TMI Blog1997 (1) TMI 477X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act"), have been quashed. Civil Appeal No. 3041 of 1983 arises out of Writ Petition No. 1177 of 1974, filed by Purushottam Das Bangur, respondent No. 1. It relates to the assessment of the said respondent for the assessment year 1969-70. During the accounting year relevant to the said assessment year the assessee claimed that he had suffered long-term capital loss on sale of shares of Maharaja Shree Umaid Mills Ltd. during the period March 5, 1969, and March 30, 1969, at the price quoted in the official report and quotations of the Calcutta Stock Exchange Association. According to the assessee, he had incurred a loss of Rs. 1,57,792. The said claim of the assessee was accepted by the Income-tax Officer, 'C' Ward, Jodhpur, while making the assessment and the same was affirmed in appeal by the Appellate Assistant Commissioner. Subsequently, the Income-tax Officer received a letter dated March 21, 1974, from Shri S. M. Bagai, Deputy Director, Directorate of Inspector (Investigation), Special Cell, New Delhi, wherein it was stated that on information obtained from the Bombay Stock Exchange Directory, the book value per equity share of Maharaja Shree Umaid Mills Ltd. rose from Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s follows : "147. If--.... (b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Income-tax Officer has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance, as the case may be, for the assessment year concerned (hereafter in sections 148 to 153 referred to as 'the relevant assessment year')." A perusal of clause (b) of section 147 shows that for taking action under the said provision what was required was that : (i) the Income-tax Officer has received information, and (ii) in consequence of such information he has reason to believe that income chargeable to tax has escaped assessment for any assessment year. The question is whether in the present case after he had completed the original assessment, the Income-tax Officer had received information on the basis of which he could have reason to believe that the income chargeable to tax had escaped assessment. Shri D. R. Gupta, In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of the letter dated March 21, 1974, from Shri S. M. Bagai to Shri C. S. Jain. The said letter was as under : "My dear Jain, Sub : Maharaja Shree Umaid Mills Ltd., Pali I have received your D. O. No. C-Misc. 56/73-74/229 dated 19th March, 1974, today through a special messenger enclosing a statement regarding transfer of shares of the captioned company and also statement regarding shareholding of that company on various dates. You have just confirmed to me on telephone that you have retained a copy of the statements for your own record. 2. I am enclosing herewith a statement containing certain financial information regarding the captioned company which has been extracted from the Bombay Stock Exchange Directory. According to this statement the paid-up equity capital of the company is Rs. 72,00,000 divided into 72,000 shares of Rs. 100 each, the equity share data at page 2 of the enclosed statement indicates that the book value per equity share rose from Rs. 318.55 for the year ending 31st December, 1965, to Rs. 401, for the year ending 31st December, 1970. The earning per share rose from Rs. 8.37 per share to Rs. 44 per share during the abovementioned period. The div ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... break-up method and by the maintainable profit method. These two values may be worked out on the basis of Circular No. 2 (W. T.) of 1967 and communicated to me telegraphically c/o Shri V. Subramanyan, Inspecting Assistant Commissioner, Range XXI, Aayakar Bhawan, P-7, Chowringhee Square, Calcutta. You may also convey this information to the Commissioner of Income-tax, Rajasthan, and the Inspecting Assistant Commissioner, Bikaner, so that the information reaches the concerned Wealth-tax Officers, Income-tax Officers and Gift tax Officers, who would be concerned with the case of the other share holders in Rajasthan. With regards, Yours sincerely, (Sd.) (S. M. Bagai)." In the second paragraph of his letter Shri Bagai has referred to the statement containing certain financial information regarding Maharaja Shri Umaid Mills Ltd. which he had extracted from the Bombay Stock Exchange Directory and which he had forwarded as an annexure along with the said letter. The said information was to the effect that the paid up capital of the company was Rs. 72,00,000 divided into 72,000 shares of Rs. 100 each ; the equity share data at page 2 of the enclosed statement indicated that the boo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssociation shown by the assessee at the time of original assessment were manipulated ones and as a result income chargeable to tax had escaped assessment. It could not be said that the information that was contained in paragraph 2 of the letter of Shri Bagai was not definite information and it could not be acted upon by the Income-tax Officer for taking action under section 147(b) of the Act. Ms. Gauri Rastogi, learned counsel appearing for the respondents, has urged that the letter of Shri Bagai was received by the Income-tax Officer on March 26, 1974, and on the very next day, that is, on March 27, 1974, he issued the impugned notice under section 147(b) of the Act and that he did not have conducted any inquiry or investigation into the information sent by Shri Bagai. Merely because the impugned notice was sent on the next day after receipt of the letter of Shri Bagai does not mean that the Income-tax Officer did not apply his mind to the information contained in the said letter of Shri Bagai. On the basis of the said facts and information contained in the said letter, the Income-tax Officer, without any further investigation, could have formed the opinion that there was reason ..... X X X X Extracts X X X X X X X X Extracts X X X X
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