TMI Blog1973 (2) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee contended that the amount in question was only a loan taken by her from Jupiter Pictures and that it had to be repaid by adjustment when her work with Jupiter Pictures was completed. The Income-tax Officer did not accept the said contention and, therefore, included the said amount in her assessment. The assessee, therefore, filed a revision petition before the Commissioner of Income-tax against the said reassessment order. In those revision proceedings it came to light that the said sum of Rs. 36,000 received by the assessee in the accounting year relevant for the assessment year 1952-53, was in fact adjusted by the successors of Jupiter Pictures, namely, Manohara Pictures, on August 31, 1954, that is, during the accounting year relevant to the assessment year 1955-56. The Commissioner issued a notice dated February 8, 1963, to the assessee asking the assessee whether she was agreeable to the inclusion of the sum of Rs. 36,000 in her assessment for the year 1955-56. In reply to the said notice the assessee expressed her willingness to have the said sum included in her assessment for 1955-56, subject to the condition that the said amount was deleted from the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellate Tribunal. It was contended before the Tribunal that the Income-tax Officer having given the Commissioner's direction as a reason for reopening the assessment under section 147(a) in his notice under section 148(2), it is not open to the Appellate Assistant Commissioner to go into the sufficiency or otherwise of the said reason, that even otherwise there is material to show that the assessee has failed to disclose the said sum of Rs. 36,000 as her income at the time of the original assessment and that has resulted in an escapement of income and, therefore, the proceedings initiated under section 147 were valid and sufficient to give the Income-tax Officer jurisdiction to reopen the original assessment for 1955-56. The Tribunal, however, held, that it was open to the Appellate Assistant Commissioner to consider whether the reasons recorded by the Income-tax Officer initiating proceedings under section 147(a) were valid and sufficient, that the reasons recorded by the Income-tax Officer in his letter to the Commissioner seeking sanction did not disclose any belief on his part that the income had escaped assessment due to the assessee's failure to disclose any portion of the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee should have been aware of this adjustment ; but the amount of Rs. 36,000 had already been included in her assessment for 1952-53 ; and the assessee was not bound to again include this amount in her income for the assessment year 1955-56 and it was also not necessary for her to disclose to the Income-tax Officer, who was making the assessment for 1955-56, the fact of the adjustment on August 31, 1954 ............ The assessee cannot be expected to disclose the fact of the adjustment during the assessment proceedings for 1955-56, thereby inviting an assessment of this amount in 1955-56, while the assessment of this amount in 1952-53 was still in force. The assessee cannot be expected to invite double assessment on the same income. It cannot, therefore, be said that there was any failure on the part of the assessee to fully and truly disclose all the material facts at the time of the original assessment for 1955-56. " The Tribunal has proceeded on the basis that the assessment for the year 1952-53 including the sum of Rs. 36,000 as the income accrued in that year was before the assessee submitted the return for the assessment year 1955-56 during which year the said sum of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e earlier years. But whatever the view the Income-tax Officer took, the true legal position is that there has been escapement of income in the assessment year 1955-56, which was due to the failure on the part of the assessee to fully and truly disclose the material facts at the time of the original assessment for 1955-56 which took place long before the reassessment for the year 1952-53. Therefore, the Tribunal is not justified in saying that the non-disclosure of the said income of Rs. 36,000 in respect of the assessment year 1955-56 was due to the actual inclusion of the said amount in the re-assessment for the year 1952-53 which took place later. We, therefore, hold that this reason given by the Tribunal for holding that the Income-tax Officer had no jurisdiction to reopen the assessment for 1955-56 under section 147 is not tenable. The other reason given by the Tribunal for upholding the order of the Appellate Assistant Commissioner annulling the reassessment proceedings under section 147(a), however, appears to us to be sound. The condition precedent for initiating proceedings under the said sub-section is the issue of a notice under section 148. Section 148(2) specifically ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g in which these words occur and the significance of the opening words in section 148(1), they have to be understood only as requiring the recording of reasons for initiating the proceedings under section 147. If it is otherwise, we cannot contemplate as to what are the reasons which could be given by the Income-tax Officer for issuing the notice as such, without reference to the ingredients referred to in section 147(a). Admittedly, the only reason recorded for issuing the notice is the direction of the Commissioner to re-open the assessment. Therefore, it has to be taken that the only reason recorded by the Income-tax Officer for issuing the notice as well as for initiating proceedings under section 147(a) is the direction of the Commissioner and not a reasonable belief entertained by the Income-tax Officer that income has escaped assessment as a result of the non-disclosure of material facts by the assessee. The learned counsel for the revenue then contends that there is a clear-cut distinction between jurisdiction and procedure, and that the issue of a notice without recording reasons is only a defect in procedure and that will not affect the jurisdiction of the Income-tax Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preme Court in Calcutta Discount Co. Ltd. v. Income-tax Officer, while considering the scope of the jurisdiction of the Income-tax Officer under section 34(1)(a) of the 1922 Act which corresponded to section 147(a) of the 1961 Act, that to confer jurisdiction under section 34 to issue a notice in respect of assessments beyond the period of four years, two conditions have to be satisfied, namely, (1) the Income-tax Officer must have reason to believe that income, profits or gains chargeable to income-tax escaped assessment, and (2) he must have also reason to believe that such an escapement of income had occurred by reason of omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment in that year, and that both the above conditions are conditions precedent to be satisfied before the Income-tax Officer could have jurisdiction to issue a notice for assessment or reassessment beyond the period of four years. On the above reasoning the Income-tax Officer cannot be said to have acted within his jurisdiction if the reason for his belief that the two conditions are satisfied does not exist or is not relevant and material to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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