TMI Blog1971 (4) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... which the petitioner was not entitled to in the relevant assessment years. It would be necessary to advert to the facts in detail later on. For the assessment year 1962-63 it has been stated by the petitioner that no relief under section 15C had been claimed or granted. Therefore, there cannot be any question of reopening of the assessment for the said assessment year on the aforesaid ground. The fact that in respect of the assessment year, 1962-63 no relief under section 15C had been granted has been accepted by the learned counsel for the revenue. Learned counsel has further stated that the revenue did not wish to proceed with the said notice under section 148 of the Income-tax Act, 1961, for the assessment year 1962-63. It is, therefore, not necessary to consider the question of the assessment year 1962-63. The petitioner is a manufacturing company engaged in the manufacture and sale of electric dry batteries, chemicals and plastics and carbon products. The manufacture of electric dry batteries in India is undertaken by a division or department of the petitioner-company known as National Carbon Company, shortly called " Natco ". Zinc strips are incorporated in dry batteries and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration of all the relevant materials and evidence the Income-tax Officer was satisfied about the claim of the petitioner in respect of the profits earned from " Metco " and allowed relief in respect of the said four years, being assessment years 1958-59 and 1961-62 under section 15C of the Income-tax Act, 1922. On the 20th March, 1967, the petitioner received two notices dated 20th March, 1967, signed by Shri S. K. Roy, the then Income-tax Officer, issued under section 148 of the Income-tax Act, 1961, in respect of the assessment years 1958-59 and 1962-63. It appears from the said notices that the notice for the assessment year 1958-59 was issued after obtaining the necessary satisfaction of the Commissioner of Income-tax, West Bengal III. Thereafter, the petitioner received another notice dated 26th March, 1968, in respect of the assessment year 1959-60 issued by the Income-tax Officer, Shri P. R. Rao. From the correspondence preceding the issuance of the said notices and subsequent thereto, and the affidavit-in-opposition it appears that the notice was issued on the ground that the petitioner had been wrongly granted relief under section 15C of the Indian Income-tax Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew of the said decision of the Central Board of Direct Taxes it becomes necessary to re-examine the case of the petitioner and as such jurisdiction was assumed under section 147 of the new Act so that the entire question could be gone into upon proper materials and evidence." Again in paragraph 19 of the affidavit he states : " In this connection I say that the petitioner failed to disclose at the time of the original assessment the fact that a portion of the profits said to have been earned by Metco was as a result of inter-departmental transaction and further failed to disclose material particulars showing what was the amount of profits arising out of sales to outside parties. As such the Income-tax Officer has reason to believe and bona fide believed that by reason of the omission and failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment the said year's income chargeable to taxes had escaped assessment." There is no affidavit by Shri S. K. Roy as mentioned hereinbefore. In the records of the Income-tax Officer produced before me, it has been recorded as follows : " The company has been allowed section 15C reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any's products in 1957 totalled Rs. 5,35,34,597 as compared to Rs. 5,18,94,061 in 1956. Total sales include Rs. 43,71,970, being the value of zinc processed by Metals Ores Company for internal use by other division of your company." In page 13 of the said balance-sheet of the profit and loss account it has been stated : " By sales (including Rs. 43,71,970 being the cost of items utilized internally) ... ... Rs. 5,35,34,597. " Similarly in the annual report of the directors for the year 1958 it has been stated as follows : " Total sales of the company's products were about Rs. 6,05,06,971 in 1958 as compared to Rs. 5,35,34,597 in 1957. Of these total sales, Rs. 39,44,301 represents the value of zinc processed by Metals Ores Company for internal use of other division of your company." In the profit and loss account for the said year there is also a statement like this : " By Sales (including Rs. 39,44,301 being the cost of items utilized internally) ... ... Rs. 6,05,06,971. " It is also the common case that along with the profit and loss account of the company a copy of the profit and loss account of the Metals Ores Company was filed for the purpose of section 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced before the court. It is upon conditions and within the time prescribed by subsequent section of the Act and after obtaining sanction as mentioned in the Act that notice under section 148 of the Income-tax Act, 1961, can be served. The above propositions of law, in my opinion, are now well-settled by the several judicial decisions. Reference may be made to Calcutta Discount Company Ltd. v. Income-tax Officer, Narayanappa v. Commissioner of Income-tax, Commissioner of Income-tax v. Bhanji Lavji, Kantamani Venkatanarayana and Sons v. First Additional Income-tax Officer, Rajahmundry, Sowdagar Ahmed Khan v. Income-tax Officer, Nellore and Commissioner of Income-tax v. Burlop Dealers Ltd. In the case of Chhugamal Rajpal v. S. P. Chaliha the Supreme Court observed after setting out the facts at page 607 of the report : " What that provision requires is that he must give reasons for issuing a notice under section 148. In other words, he must have some prima facie grounds before him for taking action under section 148. Further, his report mentions : ' Hence proper investigation regarding these loans is necessary.' In other words, his conclusion is that there is a case for investi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the revenue contended that as mere production of books of account would not satisfy the requirements of full disclosure, mere filing of the directors' report and the profit and loss account of the petitioner-company would not amount to a full disclosure. As mentioned hereinbefore the company's balance-sheet and the profit and loss account are parts of the return. They are not evidence or books of accounts in respect of the return. These balance-sheets are statutorily required to be filed along with the return. In the case of Calcutta Chromotype Private Ltd. v. Income-tax Officer, Central-15 (Matter No. 53 of 1967), T. K. Basu J. held that where facts had been disclosed in the balance-sheet filed along with the return it could not be contended that there was no full disclosure of the said facts. I am in respectful agreement with the views expressed by T. K. Basu J. In view of the aforesaid judgment and in view of the facts it is clear to me that I have to presume that facts stated in the directors' report and the profit and loss account of the National Carbon Company for the two relevant years were fully disclosed. A reference to the directors' report would reveal that, out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e materials either he or Sri Roy came to the conclusion that the petitioner-company had failed to disclose truly and fully all primary facts. The affidavit of Sri Rao and the records of the case reveal that more or less as a result of the directions of the Central Board of Direct Taxes it was thought necessary that there should be a re-examination of the position in case of the petitioner. It is really trying to judge the position retrospectively in view of certain altered notions of law. A desire to re-examine facts from an altered notion of law is not the same thing as to come to the conclusion that there was failure or omission on the part of the petitioner to disclose fully and truly all primary facts at the time of the original assessments. From the records it appears to me, therefore, that the conditions precedent for the issue of the notice have not been fulfilled. Counsel for the petitioner contended that Sri S. K. Roy had not made the affidavit ; but the records have been produced and the records of the case do not improve the position of the revenue from this point of view. In the aforesaid view of the matter this application must succeed and the rule is made absolute. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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