SRIKRISHNA PRIVATE LIMITED Vs. I T O CALCUTTA

JUDGEMENT

(1.) CIVIL APPEAL NO. 1562 OF 1977:

(2.) In the return filed for the Assessment Year 1959-60, the assessee had shown certain hundi loans totalling Rs.8,53,298/- said to have been taken from a number of persons. The Income Tax Officer accepted the averment and made the assessment. During the assessment proceedings for the succeeding year, 1960-61, the assessee again showed hundi loans in a sum of more than Rupees seventeen lakhs. The Income Tax Officer enquired into the truth of the averment and found that many of them were bogus claims while some of the alleged lenders were found to be near relations of directors or principal shareholders of the assessee. The Income Tax Officer held that out of the hundi loans of more than Rupees seventeen lakhs claimed by the assessee, loans totalling Rs.11,15,275/- were not established to be genuine loans and accordingly added that amount as income from undisclosed sources. Having regard to the similarity of the claims and the persons who are said to have advanced the said unsecured hundi loans during the accounting year relevant to the Assessment Year 1959-60, the Income tax Officer issued a notice under Section 148 calling upon the assessee to file a revised return for the Assessment Year 1959-60. Immediately, upon receiving the said notice, the assessee approached the Calcutta High Court by way of a writ petition questioning the validity of the notice on the grounds that the Income Tax Officer had no reasonable ground to believe that income chargeable to tax has escaped assessment for the said year on account of any omission or failure on his part to make a full and true disclosure of all material facts. The writ petition was allowed by a learned single Judge, as stated above, whose decision has been reversed in appeal by the Division Bench. This Court entertained the Special Leave Petition filed by the assessee and granted leave on July 26, 1977. This Court, however, did not stay the proceedings pursuant to the impugned notice. It directed that the Income Tax Officer may proceed to complete the assessment proceedings but will not issue a demand notice. The Income Tax Officer has accordingly completed the re-assessment.

(3.) Sections 147, 148 and 151, as they stood at the relevant time, read as follows: