TMI Blog1975 (8) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... tice was issued beyond the period of four years from the end of the relevant assessment year the said notice must have been issued under clause (a) to section 147 of the Income-tax Act, 1961. The provisions of the said section are well known and the material part of the said section provides as follows : " 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had lost its books of accounts and connected bills, vouchers, etc., in the hands of its ex-employee who had stolen and destroyed them. Thus, I say the assessment in the instant case was completed under section 23(3) of the Indian Income-tax Act, 1922, without reference to the books of accounts and documents. I say that subsequently a search was duly conducted on February 10, 1966, and as per the seizure list the following books of accounts and documents relating to the assessment year 1959-60 were discovered in the assessee's premises : --------------------------------------------------------------------------------------------------------------------------------------------------- Premises where the books Particulars of Sl. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 1958-59, which is relevant for the assessment year 1959-60, were in the possession of the assessee and by not producing them during the course of assessment proceedings and by making a wrong statement that the books of accounts were stolen and destroyed, the assessee's income had escaped assessment or had been under-assessed. I say further that the balance-sheet and profit and loss account for the said accounting period ending March 31, 1959, as submitted by the auditor and chartered accountant was based on a trial balance which was prepared by the company and the auditor could not verify the said trial balance with the relevant books of accounts, vouchers and documents, the latter being not available at any point of time to the auditor. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorised representative appeared before the assessing Income-tax Officer and stated that the petitioner had lost its books of account because its ex-employee had stolen the books of accounts and had destroyed them and action was taken against the said ex-employee by the authority of the petitioner-company. In support of the above statement evidence was produced relating to suits filed against the said employee. It was further stated by the petitioner in the said paragraph 2 that the petitioner had prepared an audited balance-sheet and profit and loss account on the basis of the books of account prepared by the petitioner from the evidence, memos, bank accounts, etc. Therefore, it appears that the assessee's case was that the assessee's e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n under-assessed. Therefore, there must be material for the formation of the belief that income has escaped assessment. Clause (a) stipulates further that that conclusion must be based upon a further condition, that is to say, failure or omission on the part of the assessee to disclose fully or truly at the relevant time all material facts. It has been reiterated by the Supreme Court on occasions more than once that the belief must be held in good faith. Reliance in this connection may be placed on the observations of the Supreme Court in the case of Sheo Nath Singh v. Appellate Assistant Commissioner of Income-tax [1971] 82 ITR 147 (SC) and the observations appearing at page 153 of the report, where the Supreme Court reiterated that the be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fy the conclusion or belief that there has been an escapement of income. In this case I find no basis for that conclusion. Furthermore, it is not clear whether the Income-tax Officer had formed the belief that income had escaped assessment. What he has stated in fact was that had the books of accounts been disclosed, a larger income would have been found out. That is not, in my opinion, holding a belief in terms of clause (a) to section 147 of the Income-tax Act, 1961. In the premises, I am of opinion that the condition precedent for the issuance of the notice is not fulfilled in the instant case. The notice is, therefore, quashed and set aside. The rule is made absolute to the extent indicated above. If any assessment has been made in pu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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