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TMI Blog1973 (7) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... by the respondent No. 1 and a writ in the nature of prohibition restraining the respondents to forbear from giving any effect to the said notice. The respondents would, however, be at liberty to proceed according to law ". That order allowing the reliefs prayed for in an application under article 226 of the Constitution arose in the following circumstances : The respondent before us, Calcutta Chromotype (Private) Ltd., is a company incorporated under the Indian Companies Act and carries on business, inter alia, as manufacturers of playing cards, printers and lithographers. The assessment of the total income for the year 1960-61, under section 23(3) of the Indian Income-tax, 1922, was computed at Rs. 1,62,271. After assessment for the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecause in the balance-sheet which was submitted as a part of their return for the relevant year there was not only an entry showing on the liabilities side under the head " Machinery sales suspense " an amount of Rs. 2,17,214.50, but also in that balance-sheet there was a note in these terms : " 2. Machinery sales suspense Rs. 2,17,214.50. This amount represents the sale proceeds of certain old machineries. The original cost of the machineries is not available at the moment and, therefore, the profit or loss on the sale cannot be ascertained for the present ; the management prefers not to show this amount as a deduction from the value of the relative assets, until the said profit or loss is ascertained." Below that note on the auditor's r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 2 to section 147 is confined to cases of books of account and other evidence which are produced in the course of assessment proceedings but the balance-sheet of a company is a part of that return. In other words, the learned trial also proceeded to observe that once the statements contained in the balance-sheet are before the assessing authority, there is a duty cast on the assessing authority to enquire into those and find out whether they are relevant for the purpose of computation of the total income and the amount of tax consequent to that view ; the learned judge upheld the contention on behalf of the assessee-company and held that the notice under section 148 has been without jurisdiction ; not only so, the learned judge also acce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded to be valid act under clause (a) of section 147 of the Income-tax Act, 1961. Mr. Sengupta in support of his contention relied on the judgment of the Division Bench of this court in Commissioner of Income-tax v. Hoosen Kasam Dada (India) Ltd. He also relied on the two well-known decisions of the Supreme Court : (1) in the case of S. Narayanappa v. Commissioner of Income-tax and (2) in the case of Kantamani Venkata Narayana and Sons v. First Addl. Income-tax Officer, Rajahmundry. The learned counsel for the revenue also contended that the view that if it is shown that from what has been disclosed by the assessee the Income-tax Officer by diligent enquiries could have discovered further material particulars that would be sufficient disclo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exure to the petition. There is no effective denial for the revenue as to that assertion made on behalf of the assessee-company. That detailed list taken with what appears in the balance-sheet both in the entry and in the note appended are enough to show that the assessee-company had done their duty to disclose all material facts within their knowledge. It was brought to the notice of the Income-tax Officer at the original proceeding and he formed his own opinion as to how to act on those materials. To say now that it is reasonably believed that income has escaped assessment for the reason of any non-disclosure tends too bad to an expectation that an assessee has any duty to disclose matters which are not within his knowledge. That lack of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts to enable the revenue to reopen the assessment for the year 1960-61 under clause (a) of section 147 of the Income-tax Act, 1961. The notice under section 148 that has been issued for that purpose upon the purported ground of omission to disclose the profits must, therefore, be held to have been issued in excess of jurisdiction. There was no occasion in this case for the Income-tax Officer to gather further facts by enquiry. What he could have done in the original assessment instead of acting upon the view he has taken, to act upon the other view and proceeded to exercise the other powers under the Income-tax Act. On behalf of the revenue Mr. Sengupta has referred to the material included in the affidavit-in-reply to say that the new in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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