R.N. Pyne, J.
1. In this appeal, which is directed against a judgment and order of Sabyasachi Mukharji J., dated February 6, 1973, dismissing the appellant's application under Article 226 of the Constitution, we are concerned with the question regarding the validity of a notice dated 15th March, 1969, under Section 148 of the I.T. Act, 1961.
2. In the court of the first instance the appellant (who was the petitioner there) challenged the said notice on two grounds. Firstly, while the heading of the notice showed that it was from the ITO, Special Circle-VII, Comp. Dist. IV, the notice was signed by the ITO, Special Circle, District IV, and, therefore, it was defective. Secondly, on the usual ground, i.e., there was no material to indicate the formation of the requisite belief for taking action under Section 147(a) of the Act. The learned trial judge overruled both the contentions of the appellant and held that the notice was valid. It appears that the learned judge in coming to his above decision relied on the recorded reasons set out in para. 13 of the affidavit of one Gurupada Dasgupta affirmed on the 22nd August, 1970, as also on a letter dated 15th February, 1969, which was before the ITO at the time of the said recorded reasons. As the said letter is fully set out in the judgment under appeal it is not necessary to recite the same herein.
3. The only point urged on behalf of the appellant in this appeal before us is that there was no material for the formation of the requisite belief for taking action under Section 147(a) of the I.T. Act. Appellant's counsel contended that the letter dated 15th February, 1969, could not be relied upon to justify or support the fact that the ITO had the requisite belief for re-opening the assessment in the instant case because the said letter was neither relied upon by the ITO who recorded the reasons nor it was disclosed in the two affidavits filed by him in the proceedings before the court of first instance. It was further submitted that the said letter was not placedbefore the CIT who granted sanction for reopening of the assessment and, therefore, the Commissioner did not apply his mind to that particular letter as a material for reopening of the assessment. It was also the submission of the counsel that the said letter dated 15th February, 1969, was disclosed before the learned trial judge for the first time at the time of hearing of the case and, therefore, the appellant did not get an opportunity to rebut the same and hence there was a violation of the principles of natural justice. Counsel further submitted that the original assessment order would show that the alleged materials disclosed in the letter were already known to and considered by the ITO who made the original assessment. It was known to the assessing ITO as would appear from the assessment order that the difference in the jute purchase account was due to dhalta allowance of one seer for every 4 maunds purchased at Cossipur centre. Therefore, no new fact was disclosed to or discovered by the ITO for reopening the assessment. According to counsel, there was no omission or failure on the part of the assessee to disclose fully or truly its income. Counsel also submitted that there was no sanction by the Commissioner on the basis of the recorded reasons and the letter. Counsel has relied upon the unreported judgment dated June 16, 1972, in Matter No. 58 of 1970 (Bhawarlal Chandmull v. ITO) and also the unreported judgment dated June 18, 1972, in Appeal No. 234 of 1972 (ITO v. Bhawarlal Chandmull) whereby the said judgment dated June 16, 1972, was upheld. Reliance was also placed on the cases of Ishverlal & Bros. v. N. N. Seth, ITO : 85ITR414(Guj) and Bajranglal Beria v. ITO : 85ITR335(AP) .
4. Counsel for the revenue submitted that there were ample materials for the formation of the requisite belief for taking action under the relevant section mentioned above. Counsel also referred to a letter dated 26th February, 1969 (which formed part of the records of the proceedings of the department), from the ITO to the CIT endorsing a copy of the letter dated 15th February, 1969. Counsel further submitted that though the jute purchases were disclosed to the ITO at the time of original assessment, all the purchases were not fully and truly disclosed as would appear from the said letters. According to counsel, there were ample materials for the formation of the requisite belief for taking action under Section 147(a). Counsel has relied on the case of Kantamani Venkata Narayana & Sons v. First Addl. ITO : 63ITR638(SC) .
5. The said letter dated 26th February, 1969, which was relied upon by the revenue is as follows :
' Office of the Income-tax Officer, Special
Circle VII, Comp. Dr. IV, P-7, Chow-ringhee
No. C. IV/303-M/S. C.VII/52-53. 26th February, 1969.C.I.T., W.B. III., Calcutta(Through I.A.C./Range-XII, Calcutta)Sub : Re-opening of assessment Under Section 147, M/s. Mangilal Bhikamchand--assessment year 1952-53.
6. In this case a search was made and a number of books of accounts and other documents have been seized. On scrutiny of some stock book and statement of stock relevant for the assessment year 1952-53, I find that the assessee did not disclose all his purchases. It appears from some statements of jute purchases and despatch account that the total receipts or purchases during the months of March, 1951, to December, 1951, comes to 29,689 mds., whereas in the final account submitted, the loose jute purchase has been shown as 28,026 mds.
7. From a godown stock register it is seen that the total import or purchase comes to about 34,769 mds. whereas the total purchase of both loose jute and bales has been shown as 30,709 mds. It thus appears that there is a large difference in the jute purchase account. The average purchase price of jute is shown at Rs. 48 per md. It is thus apparent that the assessee has not disclosed all his purchases and the corresponding sales. The total amount of concealment on account of in vestment in such purchases and the corresponding sales is estimated to be much more than a sum of Rs. 1,00,000.
8. A show-cause notice was, therefore, issued to the assessee to explain the difference. A copy of this letter is enclosed for ready reference. The assessee in a letter dated 24-2-69 has not given any definite explanation. On the contrary he has made several baseless allegations against me. The assessees wanted inspection of the documents ; at the same time stated that they are not prepared to appear before me for taking the inspection. A copy of this letter dated 24-2-69 is also enclosed.
9. In the course of assessment for 1962-63, in this case, the assessee admitted that they concealed income. At present they are now trying to deny the admission. The assessee is also avoiding services of notices and letters.
10. In the circumstances stated above, I feel that in the present case income of more than Rs. 1,00,000 has escaped assessment due to failure on the part of the assessee to disclose fully and truly the full particulars necessary for the assessment. I am, therefore, submitting herewith a proposal for reopening of assessment for 1952-53.
(G. P. Dasgupta)
I.T.O., Spl. Cir. VII, Comp. Dt. IV, Cal.
Enclo : Proposal Under Section 147.'
11. The above letter was produced by the revenue at the time of the hearing from the relevant records of the case and inspection thereof was given to the appellant. The above letter should have been disclosed by the revenue in its affidavit filed in the court of first instance but in a writ application with a prayer for writ of certiorari when the entire records of the case are before the court it is open to it to examine such record for doing justice between the parties. As the said letter was not referred to in the court of the first instance, we also allowed the appellant to make its submission on the basis of that letter.
12. The said letter dated 26th February, 1969, shows that the ITO had considered the letter dated 15th February, 1969 (paper book p. 77). Reading the said two letters dated 15th and 26th February, 1969, and the recorded reasons it appears to us that there were materials in the possession of the ITO for the formation of the requisite belief for taking action under Section 147(a) of the I.T. Act, 1961. In the facts and circumstances of this case, it cannot be said that the materials disclosed in the letter dated 15th February, 1969, were disclosed to the ITO who made the assessment for the assessment year 1952-53. The assessment order shows that the assessee disclosed the purchase of jute of 28,025 mds. only which was much below the total purchase as stated in the said letter. Whether the said difference was due to dhalta received by the assessee or not is a fact to be considered and decided at the time of reassessment. At this stage, we are only concerned with the existence of the materials having rational connection with or relevant bearing to the formation of the requisite belief of the ITO.
13. The decisions relied upon by the assessee are distinguishable and are based on the peculiar facts of those cases. Learned judge of the court of first instance in his judgment has also distinguished his earlier decision in Bhawarlal's case (judgment dated June 16, 1972, in Matter No. 58 of 1970).
14. In Kantamani's case : 63ITR638(SC) , the Supreme Court observed thus :
' It is clearly implicit in the terms of Sections 23 and 34 of the Income-tax Act, that the assessee is under a duty to disclose fully and truly material facts necessary for the assessment of the year, and that the duty is not discharged merely by the production of the books of account or other evidence. It is the duty of the assessee to bring to the notice of the Income-tax Officer particular items in the books of account or portions of documents which are relevant. Even if it be assumed that from the books produced, the Income-tax Officer, if he had been circumspect, could have found out the truth, the Income-tax Officer may not on that account be precluded from exercising the power to assess income which had escaped assessment. '
15. Therefore, it appears that the assessee did not make a full and true disclosure before the ITO who made the assessment. On the facts of this case and in view of the recorded reasons and the letters of 15th and 26th February, 1969, we are satisfied that in this case there were materials for the formation of the requisite belief on the part of the ITO for reopening the assessment. In our view, the conditions precedent for taking action under Section 147(a) were satisfied in the instant case. In view of the said letter dated 26th February, 1969, we are also unable to accept the appellant's other contention, viz., sanction was not properly given by the CIT. In our view, the learned judge of the court of first instance came to a correct finding. We respectfully agree with the finding of the learned judge of the court of first instance as also with the reasoning for his finding. In the aforesaid view of the matter, this appeal fails and it is dismissed. There will be no order as to costs.
S.C. Ghose, J.
16. I agree.