TMI Blog1968 (12) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... diverse amounts had been put in the said account in the accounting year 1947-48 corresponding to the assessment year 1948-49. The petitioner was asked to show cause why the said amounts totalling Rs. 2,51,502 should not be treated as the petitioner's income for the assessment year 1948-49 and why proceedings under section 147 of the Income-tax Act, 1961 (hereinafter referred to as " the Act ") should not be initiated against the petitioner. By his letter dated the 22nd March, 1965, the petitioner denied the allegations contained in the said letter, dated the 19th March, 1965, and contended that the respondent-Income-tax Officer had no reason for coming to the conclusion stated in the said letter. Thereafter, on or about the 27th March, 1965, a notice under section 148 of the Act was served on the petitioner, wherein it was stated that the Income-tax Officer had reason to believe that the income of the petitioner in respect of which he was chargeable to tax for the assessment year 1948-49, had escaped assessment within the meaning of section 147 of the Act. By the said notice the petitioner was required to deliver within 30 days from the date of the service of the notice a retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truly all the material facts necessary for the assessment for that year. Both these conditions are conditions precedent to be satisfied before the Income-tax Officer acquires jurisdiction to issue a notice under the section. But the legal position is that if there are in fact some reasonable grounds for the Income-tax Officer to believe that there had been any non-disclosure as regards any fact, which could have a material bearing on the question of under-assessment, that would be sufficient to give jurisdiction to the Income-tax Officer to issue the notice under section 34. Whether these grounds are adequate or not is not a matter for the court to investigate. In other words, the sufficiency of the grounds which induced the Income-tax Officer to act is not a justiciable issue. It is of course open for the assessee to contend that the Income-tax Officer did not hold the belief that there had been such non-disclosure. In other words, the existence of the belief can be challenged by the assessee but not the sufficiency of the reasons for the belief. Again, the expression 'reason to believe' in section 34 of the Income-tax Act does not mean a purely subjective satisfaction on the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ides that in cases where eight years have expired from the end of the relevant assessment year, no notice under section 148 of the Act can be issued unless the Central Board of Revenue is satisfied on the reasons recorded by the Income-tax Officer, that it is a fit case for the issue of such notice. Mr. Roy argued that, as the reasons recorded by the Income-tax Officer were arbitrary, erroneous or unreasonable, the sanction of the Central Board of Revenue based thereon is also vitiated. Mr. Roy contended that since nearly fourteen years have elapsed after the regular assessment of the assessee for the relevant assessment year and before the impugned notice was issued, the performance of the statutory obligations on the part of the income-tax authorities must be very strictly construed as an additional burden is sought to be imposed on the assessee after the lapse of such a long time. He further contended that the belief in the present case was a mere pretence and as such could not warrant the assumption of jurisdiction to reopen the proceedings by issuing the impugned notice under section 148 of the Act. Mr. Gouri Mitter appearing on behalf of the respondents relied on the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contentions, Mr. Mitter relied on a decision of the Supreme Court in the case of Sowdagar Ahmed Khan v. Income-tax Officer, Nellore. In the said case Ramaswami J., delivering the judgment of the Supreme Court and in the course of a summary of the facts in that case, observed as follows : " In the course of assessment proceedings for the assessment year 1957-58, the Income-tax Officer found that the assessee had a current account in the Imperial Bank of India in the name of his father-in-law till the latter's death. This fact came to the notice of the Income-tax Officer when the assessee was asked to explain a cash credit of Rs. 40,000 found in the assessment year 1950-51 . . . It was also detected by the Income-tax Officer that in the relevant returns the assessee had not shown income from property in the names of his sons, wife and daughter, though many of the properties were purchased by him in their names. The Income-tax Officer had, therefore, reason to believe that, by reason of the omission or failure on the part of the assessee to disclose fully and truly all the basic and material facts necessary for the assessment for those years, income chargeable to tax had escaped as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als in his possession. He must perform the further necessary mental act of accepting such materials and information as reliable and forming the belief that they can be acted upon. If, as in the present case, the Income-tax Officer had the information, upon enquiries, that the petitioner had an account in the United Commercial Bank Ltd. in the benami name of his nephew and had further found as a fact that such information could be acted upon, as is apparent from the notice dated the 19th March, 1965, I fail to see how it can be contended that the Income-tax Officer had no " reason to believe " within the meaning of section 148 thereof. I also do not understand how the finding of the Income-tax Officer can be called erroneous or arbitrary or unreasonable at this stage. No doubt, in the course of the reopened assessment proceedings, it would be open to the petitioner to satisfy the Income-tax Officer that the said account is not a benami account of the petitioner and that the deposits made in that account in the relevant assessment year do not represent the undisclosed income of the petitioner. If the petitioner succeeds in establishing the above facts, the Income-tax Officer would ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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