BISHAMBER NATH RAM SARUP Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THIS writ petition challenges the notice dt. 9th March, 1973 issued by Respondent No. 1, the ITO District VI(13) new Delhi, on the ground that income chargeable to tax for the asst. yr. 1961-62 has escaped assessment within the meaning of s. 147(a) of the IT Act, 1961 (to be called "the Act"). A brief reference to the facts a leading to this notice by respondent No. 1 would be helpful in appreciating the points raised. It appears that some time in September, 1967 some account books alleged to be duplicate books of account came to the possession of CB1 which were later on made available to the IT Department. The ITO issued a notice on 25th March, 1970 under s. 148 of the Act on the ground that a certain income for the asst. yr. 1961-62 had escaped assessment. In response to the notice under s. 148 a return declaring the net income of Rs. 37,591 was filed. THIS is the amount at which the assessee had been assessed before the said notice. On the date of hearing no one appeared on behalf of the assessee. The ITO by his order of 19th March, 1974 found the assessee having had income from undisclosed sources and estimated it at Rs. 45,000. Later on, however, in response to the assessee moving an application under s. 146 of the Act, the order of 19th March, 1974 was cancelled and proceedings for assessment were started do novo.

(2.) THE ITO by his order of 23rd Oct., 1975 referred to the unexplained cash credits appearing in the books and also noted that despite the opportunity given to the assessee he had failed to prove the genuineness of the accounts. He was also of the view that the duplicate books maintained by the assessee in the relevant period 1961-62 showed that the assessee had interest income which was not mentioned in the return of income. He, therefore, added an income of Rs. 1,24,610 on account of the various unexplained cash credits and another income of Rs. 32,621 as income from interest from the duplicate books of account perused by the Department. Thus, adding these two undisclosed amounts to Rs. 36,591 as filed in the return the assessee, total income of Rs. 1,93,822 was assessed by the ITO. THE assessee thereafter filed appeal before the AAC. His frontal attack was that the notice issued under s. 148 was invalid as the same had been issued without the prior permission of the Commr. as required by s. 151(2) of the Act. As the AAC found from the record that no permission had been given by the Commr. the notice issued on 25th March, 1970 by the ITO under s. 148 was held to be without jurisdiction and the proceedings initiated in pursuance of it under s. 147(a) obviously had to be quashed and he did so by his order dt. 10th March, 1977. It is relevant to note that the AAC allowed the appeal only on the ground of lack of permission from the Commr. under s. 16(2) of the Act. It was, thereafter, that the present impugned notice had been issued on 13th March, 1978. THE notice specifically mentions that it had been issued after the necessary satisfaction of the CBDT.