Skip to content


Commissioner of Income-tax and anr. Vs. Punam Chand Banthia - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberAppeal No. 243 of 1973
Judge
Reported in[1978]112ITR727(Cal)
ActsIncome Tax Act, 1961 - Sections 139, 147, 148 and 153(2)
AppellantCommissioner of Income-tax and anr.
RespondentPunam Chand Banthia
Appellant AdvocateSuhas Sen, Adv.
Respondent AdvocateTebriwal and ;Pugalia, Advs.
Cases ReferredC) and Lalji Haridas v. Income
Excerpt:
- .....the income of the respondent for the said assessment year 1962-63 and by the above mentioned notice issued under section 148 of the act required the respondent to deliver to the appellant no. 2 within 30 days from the date of service of the said notice a return in the prescribed form of the respondent's income assessable for the assessment year 1962-63, the respondent after the receipt of the notice by a letter sent to the appellant no. 2 denied the allegations contained in the said notice and without prejudice to the respondent's rights filed a return on the basis of the original return. no further action was taken by the appellant no. 2 until 1st february, 1971. on that date by a notice issued under section 22(1)/139 the respondent was called upon to produce books of accounts and.....
Judgment:

Ghose, J.

1. This appeal is directed against the judgment and order passed by T. K. BASU J. on 19th January, 1973, whereby his Lordship was pleased to make a rule nisi absolute and directed issue of a writ in the nature of certiorari for quashing, inter alia, a notice dated 25th January, 1967, issued under Section 148 of the Income-tax Act, 1961, as well as an order of assessment. The facts leading to the making of the said application under Article 226 by the respondent are set out hereunder.

2. The respondent is an assessee and is being assessed as an individual. The respondent was duly assessed for the assessment years 1954-55 to 1966-67. On 27th January, 1967, the respondent was served with a notice under Section 148 of the Income-tax Act, 1961, issued by the appellant No. 2. The said notice was dated 25th January, 1967. In the said notice it was alleged that the appellant No. 2 had reason to believe that the respondent's income chargeable to tax for the assessment year 1962-63 appeared to have escaped assessment within the meaning of Section 147 of the Income-tax Act, 1961. On the basis of the said allegation the appellant No. 2 intended to reassess the income of the respondent for the said assessment year 1962-63 and by the above mentioned notice issued under Section 148 of the Act required the respondent to deliver to the appellant No. 2 within 30 days from the date of service of the said notice a return in the prescribed form of the respondent's income assessable for the assessment year 1962-63, The respondent after the receipt of the notice by a letter sent to the appellant No. 2 denied the allegations contained in the said notice and without prejudice to the respondent's rights filed a return on the basis of the original return. No further action was taken by the appellant No. 2 until 1st February, 1971. On that date by a notice issued under Section 22(1)/139 the respondent was called upon to produce books of accounts and documents specified in the said notice. The said notice was dated February 1, 1971, and was sought to be quashed and/or set aside in the instant writ proceedings. In the affidavit filed by Anand Singh, the Income-tax Officer concerned, it was stated as follows :

'I say that after completion of the original assessment for the assessment year 1962-63 information was received from the assessing Income-tax Officer of Smt. Moni Devi Banthia, the wife of the petitioner, that her source of investment with Smt. Ratan Kumari Sethia to the tune of Rs. 40,000 during the year relevant to the assessment year 1962-63 could not be explained by her.'

3. It was contended on behalf of the respondent before the court of first instance that inasmuch as the impugned notice under Section 148 was issued in exercise of powers under Section 147(1)(b) of the Act the said notice was issued beyond the prescribed period of limitation and as such no proceeding could be initiated or continued by virtue of the said impugned notice. T. K Basu J. upheld the contention of the respondent-petitioner in the court of first instance and quashed the said notice and made the rule nisi absolute as mentioned hereinbefore. Before us, in the appeal, it was contended on behalf of the appellants by Mr. Suhas Sen that power under Section 147(1)(a) could be exercised even on the basis of information received if such information be material which leads the Income-tax Officer to come to the belief that the income assessable for a particular assessment year escaped assessment on account of omission or failure of the assessee to make a return or to disclose fully and truly all material facts necessary for his assessment for that year. In the instant case the Income-tax Officer concerned issued the impugned notice on the basis of information received from another Income-tax Officer who had been assessing the income of the wife of the respondent. The said Income-tax Officer assessing the wife of the respondent sent a report, inter alia, containing a statement that the sum of Rs. 40,000 which appears to have been lent by the wife to one Ratan Kumari Sethia could not be satisfactorily explained by her in her assessment proceedings.

4. Mr. Sen very fairly handed over to us the file containing the orders of the Income-tax Officer concerned who directed the issue of the notice under Section 148. In the order sheet the following order appears :

'Seen ITO 'B' Ward, 24-Pgs's, letter dt. 5-1-67. Income has escaped assmt. Issue notice under Section 148.'

From a perusal of the above mentioned order in the order sheet directing issue of notice under Section 148 of the Act it appears that on the receipt of the information from the assessing Income-tax Officer of the wife of the respondent the Income-tax Officer concerned recorded the above-mentioned order. The order clearly shows that the Income-tax Officer did not apply his mind to the facts of the case: nor did he come to the conclusion that the income assessable for the said assessment year of the assessee escapedassessment on account of the omission or failure of the assessee to disclose fully and truly all material facts necessary for his assessment for that year. The Income-tax Officer concerned merely recorded the information received and on the basis of such information directed the issue of the notice under Section 148 after mechanically recording that income escaped assessment. For the reasons aforesaid it appears to us that the notice was issued under Section 148 on the basis of the information received as mentioned hereinbefore under Section 147(1)(b) of the Act. In that view of the matter, in our opinion, Section 153(2)(b)(ii) of the Act applies to the facts and circumstances of this case. The said Section 153 is set out hereunder:

'153. (1) No order of assessment shall be made under Section 143 or Section 144 at any time after-

(a) the expiry of-

(i) four years from the end of the assessment year in which the income was first assessable, where such assessment year is an assessment year commencing on or before the 1st day of April, 1967 ;

(ii) three years from the end of the assessment year in which the income was first assessable, where such assessment year is the assessment year commencing on the 1st day of April, 1968 ;

(iii) two years from the end of the assessment year in which the income was first assessable, where such assessment year is an assessment year commencing on or after the 1st day of April, 1969 ; or

(b) the expiry of eight years from the end of the assessment year in which the income was first assessable, in a case falling within Clause (c), Sub-section (1) of Section 271 ; or

(c) the expiry of one year from the date of the filing of a return or a revised return under Sub-section (4) or Sub-section (5) of Section 139, whichever is latest.

(2) No order of assessment, reassessment or recomputation shall be made under Section 147-

(a) where the assessment, reassessment or recomputation is to be made under Clause (a) of that section, after the expiry of four years from the end of the assessment year in which the notice under Section 148 was served;

(b) where the assessment, reassessment or recomputation is to be made under Clause (b) of that section, after-

(i) the expiry of four years from the end of the assessment year in which the income was first assessable, or

(ii) the expiry of one year from the date of service of the notice tinder Section 148, whichever is later.'

5. In the instant case a notice was served on or about 25th January, 1967, under Section 148 of the Act. Thereafter, the Income-tax Officerserved another notice bearing G.I. No. IV(1)/719-B/E dated February 1, 1971, under Section 139 of the Act requiring the respondent to produce or cause to be produced at his office at No. 40, Strand Road, Calcutta 1, on 9th February, 1971, at 11.30 A.M. accounts and documents mentioned on the reverse of the notice, viz., books of accounts, bank pass book and other related papers. This notice was served about 4 years after the service of the notice under Section 148 of the Act and no assessment or reassessment or recomputation could be made under Section 147 where the assessment, reassessment or recomputation is to be made under Clause (b) of that section after the expiry of one year from the date of service of the notice under Section 148. It appears that this has clearly been the case in the instant matter. For the reasons aforesaid the appellants could not proceed with the reassessment as they purported to do by virtue of the notice dated 1st February, 1971.

6. For the reasons stated hereinabove, we are of the view that there is no merit in the appeal. The appeal must fail and is hereby dismissed. There shall, however, be no order as to costs.

7. In view of the conclusion arrived at by us in this matter it is not necessary for us to deal with the cases cited by Mr. Sen from the Bar, viz., Young v. Duthie [1965] 45 TC 624 , Lalji Haridas v. R. H. Bhatt : [1965]55ITR415(SC) and Lalji Haridas v. Income-tax Officer : [1961]43ITR387(SC) .

8. There shall be a stay of operation of the order for eight weeks. Theinterim order passed by the court of first instance shall continue for anothereight weeks.

R.N. Pyne, J.

9. I agree.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //