TMI Blog1981 (5) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... operty, to enforce these notices and orders. In addition to this multiple relief, the petitioner also prayed for a declaration that ss. 147 and 148 of the Act and s. 3 of the Diplomatic and Consular Officers (Oaths and Fees) Act, 1948, are unconstitutional and, therefore, null and void. The facts which are necessary for the disposal of this writ petition may be shortly stated here. The petitioner, Vimal Chandra Golecha, is carrying on the business of sale and purchase of precious stones. He filed a return of his income, for the assessment year 1977-78, on August 29, 1977. According to him, his total income chargeable to tax was Rs. 73,580. The ITO made an assessment order on October 29, 1977, computing the total assessable income of the petitioner at Rs. 81,550. The petitioner's brother, Hem Chandra Golecha, deceased, had been working for a firm, M/s. Sales S. A. of Geneva, in 1969. In due course, he became general manager of a firm called M/s. Ashlyn Co., Frankfurt. He went to Brazil and disappeared there in 1976. He has not been heard of since July 7, 1976. The petitioner and his family suspected that Hem Chandra Golecha had been murdered and that John Ashlyn (of M/s. Ash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... $1,20,000 to the account of M/s. Sales S. A., Geneva, and that the books of this firm showed that they had credited the amount of $1,20,000 to the account of the petitioner in their books. The petitioner was thus called upon to explain why his income from this business be not estimated for the assessment years 1977-78 and 1978-79. The petitioner gave a written reply to the letter, Ex. F, mentioned above, denying that he had written any such letter as alleged instructing the bankers in Switzerland to transfer any amount to the account of M/s. Sales S. A., Geneva. He did not specifically deny that a sum of 8,21,514.92 Swiss francs had been credited to his account. On December 5, 1980, respondent No. 2 sent a letter to the petitioner, giving further details of the information in his possession and of the material gathered on the basis of the enquiry held by him and thus giving him an opportunity of being heard in respect of that material in accordance with the provisions of s. 142(3) of the Act. By his letter dated December 15, 1980, the petitioner made lengthy reply (Ex. H/2) to the aforementioned notice under s. 142(3). He denied the allegations contained in the, notice. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns contained therein. They pleaded that if the petitioner had any real and genuine grievance against the impugned order of reassessment, he should be left to seek his remedy by way of appeal within the ambit of the Act and that the remedy provided by the Act is adequate and efficacious. They referred in this connection to the relevant provisions of the Act providing remedy against wrong assessment or reassessment. They pleaded that the petitioner had already filed an appeal before the Commissioner of Income-tax (Appeals) challenging the, order of reassessment, dated February 12, 1981, and that the said appeal is still subjudice. According to the respondents, the writ petition is liable to be dismissed on the short ground that an adequate alternative remedy was available to the petitioner and he has in fact already approached the appellate authority for appropriate relief. The respondents denied that ss. 147 and 148 of the Act and s. 3 of the Diplomatic and Consular Officers (Oaths and Fees) Act, 1948, are violative in any manner of the provisions of arts. 14, 19(1)(g) and 21 of the Constitution. They further denied that respondent No. 2 had passed the impugned order in contraven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are of the considered opinion that these statutory provisions are perfectly constitutional. We may now give our reasons briefly. Section 147, excluding the two Explanations appended to it, which are not relevant for our present purpose, and s. 148 of the Act, which are under challenge, may be reproduced here for convenience of reference. They read as under: "147. Income escaping assessment.-If- (a) the Income-tax Officer has reason to believe that, by reason of the omission or failure on the part of an assessee to make a return under section 139 for any assessment year to the Income-tax Officer or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year, or (b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Income-tax Officer has, in consequence of information in his possession, reason to believe that income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to s. 153, assess or reassess such income or recompute the loss or the depreciat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... administrative in character, so as to enable the higher administrative authorities, i. e., the Commissioner and the CBDT, to exercise proper control over and supervision of such action by the ITO and to restrain it, if necessary, in appropriate cases. That is why the Madras High Court, while dealing with s. 34, Indian I.T. Act, 1922, which was in similar terms to ss. 147 and 148 of the Act, held in Presidency Talkies Ltd. v. First Addl. ITO [1954] 25 ITR 447, that the reasons recorded by the ITO for initiating action for reassessment need not be communicated to the assessee and that the only, object of the requirement as to the recording of reasons is to safeguard the interest of the assessee against any hasty action on the part of the ITO or action without any justification. The Supreme Court approved this ruling in S. Narayanappa v. CIT [1967] 63 ITR 219 (SC) repeating that there is no requirement in any of the provisions of the Act that the reasons recorded under s. 148(2) must be Communicated to the assessee as a condition for the initiation of action against him for reassessment of his income. Now, as already stated, the attack on the constitutionality of ss. 147 and 148 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any material gathered on the basis of any enquiry held under that section. It will thus be seen that s. 148 of the Act contains a built-in safeguard for the assessee in that it makes it obligatory on the assessing authority to disclose to the assessee the material on the basis of which it proposes to reassess his income and then give him an opportunity of being heard and explaining that material. The other checks and controls on the power of the assessing authority are enacted in ss. 149 to 153 of the Act. We cannot, therefore, accept the argument that ss. 147 and 148 contain delegation of arbitrary and uncontrolled power to the ITO to re-open an assessment without any reason. Though s. 147 and 148 of the Act contain all the necessary safeguards ensuring fair play to an assessee, we are not unmindful of situation wherein an ITO, if he is determined to act in an arbitrary manner, may record reasons which are no reasons in the eye of law and thus issue notice to the assessee initiating action for reassessment of his income. Now, if that be so, one cannot condemn the statute as unconstitutional merely because the ITO has ignored the principles enunciated therein for regulating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... like and that he may act on material which may not, strictly speaking, be accepted as evidence in a court of law. Thus, the challenge to the constitutionality of s. 3, Diplomatic and Consular Officers (Oaths and Fees) Act, 1948, also fails. Lastly, we take up the petitioner's plea to the effect that the impugned order of assessment was made by the assessing authority in violation of the principles of natural justice. We have carefully examined the material on record and find that this plea is groundless. We have seen the reasons recorded by the ITO under s. 148(2) of the Act for the initiation of the proceedings for reassessment. We find that the reasons recorded are relevant, and, if correct, would, lead to the legitimate inference that the assessee's income had escaped assessment by reason of its concealment by him. The substance of these reasons was communicated to the assessee during the enquiry, vide detailed letter, Ex. F, dated, August 21, 1980, from respondent No. 2 to the petitioner. The petitioner made a detailed reply, Ex. G, dated September 1, 1980, to the said communication. Thereafter, the entire material gathered by the assessing authority on the basis of his en ..... 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