TMI Blog1978 (4) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... 1971, a search was made under section 132(1) of the Act, at the business premises of the petitioner-firm as well as at the residential houses of its partners. In the search, books of accounts and other documents were seized. The Income-tax Officer thereafter reopened the assessment under section 147(a) after obtaining approval of the Commissioner of Income-tax. The reassessment proceedings were initiated against the petitioner-firm on two grounds, (1) that the scrutiny and examination of the seized documents revealed that the petitioner-firm had advanced Rs. 65,650 on various dates between 25th November, 1963, to 6th July, 1964, to M/s. Kedarnath Jageshwar Prasad (a sister concern) but did not debit the amount in its account books on those dates. The second reason in justification of the reopening of the assessment proceedings was that the petitioner-firm had deposited Rs. 10,000 in cash on August 12, 1964, in the account of Sri Jageshwar Prasad but it did not post the same in his ledger account and squared up in the rokar. This action clearly showed that the amount of Rs. 10,000 was out of their secreted profit which they intentionally omitted to post to the respective ledger acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Officer concerned issued a second notice under section 147(a) of the Act on August 29, 1973, calling upon the petitioner-firm to show cause as to why the assessment order made with respect to the year 1965-66 be not set aside and a fresh order of assessment be made in respect of the said year. Upon the receipt of the said notice the petitioner-firm filed the present writ petition in this court challenging its validity on a number of grounds, including that the Income-tax Officer did not have jurisdiction to issue the second notice under section 148 of the Act in respect of those very matters regarding which the reassessment proceedings had once been annulled. The petitioner also alleged that the proceedings taken against the petitioner-firm were mala fide inasmuch as the same had been started by the Income-tax Officer concerned only with the sole object of harassing the partners of the petitioner-firm. In the counter-affidavit filed on behalf of the Income-tax Officer as well as the Commissioner of Income-tax the allegations made by the petitioner were denied and the issuance of the second notice under section 147(a) was justified. Along with the counter-affidavit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain item has escaped assessment on account of assessee's furnishing inaccurate particulars at the time of assessment. " We are informed that after the dismissal of the appeal by the Income-tax Appellate Tribunal, the Commissioner of Income-tax filed an application under section 256(2) before this court. The application was also rejected. It would thus show that the judgment of the Income-tax Appellate Tribunal between the parties became final. The question that needs consideration is whether once an order with reference to those items became final, was it open to the Income-tax Officer to start proceedings under section 147 of the Act on the basis of these items along with others afresh. The settled rule of law is that a judicial determination which has become final between the parties is binding provided it is made by an authority having jurisdiction. It will have legal efficacy till set aside on an appeal or by any superior authority. In the instant case, we find ample reason for applying the same principle, as admittedly the Appellate Assistant Commissioner, who allowed the appeal and the Income-tax Appellate Tribunal which maintained it, had jurisdiction to hear and decide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n regard to the income he later on sought to tax. The said finding necessarily implies that the Income-tax Officer had no reason to believe that because of the assessee's failure to disclose the facts, income has escaped assessment. The earlier finding is comprehensive enough to negative ' any such reason ' on the part of the Income-tax Officer. That finding is binding on him. He could not on the same facts reopen the proceedings on the ground that he has new information. If he did so, it would be a clear attempt to circumvent the said order, which had become final. " The law enunciated by the Supreme Court in the above case squarely applies to the facts of the present case also. If the second notice issued by the Income-tax Officer under section 148 is only an attempt to circumvent the first order passed by, the Appellate Assistant Commissioner of Income- tax and the, Income-tax Tribunal, it is against the principle of finality that such a course be permitted. Now the question is with reference to the items other than those which were mentioned in the notice dated December 2, 1971, given under section 148 of the Income-tax Act. It was not disputed before us that all the other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax Officer that it is a fit case for the issue of such notice. It is also imperative for the Income-tax Officer to record his reasons before initiating proceedings as required by section 148. The Income-tax Officer cannot initiate proceedings in a case where the period of 4 years has expired from the end of the relevant assessment year without obtaining the prior sanction. The giving of the sanction by the Commissioner of Income-tax is not a mere formality. He is required to apply his mind to the grounds on which the sanction is sought, to start or initiate the proceedings de novo. In the instant case, it would be seen that in the reasons recorded by the Income-tax Officer the two items referred to above found a prominent place. It was stated therein that the assessment orders already made by the Income-tax Officer regarding the same had been quashed. The Commissioner of Income-tax still gave sanction for starting the proceedings in respect of these two item as well. This clearly shows the non-application of his mind to the controversy, whether the present was a fit case for according sanction or not. Had he applied his mind properly he would have found that as a competent cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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