Satish Chandra, J.
1. The petitioner challenges the validity of a notice dated 29th March, 1975, issued under Section 148 of the I.T. Act, 1961, proposing to reopen the assessment of the petitioner-company for the year 1970-71. The principal ground of attack was that the ITO had no reason to believe that any part of the income of the petitioner-company had escaped assessment or that there was any failure in submitting true particulars thereof, and hence had no jurisdiction to issue the notice.
2. In the counter-affidavit it has been clarified that while conducting the assessment proceedings for the subsequent year 1972-73, the ITO discovered that personal and household expenses of the directors and their relations were debited to the stores account, basa kharch account, and travelling expenses account of the company. These had escaped notice when the assessment proceedings for the year in question were completed. Thus, the petitioner-company failed to disclose full and true particulars of its income, and hence he had jurisdiction to reopen the assessment.
3. A perusal of the assessment order shows that the ITO disallowed a sum of Rs. 5,500 out of the claimed expenses of Rs. 21,082 under the head of basa kharch account. This order was challenged by the assessee in appeal. The AAC held that the counsel for the appellant had submitted that the basa kharch expenses were mainly in respect of employees of the company who were low paid. The learned counsel had, however, not ruled out the possibility that some constituents of the company might also have been entertained from the mess maintained by the company for its employees. He came to the conclusion that disallowance to the extent of Rs. 5,500 was not excessive.
4. It is thus apparent that the ITO admitted the disallowance at Rs. 5,500on the footing that the mess maintained by the petitioner-company caterednot only to the low-paid employees but also to its constituents. In appeal,this aspect alone was emphasised on behalf of the assessee. The argumentof the counsel for the assessee was that the basa kharch was in respect of themessing of the employees of the company. It is thus apparent that therewas no question either raised or answered in respect of the aspect whetherbasa kharch contained within itself the expenses in relation to the directors'household also. It is obvious that the ITO had not looked into the accountbooks of this basa kharch account in any detail. He only disallowed part ofit on the ground that some constituents of the company might have beenalso entertained.
5. There is no reason to disbelieve when the ITO asserts in his counter-affidavit that while conducting the income-tax proceedings for the subsequent years, the accounts were investigated and it was found that the company had inserted in it household expenses of the directors and their relatives. It cannot be said that in view of this discovery, the belief that some additions may have been done in the previous year, was unreasonable. We are unable to uphold the contention of the petitioner that the ITO had no reason to believe. We are also not satisfied that this was a case where it could be said that the petitioner had disclosed all particulars of its income. It is settled that merely placing the account books on the table of the ITO is not enough to hold that there was complete disclosure of all material facts.
6. The petition has no substance. It is accordingly dismissed with costs.