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TMI Blog1971 (7) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... 1954, relating to the sale of 22 silver bars, but the corresponding credit for the value of the silver bars had not been given to any individual or firm, and hence it seemed that the cash balance had been under-stated by Rs. 97,087-11-0. The firm was required to indicate the name of the parties from whom it had purchased those silver bars. Hotilal, one of the partners of the firm, sent a reply on 19th October, 1965, stating that the firm had since been dissolved and it was not possible to give a proper explanation without examining the books of account in detail. He intimated that Tarachand and Babu Ram, the other two partners of the firm, were in a better know of the state of affairs of the firm, and enquiries might be made from them. The Income-tax Officer, however, by his letter dated 27th July, 1966, reiterated the earlier queries and wanted a satisfactory answer. Nothing seems to have happened thereafter for some time till 15th July, 1969, when the Income-tax Officer, Circle I(7), Kanpur, issued a notice under section 148, Income-tax Act, 1961, reopening the assessment for the year 1955-56, on the ground that he had reason to believe that the petitioner's income chargeable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also stated that the assessee had been called upon to explain the significance of these entries and omission therefrom, but they did not do so in spite of several opportunities. The Income-tax Officer observed that these facts and materials led him to believe that these 22 silver bars actually belonged to the assessee, which it kept outside the books of account and entries had been made by the assessee to introduce its own goods which had been sold to the aforesaid parties. Action was, therefore, necessary to assess the sum of Rs. 97,087-11-0 in the hands of the assessee which represented the cost as well as the profit on the sale of 22 silver bars to the aforesaid parties. Upon this report, the Commissioner of Income-tax, U.P., gave his assent that this was a fit case for the issue of a notice under section 148 of the Act. The matter was then taken to the Central Board of Direct Taxes. The Board also signified its approval. Thereafter, the impugned notice was issued by the Income-tax Officer. It appears that the Income-tax Officer felt that the had sold his own 22 silver bars, and that the assessee's case was that it had purchased these bars from the market in order to sell them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were not made in the trading account and the cash book, and for that reason, at the time of completion of the initial assessment, it could not be determined whether this transaction of sale of 22 silver bars represented introduction of the assessee's own silver bars and earning of any profit therefrom. It was the duty of the assessee to have informed the Income-tax Officer of this particular transaction, or the primary facts relating to it, namely, the person from whom the assessee had purchased these silver bars, the person to whom they were sold and whether any commission was charged on their sale, etc. In the writ petition, it has been stated that during the year 1955-56, the petitioner-firm was doing business of commission agent on the sale and purchase of silver bars on forward transactions. Commission used to be charged on the transactions alone and no commission was charged when the delivery of goods were effected the forward transactions to the constituents of the petitioner-firm. It has been also stated that the firm did business of ready transactions on a very small scale in order to maintain good relations with its constituents. It is also stated that on 28th June, 1954, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sanction. Unfortunately, this point has also not been taken in the writ petition. If the point had been taken, the respondent would have clarified the position as to the jurisdictional division of work between these two Income-tax Officers. For all we know, the Income-tax Officer, Circle I(7), was the relevant officer doing the work relating to the petitioner-firm. We, therefore, decline to entertain this point as well. Learned counsel for the petitioner then urged that the Income-tax Officer had impounded the petitioner firm's books of account on 24th September, 1965. He had retained the custody of these books and has not returned them to the petitioner-firm in spite of repeated requests and reminders. Section 131(3) of the Income-tax Act, 1961, authorises the Income-tax Officer to impound any books of account after recording his reasons for so doing. This provision further provides that the Income-tax Officer shall not retain custody of any such books of account for a period exceeding 15 days (exclusive of holidays) without obtaining the approval of the Commissioner therefor. In the petition, it is alleged that the Income-tax Officer did not record any reason for impounding th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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