MOOL CHAND RASTOGI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) HEARD . These three reference applications relate to the asst. yrs. 1959-60 to 1961-62. Pursuant to directions given by this Court in IT Case Nos. 142, 143 and 164 of 1976, following questions have been referred for opinion of this Court:

(2.) BACKGROUND facts as enumerated in the statement of case are as follows : Assessee, an individual at the relevant point of time, was dealing in purchase and sale of glass bottles, tin and caps. Original assessments for these years were completed by the ITO on 4th Oct., 1960, 25th Aug., 1961 and 25th Sept., 1963. In the course of assessment proceedings for the asst. yr. 1962-63, it was revealed that certain deposits shown in the name of wife and minor children of the assessee during the accounting years relevant to the asst. yrs. 1958-59 to 1961-62 had escaped assessment and the assessee failed to disclose all the facts fully and truly. The ITO has recorded reasons for all the three years on the basis of which he formed a belief that the assessee had failed to disclose all the facts truly and fully and he sought approval of the CIT to reopen the assessments under S. 147(a) of the IT Act, 1961 ('the Act'). For the reasons recorded, names of the depositors were given and it was stated that depositors were mere relations and no satisfactory explanation was offered to prove the source of deposits. The CIT recorded necessary approval to reopen the assessments. Accordingly, notices were issued under S. 148 to the assessee. The assessee objected to the reopening the assessments. Objections were overruled and reassessments were made including the deposits which had escaped assessment as the assessee's income from undisclosed sources. The assessee filed appeals which were heard by the AAC. For all the four years, appeals were disposed of by a consolidated order dt. 22nd June, 1971. The AAC confirmed the action of the AO. Matter was further carried in appeal before the Tribunal. Main ground of appeal was that there was no enquiry conducted by the ITO before reopening the assessments. There was mere change of opinion. Stand of the Revenue was that enquiry had been made before recording reasons and such enquiry revealed that certain deposits had been made in the name of wife and minor children which had escaped assessment as the assessee had not fully and truly disclosed his income. The escapement of income was discovered by the AO in the course of proceedings for 1962-63 when statement of one of the depositors Smt. Vidya Wati was recorded on 11th Nov., 1964 and much thereafter on 6th Feb., 1967 the CIT accorded approval for reopening the assessments. The Tribunal found no merit in the appeal so far as the issue in question was concerned. A prayer was made for a reference under S. 256, which was turned down. Present reference was made pursuant to the order as aforesaid.