TMI Blog1994 (12) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... were necessary having already been disclosed, the action of the Income-tax Officer is entirely illegal and arbitrary. The payment of the said commission to the sole selling agent has always been allowed from the years 1969-70 to 1975-76 and as such the action being without jurisdiction, it has been prayed that the notice dated April 22, 1978, may be quashed and the respondents be restrained from proceeding further in consequence of the said notice. No one has appeared on behalf of the respondents. When Mr. Bapna who is standing counsel for the Income-tax Department, was called, it was stated that he has informed the Department, but no care has been taken by the Department for making preparation of the case. A copy of this order be sent to the Chairman, Central Board of Direct Taxes, New Delhi, and the Chief Commissioner of Income-tax, Rajasthan, Jaipur, to show the manner in which the cases are being taken care of by the Department. In all other writ matters, an officer-in-charge is appointed who is supposed not only to assist the advocate/standing counsel/panel lawyer, but also he has to be present in the court. In respect of the Income-tax Department, no care is taken by the au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it petition has been filed on September 29, 1982, challenging the notice dated April 22, 1978, and as such it suffers from laches and delay. A copy of the statement of Shri P. D. Podar, dated March 15, 1975, and that of Shri R. K. Pareek, dated February 26, 1975, has also been submitted as annexures R-1 and R-2. Copy of the form for recording reasons for initiating proceedings under section 148 has also been submitted as annexure R-3 in which the reasons have been explained as under: " Aditya Mills Ltd., Kishangarh, is a company running a textile mill at Kishangarh in Rajasthan. This company is a unit of well-known industrial group of Kanorias at Calcutta. Traders and Miners Ltd., Jaipur, is another company of the same group, Aditya Mills Ltd. appointed Traders and Miners as its selling agents and it paid selling agency commission to Traders and Miners Ltd. in the various assessment years as per details given below: Assessment year Amount (Rs.) 1970-71 5,62,983 1971-72 6,48,533 1972-73 7,80,952 1973-74 9,67,487 In it own turn, the company, Traders and Miners Ltd., while showing the receipt of the above amount, claimed huge bogus losses in fictitious transactions of pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 41 ITR 191 (SC), it was held that the responsibility of the assessee is to disclose primary facts, but once he has disclosed all the primary facts his duty ends and it is for the assessing authority to draw a proper conclusion from it. If a wrong conclusion has been drawn, it cannot be a ground for reopening. The proceedings cannot be initiated on that ground. In a petition under article 226 of the Constitution of India where the validity of the notice is challenged the court has to see whether the condition precedent for initiation of the proceedings exists or not. The existence of any reason and not the sufficiency thereof has to be seen. Thus, there must be some material and not the imagination or suspection. The belief of the Income-tax Officer with regard to the escapement of the income must have a live link having rational connection and it must be borne out from the record that there was application of mind of the Income-tax Officer to the material on record on the basis of which he has reason to believe and the inference which has been drawn must be based on the reasons which are to be recorded. The Division Bench has found that when P. D. Podar and R. K. Pareek were examin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ef is that of the Income-tax Officer, the sufficiency of reasons for forming the belief is not for the court to judge, but it is open to an assessee to establish that there in fact existed no belief or that the belief was not at all a bona fide one or was based on vague, irrelevant and non-specific information. To that limited extent, the court may look into the conclusion arrived at by the Income-tax Officer and examine whether there was any material available on the record from which the requisite belief could be formed by the Income-tax. Officer and further whether that material had any rational connection or a live link for the formation of the requisite belief. It would be immaterial whether the Income-tax Officer, at the time of making the original assessment, could or could not have found by further enquiry or investigation, whether the transaction was genuine or not if, on the basis of subsequent information, the Income-tax Officer arrives at a conclusion, after satisfying the twin conditions prescribed in section 147(a) of the Act, that the assessee had not made a full and true disclosure of the material facts at the time of original assessment and, therefore, income charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e view taken by the Division Bench in this case is contrary to the law laid down by the apex court in the case of Phool Chand Bajrang Lal [1993] 203 ITR 456. In the case of Phool Chand Bajrang Lal [1993] 203 ITR 456, the apex court observed (at page 478): "We are not persuaded to accept the argument of Mr. Sharma that the question regarding the truthfulness or falsehood of the transactions reflected in the return can only be examined during the original assessment proceedings and not at any stage subsequent thereto. The argument is too broad and general in nature and does violence to the plain phraseology of sections 147(a) and 148 of the Act and is against the settled law laid down by this court. We have to look to the purpose and intent of the provisions. One of the purposes of section 147 appears to us to be to ensure that a party cannot get away by wilfully making a false or untrue statement at the time of original assessment and when that falsity comes to notice, to turn around and say 'you accepted my lie, now your hands are tied and you can do nothing'. It would be a travesty of justice to allow the assessee that latitude." In the case of ITO v. Lakhmani Mewal Das [1976] ..... X X X X Extracts X X X X X X X X Extracts X X X X
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