TMI Blog1998 (1) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... ontractors, the quantity of beedies manufactured and the amount paid has been disclosed by the assessee - notice under section 147(a) are quashed - - - - - Dated:- 2-1-1998 - Judge(s) : MS. S. V. MARUTHI., T. N. C. RANGARAJAN. JUDGMENT The judgment of the court was delivered by G.T.N.C. Rangarajan J. -The petitioner seeks a writ of prohibition against the respondents in respect of a notice issued under section 147(a) of the Income-tax Act, 1961. The facts stated by the petitioner are that there was originally a firm carrying on a business of manufacture and sale of beedies. The petitioner-company was incorporated on May 12, 1977, for carrying on the said business and it took over the trademark of the beedies manufactured by the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessment year 1979-80 to the assessment year 1984-85, on a fresh ground, namely, that part of the manufacturing activity was carried on outside the backward area, the Income-tax Officer sought to first amend the assessment under section 154 of the Act and thereafter, the Commissioner of Income-tax sought to revise the assessment under section 263 of the Act. Finding both these courses to be untenable, the impugned notices are being issued under section 148 of the Income-tax Act alleging that the assessee has failed to disclose fully and truly all the material facts for making the assessment. The petitioner has questioned the issue of these notices for these assessment years on the ground that they lack jurisdiction inasmuch as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that mere information as to the amount paid to the contractors was not sufficient to find out whether any part of the manufacturing activity was carried on outside the backward area and what proportion of profit was attributable to the same. He submitted relying on the decisions in Sri Krishna (P.) Ltd.v.ITO [1996] 221ITR 538 (SC) and Phool Chand Bajrang Lai v.ITO [1993] 203 ITR 456 (SC) that failure to give true and full material facts necessary for his assessment for that year, enables the Income-tax Officer to reopen the assessment under section 147(a) of the Act. Section 80HH of the Income-tax Act provides for a deduction in respect of profits and gains from newly established industrial undertakings in a back-ward area. Where th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at it produces to the assessee more than the ordinary profit, the profits and gains of this industrial undertaking may be reasonably estimated. In the present case also if the Assessing Officer had carefully scrutinised the accounts of the assessee and drawn the inference that because of the entrustment of the initial part of the contract process to contractors, the income from the industrial undertaking is likely to be inflated, with reference to the profit derived from the backward area, he could have reasonably estimated the profit instead of accepting the profit as shown by the assessee. This estimate, he failed to do at the time of the assessment and he seeks to do the same by reopening the assessment. The question is whether he can do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount paid has been disclosed by the assessee. This disclosure is admitted in the counter-affidavit. The Income-tax Officer is not able to specify what extra information was required for him to have applied his mind to draw that inference for reducing the deduction to which the assessee was entitled. As long as it is not F possible for the Income-tax Officer to specify the exact information which was required and which was not disclosed, it is not possible to accept the claim of learned standing counsel that there was no true and full disclosure in the case. When that jurisdictional fact is not established, the Income-tax Officer cannot issue a notice under section 147(a). In the circumstances, the impugned notices are quashed. The writ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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