgment was delivered by Judge AFTAB ALAM, with agreement from Judge SACHCHIDANAND JHA.