TMI Blog1977 (5) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... x Act, 1961. I, therefore, propose to reassess the income for the said assessment year and I hereby require you to deliver to me within 30 days from the date of service of this notice, a return in the prescribed form of your income assessable for the said assessment year. This notice is being issued after obtaining the necessary satisfaction of the Central Board of Direct Taxes." On the same day, the opposite party No.1 wrote the following letter to the assessee-petitioner " Dear Sir, Process server is carrying along with this letter a notice under section 148 for the assessment year 1958-59. The notice is intended for reopening your assessment for the above assessment year for which purpose necessary satisfaction of the Central Board of Direct Taxes has been obtained. I have tried to contact you a couple of times over telephone regarding this. But on both the occasions you were reported to be taking rest. I, therefore, had to send the notice through the process server. Regarding your assessments of income-tax and wealth-tax for the years which are open for assessment, I am desirous of having a short interview with you for about 10 minutes or so. Kindly let me kno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, having not been satisfied, the notice itself is untenable in law. (iv) All primary facts having already been disclosed and no new material having come to the possession of the Income-tax Officer, merely on a change of opinion of the next assessing officer, the proceeding is unsustainable. The Income-tax Officer made a return to the rule nisi on behalf of all the opposite parties and appended to the affidavit the reasonings recorded by the then Income-tax Officer for initiation of the proceeding, the report made in this matter to the Central Board of Direct Taxes and the sanction accorded by the Board. In the return to the rule, reference was made to the correspondence between the Income-tax Officer and the assessee when the regular assessment for the year was taken up by the assessing officer. It may now be stated that the assessee is an ex-Chief Minister of the State. The State Government of Orissa in the year 1968 had appointed Sri Justice Mudholkar, a retired judge of the Supreme Court, to make preliminary enquiries against some political figures of the State including the assessee and subsequently there was a regular commission of inquiry headed by Shri Justice Sarj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-tax Officer in the matter of obtaining sanction, it was stated : " The assessment has already been made on salary income of Rs. 12,635 for the assessment year in question. The income which has escaped assessment, viz., Rs. 2,04,128, requires to be assessed for which action under section 147 is proposed. " In the counter-affidavit itself, there is an admission that when the normal assessment was completed, detailed enquiries had been made ; the Income-tax Officer had obtained information on all the aspects which are now made the basis for reopening of the proceeding. We may now refer to the report of the Income-tax Officer appended to the recording of reasons by him which is a part of the counter-affidavit. According to the Income-tax Officer, a sum of Rs. 2,04,128 has escaped assessment and he has proceeded to determine the same as would appear from paragraph 8 of his aforesaid report in the following way : " Computation of escaped income for the assessment year 1958-59--Income from undisclosed sources : (i) Deposits-- The deposits have been stated in detail in para. 3 above. The deposits in banks by cheque may be treated as monies belonging to the Congress ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Officer in his letter to the Commissioner of Income-tax dated 4th September, 1962 (annexure " 5 "). Therein, it had been stated : " It will thus be seen that in the accounting period 1957-58 relevant to the assessment year 1958-59 which is pending, Dr. Mahatab made a deposit of Rs. 2,63,315.67 in cash and Rs. 28,579.31 by cheques, making a total deposit of Rs. 2,92,594.18 against his returned income of Rs. 12,655.48 ...... Presently we are concerned with the assessment for the year 1958-59, which gets barred this year and subject to Commissioner's approval, I now intend to fix a date of hearing under section 23(2) with a forwarding letter along with a notice under section 22(4) also requesting Dr. Mahatab to meet me with his bank pass book in my office at Puri. In case, the Commissioner so directs, I shall take up this case at Bhubaneswar camp and ask him to explain the source of heavy cash deposits as also explain the discrepancies in the figures of investment as apparent from his bank accounts and those owned by him. On hearing from him and obtaining his explanation in the matter I shall submit a draft assessment order for the Corn- missioner's and/or I.A.C' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is searching inquiry. He instantly showed me the original complaint petition (copy of which is with us) forwarded to him by the hon'ble Minister, Shri Reddy, with his D.O. letter dated 10-10-1960. In the said D.O. to Dr. Mahatab the hon'ble Minister has amongst others said in the following words : ' It seems somebody has started an invidious campaign against you.' From the facts stated above, I am inclined to accept the explanation dated 22-12-1962 of Dr. Mahatab ........ " In his explanation referred to above, the assessee had stated : " A new house has been constructed by me in the new capital at a cost of Rs. 50,000 approximately. The investment in the building has been made partly by loan of about Rs. 20,000 from the Government of Orissa and partly from my income from agricultural land and also I have not yet been able to clear some of the private loans on account of the construction of this house. " It cannot thus be said that the matter of investment and the renovation of the building was not known to the Income-tax Officer. So far as the deposit of Rs. 15, 000 in the postal savings bank is concerned, reference to it has been made in the assessee's explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the year in question and, therefore, this could not be a material for the conclusion that the assessment required reopening. Section 147 of the Act provides : " 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 153, assess or reassess such income or recompute the loss or the depreciation allowance, as the case may be, for the assessment year concerned (hereafter in sections 148 to 153 referred to as the relevant assessment year) ....... " As we have already indicated, it is the definite stand of the revenue that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r otherwise, the assessing authority has to draw inferences as regards certain other facts ; and ultimately, from the primary facts and the further facts inferred from them, the authority has to draw the proper legal inferences, and ascertain on a correct interpretation of the taxing enactment, the proper tax leviable." (Underlining is ours). The case before us is one where the facts are slightly different from the leading cases on this topic. Here, all the materials were before the revenue authorities and with reference to them investigation had once been made and on the assessee's explanation being accepted, assessment was completed. This seems to be a case where, on change of opinion, the Income-tax Officer has tried to reopen the assessment. It is not a case of any new material which was not before the Income-tax Officer on the earlier occasion. In the case of Gemini Leather Stores v. Income-tax Officer [1975] 100 ITR 1 (SC), where while making a best judgment assessment, the Income-tax Officer had discovered certain transactions evidenced by the drafts which the assessee had not disclosed. In spite of this discovery and the knowledge of all the material facts, the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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