TMI Blog1980 (7) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... uary, 1966. When the petitioner joined the Govt. of India his income dwindled. His main source of income was salary as a minister. For the assessment year 1962-63, he filed his return showing a salary income of Rs. 30,300, property income of 2/3rds of Rs. 9,000 and interest income of Rs. 2,795 and professional and royalty income of Rs. 8,005.42. On this return, the ITO assessed him and determined the tax which the petitioner paid. A notice dated 7th August, 1974, was issued to the petitioner. The ITO proposed to reassess the petitioner's income for the assessment year 1962-63, on the ground that he had reason to believe that income for that assessment year had escaped assessment within the meaning of s. 147 of the I.T. Act, 1961 (the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice dated March 24, 1971, under s. 147 of the Act and for initiating proceedings for reopening the assessment for the year 1962-63. The purport and object of the three notices is to reopen the assessment proceedings for the year 1962-63, on the ground that the income had escaped assessment. The ground for such belief as stated by the ITO in his counter-affidavit dated 8th November, 1974, is that he was of the opinion that inasmuch as in the preceding years personal and household expenses of the petitioner were to the tune of Rs. 40,000 to Rs. 50,000 a year, it was difficult to believe that in the previous year relevant to the assessment year 1962-63, the petitioner had been able to meet all his household expenses from out of his net income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oundation on facts. It is a conjectural opinion.A pure guess-work. A convenient assumption that overlooks known facts. More a product of the ITO's imagination than of factual belief. It is more hypothetical construction without a known counterpart in reality. But the Act requires that there must exist reasonable grounds, known to the officer, before he can validly exercise the power conferred by the section. There is nothing to show that the petitioner disclosed to the authorities that he was spending Rs. 40,000 to Rs. 50,000 per year. Nor is it shown specifically what are those " preceding years " in which his expenses were of that order. It is a vague assertion, an invention of the imagination. After the petitioner became a minister in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l. As Lord Radcliffe said [1980] 2 WLR 1, 22 (HL): " However read, they must be intended to serve in some sense as a condition limiting the exercise of an otherwise arbitrary power. (Nakkuda Ali v. Jayaratne [1951] AC 66, 77 (PC)". These words do not make conclusive the officer's own honest opinion that he had reasonable cause for the prescribed belief. The grounds on which the officer acted must be sufficient to induce in a reasonable person the required belief before he can validly reopen completed assessment under s. 147(a). In England, the majority in Liversidge v. Anderson [1942] AC 206 (HL) held that the belief entertained by the officer was not justiciable. Lord Atkin dissented. Now, it has been held by the House of Lords in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
