9911796707
TMI Blog1983 (5) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... ses known as Purana Karkhana, Jind, and made intensive searches. Certain documents were seized in this raid. Bhim Singh, petitioner, and Shri Dwarka Dass, were the partners in this Purana Karkhana. On May 25, 1966, the petitioner approached the Commissioner of Income-tax, Patiala-II, Patiala, respondent No. 2, with a disclosure statement of his escaped income along with that of his partners and offered to be taxed in accordance therewith. A copy of this petition for settlement has been appended as annex. P-1 to this petition. It is mentioned therein that for the assessment year 1958-59, the total profits of the petitioner along with the other partners was Rs. 99,994. On the basis of this offer, which was accepted by respondent No. 2, a communication dated 27th March, 1967, was addressed by him to the Income-tax Assistant Commissioner, Ludhiana, to levy tax in accordance with the various directions issued in the said letters. Copy of the same is annex. P-2. It was specifically directed that the profit of Rs. 99,994 for the assessment year 1958-59, be divided between the partners as under : Sarvshri : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were correct. Subsequent to the settlement petition dated 25th May, 1966, M/s. Bhim Singh Dwarka Dass of Jind approached the Department with another petition on March 21, 1967, signed by both of them. It was stated therein: " We have submitted a settlement petition relating to the assessment years 1958-59, 1959-60, 1960-61 and 1961-62. In continuation of the same we are submitting that income-tax (including penalty) may be received from the applicants in proportion to their share which is 0-10-0 in the case of Bhim Singh and 0-6-0 in the case of Dwarka Dass and each of us will be liable to discharge the liability created in the said proportion. The Income-tax Officer may please be directed to issue separate challans in the light of the liability (including penalty) created against each of us under this settlement." From this letter, the Department inferred that Sham Lal was benamidar for Bhim Singh, whereas Radhey Kishan was benamidar for Shri Dwarka Dass. It was contended that it was as a result of the material seized by the Department in the raid of Purana Karkhana, Jind, that the settlement petition and its subsequent modifications were filed by the petitioner. It was furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed). Accordingly the above income was to be assessed in the hands of the two partners. In order, to assess the income of Shri Bhim Singh proceedings under section 148 for the assessment year 1958-59 were initiated. No return was filed in response to this notice and the order was passed under section 144. But in the ex parte assessment, the Income-tax Officer did not assess the amount of Rs. 62,496 representing share at 10 annas in the firm, M/s. Bhim Singh Dwarka Dass, Jind, which according to the settlement was to be assessed in the assessee's hands. This has as such escaped assessment and is now sought to be assessed." It was further contended that since the escapement was of more than Rs. 50,000 and more than eight years had elapsed, the necessary approval of the CBDT was obtained. Thereafter, notice, annex. P-3, was issued. The receipt of the objection-petition from the petitioner has also been admitted. It was averred that from the supplementary settlement petition (annex. R-1) the concealed share of the petitioner's income worked out to Rs. 62,496 and not Rs. 37,498 as mentioned in the settlement petition. It was reiterated that no return was made by the petitioner in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which has escaped assessment amounts to or is likely to amount to rupees fifty thousand or more for that year ........" It is clear from the above statutory provisions that if an assessee fails to make a return under s. 139 of the Act for any assessment year and by this act, the income chargeable to tax has escaped assessment for that year, then the ITO can assess or reassess such income after following the procedure prescribed in s. 148 of the Act. This power is, however, hedged in, inter alia, by the condition that a notice under s. 148 of the Act will be issued after eight years only if the income chargeable to tax., which had escaped assessment, amounted to Rs. 50,000 or more. It is not disputed that the petitioner submitted a settlement petition to the Commissioner, Patiala. It was mentioned therein that in the accounting year 1957-58, a profit of Rs. 99,994 was earned by the petitioner and his three other partners, Rs. 37,498 fell to the share of Bhim Singh, petitioner. He did not file a return for the assessment year 1958-59 and ex parte proceedings under s. 144 of the Act were taken against him and he was assessed on, the best judgment assessment basis for income of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s may raise before them, and so, it would be entirely inappropriate to permit an assessee to move the High Court under article 226 and contend that a notice issued against him is barred by time. That is a matter which the income-tax authorities must consider on the merits in the light of the relevant evidence. The point that for the transaction in question other persons have already been taxed and that the order of assessment passed against the assessee being in the nature of a protective assessment should be set aside, ought to be raised before the Income-tax Officer and cannot be allowed to be urged before the High Court in a petition under article 226." It is apparent from the facts of Lalji Haridas's case [1965] 55 ITR 415 (SC), that notice was issued to the assessee calling upon him to make a return of his income for the relevant year. He made a return in compliance with the notice. The ITO discovered such sums which were not treated by the assessee to be his income. The ITO was not satisfied with the explanation of the assessee. He passed an order of assessment. The assessee went up in appeal against that order. The appeal was, partly allowed on grounds which are not german ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been an escapement of income of Rs. 62,496. In the facts and circumstances of the case, the ITO had no jurisdiction to issue the impugned notice and continue with the reassessment proceedings. There is no merit in the second contention of Mr. Bhagirath Dass. The proceedings for grant of sanction for taking action under s. 148 of the Act are of administrative nature. The order passed by the Board of Direct Taxes has not been produced. In the absence of that order, it cannot be said that the members of the Board had not applied their mind to the facts and circumstances of the case. After the close of the arguments in this case, I had asked Mr. Ashok Bhan, the learned counsel for the Revenue, to produce the file regarding the assessment year 1958-59. 1 wanted to satisfy myself as to whether the supplementary settlement dated March 21, 1967, submitted by Bhim Singh, petitioner and Dwarka Dass on the basis of which the ITO issued the notice under s. 148 of the Act was within the knowledge of the ITO, who framed the best judgment assessment. Despite a number of adjournments having been granted during the last about 3 1/2 months, the Revenue has not produced the file before me. In view ..... X X X X Extracts X X X X X X X X Extracts X X X X
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