TMI Blog1969 (8) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... the original assessment was reduced. On July 26, 1968, the Income-tax Officer, Baripada, issued a notice under section 148 of the Indian Income-tax Act, 1961 (hereinafter referred to as " the Act ") which may be quoted : " Whereas, I have reason to believe that your income in respect of which you are chargeable to tax for the assessment year 1952-53 has escaped assessment within the meaning of section 147 of the Income-tax Act, 1961. I, therefore, propose to reassess the income for the said assessment year, and I hereby require you to deliver to me within 30 days from the date of service of this notice, a return in the prescribed form of your income assessable for the said assessment year. This notice is being issued after obtaining the necessary satisfaction of the Central Board of Revenue." On August 26, 1968, the petitioner sent a reply asserting that there was no justification for reopening the assessment and that the conditions precedent for assumption of jurisdiction by the Income-tax Officer, under section 147, were not present in the case. This writ application has been filed under articles 226 and 227 of the Constitution challenging the jurisdiction of the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer, Sri A. K Jana. On behalf of the opposite parties an affidavit was initially filed by Sri S. D. Sahay, the Income-tax Officer, who issued the notice under section 148 of the Act. In paragraphs 15 to 17 of the affidavit the facts on the basis of which he had reason to believe that the petitioner did not disclose all material facts fully and truly have been averred. The sum and substance of these averments may be indicated in brief. In the course of the examination of accounts for the assessment year 1963-64, the following entries in the account books of the branch business of Munilal Rice Mill were noticed : Credit Debit Munilal Ramdayal, 1. Achutananda Behera 21,790.25 Baripada......Rs. 1,44,813.32 2. Upendranath Gire 57,778.17 3. Udala Depot 18,703.59 4. Jaida Depot (Sheosai Ganesh Lall) 2,743.32 5. Ramachandra Kahinath 1,276.56 6. Upendranath Sahu 10,475.38 7. Lalmohan Mohanty 1,405.81 8. Dukura Hammar 3,703.12 9. Badampur Hammar 7,987.50 10. Gordhanbhai Ambalal 11,382.67 11. Cultivation A/c. 7,566.95 ------------------- 1,44,813.32 ------------------- While an amount of Rs. 1,44,813.32 was credited in the branch books in the name of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the depreciation allowance, as the case may be, for the assessment year concerned..... Explanation 2.-Production before the Income-tax Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Income-tax Officer will not necessarily amount to disclosure within the meaning of this section. " The corresponding section 34 of the old Act came up for consideration in a series of cases before the Supreme Court. The following propositions have been firmly established and are no longer in doubt. (i) It is the duty of the assessee, who wants the court to hold that jurisdiction was lacking, to establish that the Income-tax Officer had no material before him for believing that there had been such non-disclosure. (ii) Before issue of notice, two conditions precedent are to be fulfilled: (a) the Income-tax Officer must have reason to believe that the income, profits or gains chargeable to income-tax have been under-assessed ; (b) he must also have reason to believe that such under-assessment occurred by reason of omission or failure on the part of an assessee to disclose fully and truly all material facts necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appa v. Commissioner of Income-tax and Kantamani Venkatanarayana Sons v. 1st Addl. Income-tax Officer, Rajahmundry). The sole question for consideration is whether the case of the department that an amount of Rs. 1,44,813.32 which was credited in the branch office books of Munilal Ramdayal in the name of the head office, was kept concealed before the Income-tax Officer at the time when the original assessment for the year 1952-53 was made. It has already been stated that two conditions precedent are to be fulfilled before assumption of jurisdiction under section 148 of the Act. Dr. Pal does not question the first condition, namely, that the Income-tax Officer had reason to believe that the income chargeable to income-tax had been under-assessed. This aspect need not, therefore, be discussed. The real question for examination is whether the Income-tax Officer had reason to believe that such under-assessment occurred by reason of omission or failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment for the year 1952-53. On behalf of the petitioner, reliance is placed on the following pieces of materials in support of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence to show that the impugned primary fact was brought to the notice of Sri A. K. Jana either suo motu or at the instance of the petitioner. The item relates to a heavy amount of about 1 1/2 lakhs of rupees. If the attention of the Income-tax Officer had been invited to this transaction, surely the same must have been embodied in the original assessment order ; and some discussion, however perfunctory, must have been made in the assessment order relating to this impugned item. That is the strongest circumstance against the petitioner's case that Sri K. C. Mohanty specifically brought it to the notice of Sri A. K. Jana. The endorsement of Sri A. K. Jana in the relevant account book to the effect : " Running account of the mill with the main Baripada account. The two banking accounts won't tally because the two accounting years differ. A few items compared and they tally. " also leads us nowhere. It is too vague and does not indicate what items were compared and tallied. If this endorsement would have made some reference to the impugned item, then alone it could serve as a piece of intrinsic evidence. In the absence of any reference to the impugned item, the endorsement does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 951 and a corresponding credit was given in the head office account. There was, in fact, no corresponding entry in the head office account. This is exactly what is stated by Mr. Sahay and it is for this reason that the amount escaped the notice of Sri A. K. Jana in 1952. On a scrutiny of the aforesaid features, we are unable to accept the contention urged on behalf of the petitioner that there was a full and true disclosure of all the primary facts. The Income-tax Officer was, therefore, justified in issuing notice under section 148 of the Act. He had reason to believe that paddy was purchased to the tune of Rs. 1,41,813.32 on payment of cash from secreted income and not by adjustment of advances made by Prabir Chandra Rice Mill and that all material facts had not been fully and truly disclosed by the assessee to Sri A. K. Jana. On the aforesaid analysis, we are clearly of opinion that both the conditions precedent are fulfilled in this case and the notice under section 148 of the Act is not without jurisdiction. In the result, the writ application fails and is dismissed with costs. Hearing fee Rs. 250 (Rupees two hundred and fifty only). R. N. MISRA J. - I agree. Writ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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