Amiya Kumar Mookerji, J.
1. The petitioner is a company incorporated under the Indian Companies Act and is the owner of the colliery kndwn as Selected Samla Colliery situated at Pandaveswar in Ranigunj area in the district of Burdwan. The petitioner in this rule challenges a notice issued under Section 148 of the Income-tax Act, 1961, dated 12th March, 1970, and 6th November, 1970, for the assessment years 1961-62, 1963-64 and 1965-66, issued by the respondent No. 1, the Income-tax Officer, 'G' Ward, Companies Dist. II, Calcutta, on the ground that these notices are illegal, invalid and inoperative because the condition precedent for the assumption of jurisdiction under Section 147(a) of the said Act did not exist as the said respondent No. 1 was purporting to reopen the assessments on the basis of certain information in the form of a report of the underground measurement of the colliery by the mining officials of the Government of West Bengal.
2. For the assessment year 1961-62, the petitioner filed its return of income and the assessment was completed under Section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ' the Act '). The petitioner preferred an appeal against the said order of assessment before the Appellate Assistant Commissioner of Income-tax and, on further appeal to the Tribunal, the Tribunal passed its order dated 26th March, 1970,
3. For the assessment year 1963-64, the Income-tax Officer disallowed certain sum. Against the order of assessment the petitioner preferred an appeal and the petitioner was given certain relief by the Appellate Assistant Commissioner, by its order dated the 13th June, 1969.
4. For the assessment year 1965-66, the petitioner, however, could not file its return on account of a dispute between the directors of the company. Therefore, assessment for the said year was made under Section 44 of the Act. Being aggrieved by the said assessment, the petitioner took an appeal before the Appellate Assistant Commissioner. By an order dated the 21st April, the Appellate Assistant Commissioner disposed of the said appeal affirming the estimation of the Income-tax Officer. The petitioner, being aggrieved by the said order of the Appellate Assistant Commissioner, preferred a further appeal before the Appellate Tribunal. The appeal is still pending. Thereupon, on 24th March and 10th November, 1970, the petitioner received three notices dated March 12, 1970, and November 6, 1970, issued Hinder Section 148 of the Act for the assessment years 1961-62, 1963-64 and 1965-66, by the respondent No. 1, whereby the petitioner was called upon to submit a return of income for the said assessment years as the said respondent No. 1 had reason to believe that the petitioner's income chargeable to tax for the said assessment years had escaped assessment within the meaing of Section 147 of the said Act. On the 20th April, 1970, and 7th December, 1970, the petitioner filed return of income for the said assessment years in response to the said notices issued under Section 148 of the Act under protest as no income had escaped assessment due to omission or failure on the petitioner's part to disclose fully and truly all primary and relevant facts. Subsequently, it was ascertained that those notices under Section 148 of the Act had been issued as a result of the report of the underground measurement made by the mining officials of the Government of West Bengal, as disclosed by the respondent No. 1, in his letter dated 27th February, 1970. The petitioner being aggrieved by the said notices moved this court in an application under Article 226 of the Constitution and obtained the present rule.
5. Mr. Pranab Pal, appearing on behalf of the petitioner, contended that the notices had been issued and the jurisdiction had been assumed by the Income-tax Officer in consequence of the alleged report of the underground measurement by the mining officials of the Government of West Bengal as stated in the letter dated 27th February, 1970. The alleged report of the said underground measurement by the mining officials must be regarded as an information in consequence of which the respondent No. 1 assumed jurisdiction under Section 148 of the Act, and as four years have expired from the relevant assessment years, the proceedings under Section 148 of the said Act were illegal, invalid and without jurisdiction.
6. It appears that on the 14th May, 1969, the Deputy Assistant Coal Controller informed the Commissioner of Income-tax, with regard to the discrepancy in the reported figure of raising and surface stocks at Selected Samla Colliery. A copy of the letter dated January 30, 1969, from the Chief Mining Officer, Government of West Bengal, Asansol, was enclosed with the said letter. The said letter reads as follows :
Government of India,
Ministry of Petro-Chemicals, Mines and Metals.
(Deptt. of Mines and Metals),
Officer of the Coal Controller,
1, Council House Street, Calcutta,
the 14th May, 1969.
Sub. : Discrepancy in the reported figure of raisings and surface
stocks at Selected Samla Colliery.
I am directed to enclose a copy of the report of the joint inspection carried out on January 9, 1967, and January 10, 1967, by the Assistant Coal Supdt., Ranigunj Estate Branch, Directorate of Mines, and Minerals, Government of West Bengal, Calcutta, the contents of which are self-explanatory. This information is conveyed to you for such action as you may deem necessary.
(H. B. Mitra)
Dy. Asst. Coal Controller.
Encl.: as above.
Copy of letter No. 285-95/CMP dated January 30, 1969, from Chief Mining Officer, Government of West Bengal, Asansol, to the Coal Supdt, Dhanbad, and others.
Sub.: Under-reporting of coal raising and shortage of surface coal stock by Selected Samla Colliery Owner, M/s. Selected Dalur-band Coal Co. P. Ltd., 137, Cotton Street, Calcutta.
A joint inspection was made in the colliery mentioned above on January 9, 1967, and January 10, 1967, by Sri K. S. Gupta, Asst. Coal Superintendent, Ranigunj Division, and Sri Suniti Kumar Sarkar, Mining Officer of this Mining Estates Branch, Directorate of Mines and Minerals.
As a result of underground measurement it was revealed that the Colliery Co. under-reported the raising figure to the following extent during the period from 1956 to January 9, 1967.
Gr. I: 1,36,390 m.t.
Shortage of surface coal stock was also detected to the extent of 3.87 m.t. of Gr. I coal on January 9, 1967.
It has been decided to charge royalty on the aforesaid quantity of coal by the Government of West Bengal.
This is for your information and necessary action.
Thereupon the Income-tax Officer recorded his reasons :
Information received from the Chief Mining Officer, West Bengal, says that it was found as a result of underground measurement of the assessee's colliery on January 9, 1967, and January 10, 1967, that coal raising by 1,36,390 m.t. of Gr. I coal. Raising shown by the assessee during the period 1955 to 1966 is 9,54,489 m.t., raising under-reported works out at 14.3% of raising shown. Raising under-reported in 1962 C.Yr. (corresponding to 1963-64 asstt. yr.) is estimated by me on the basis of 14.3 per cent. of raising disclosed by the assessee at 19,415 m.t. Rs. 4,20,141 being value of 19,415 m,t. of coal @ average sale rate of Rs. 21.74 per m.t. represents, I have reason to believe, income which escaped assessment for failure on the part of the assessee in disclosing all material facts truly and fully that was necessary for their assessment.
(S. K. Bhattacharyya)
I.T.O., ' G ' Ward, Comp. Distt. II, Calcutta. '
7. The petitioner has all along pleaded and it is also not denied or disputed by the respondent that before the receipt of the said report, the petitioner had no knowledge of this fact about under-reporting of coal raisings by the petitioner at the time of original assessment, and in affidavit-in-opposition, however, it is stated that non-disclosure on the part of petitioner of all material facts regarding quantity of coal actually raised by it at the time of original assessment and that the said fact of non-disclosure was only brought to light by the detection of under-reporting of coal raisings as a result of the investigation held by the mining officials of the Government of West Bengal. In the case of S. Narayanappa v. Commissioner of Income-tax : 63ITR219(SC) , the Supreme Court observed that the expression ' reason to believe ' does not mean a purely subjective satisfaction on the part of the Income-tax Officer. The belief must be held in good faith. It cannot be merely a pretence. It is open to the court to examine whether reasons for the belief have a rational connection or a relevant bearing to the application of the belief or extraneous or irrelevant to the purpose of the section. The Income-tax Officer would be acting without jurisdiction if the reasons for his belief that conditions are satisfied does not exist or is not material or relevant to the belief required by the section.
8. The expression ' omission or failure to disclose fully and truly all material facts '--refer only to facts within the knowledge of the assessee at the material time. A person cannot be said to have omitted or failed to disclose something when of such thing he had no knowledge. Nor can a person be expected to disclose' a thing or said to have failed to disclose it, unless it is a matter which he knows (vide P. R. Mukherjee v. Commissioner of Income-tax : 30ITR535(Cal) . There has been no failure on the part of the assessee to make a return of his income, because he had no knowledge at the material time that there was under-reporting of raising of coal which fact has been revealed after 11 years of the assessment from the report of the mining authorities. The Income-tax Officer cannot take any action under Section 147(a) except under Clause (b) of Section 147 where the Income-tax Officer has in consequence of information in his possession reason to believe that income has escaped assessment. From the facts disclosed in the instant case, it leads to the only conclusion that the Income-tax Officer in consequence of information in his possession received from the Commissioner of Income-tax has reason to believe that income of the petitioner has escaped assessment in respect of the aforesaid years.
9. In the instant case, it appears that the information was derived by the Income-tax Officer frbm an extraneous source concerning the facts relating to the matter of assessment. Nowhere it is stated in the affidavit-in-opposition that the Income-tax Officer had made an independent enquiry. He even waited to start the proceeding until the result of the petitioner's representation against the report was disposed of by the mining authorities. He acted merely upon the information or the report received from the mining authorities and solely relying upon that information he issued notice under Section 147(a), Therefore, in my view, proceedings under Section 147(a) of the Income-tax Act, 1961, could not be initiated against the petitioner. Accordingly, the impugned notices must be cancelled by a writ of mandamus.
10. In the result this rule is made absolute. The impugned notices are quashed.
11. Issue a writ o( mandamus.
12. Let the copy of letter dated January 30, 1969, and recorded reasons of the Income-tax Officer be kept on records and marked as exhibit ' H '.
13. If any assessments have been made in pursuance of the impugned notices, those assessment orders will also be quashed. Let the operation of the order be stayed for a fortnight.