COMMISSIONER OF INCOME TAX Vs. T R RAJAKUMARI

JUDGEMENT

(1.) THE assessee is a cine actress. During the accounting year relevant to the assessment year 1952-53, the assessee received a sum of Rs. 36, 000 from Messrs. Jupiter Pictures. THE assessee had not included this amount in her return of income for that year and, therefore, the original assessment for that year had been completed on June 30, 1955, without including the said amount in her income. After the completion of the original assessment, the Income-tax Officer had received information that the said amount represented her income and, therefore, he issued a notice dated October 9, 1957, proposing to reopen the assessment under section 34 of the Indian Income-tax Act, 1922. In answer to the said notice the assessee contended that the amount in question was only a loan taken by her from Jupiter Pictures and that it had to be repaid by adjustment when her work with Jupiter Pictures was completed. THE Income-tax Officer did not accept the said contention and, therefore, included the said amount in her assessment THE assessee, therefore, filed a revision petition before the Commissioner of Income-tax against the said reassessment order. In those revision proceedings it came to light that the said sum of Rs. 36, 000 received by the assessee in the accounting year relevant for the assessment year 1952-53, was in fact adjusted by the successors of Jupiter Pictures, namely, Manohara Pictures, on August 31, 1954, that is, during the accounting year relevant to the assessment year 1955-56.

(2.) THE Commissioner issued a notice dated February 8, 1963, to the assessee asking the assessee whether she was agreeable to the inclusion of the sum of Rs. 36, 000 in her assessment for the year 1955-56. In reply to the said notice the assessee expressed her willingness to have the said sum included in her assessment for 1955-56, subject to the condition that the said amount was deleted from the assessment for the year 1952-53 and that there should be no levy of penalty on her. THE Commissioner thereupon passed an order dated March 30, 1963, under section 33A(2) of the Act directing the Income-tax Officer to delete the sum Rs. 36, 000 from her assessment for the year 1952-53, and to include the same in her assessment for 1955-56However, the original assessment for 1955-56 had been completed on March 29, 1957. In the return submitted by the assessee for that year the assessee had not included the said sum of Rs. 36, 000 even though the adjustment of the same towards her remuneration came to be made on August 31, 1954. THErefore, in pursuance of the direction of the Commissioner of Income-tax, the Income-tax Officer reopened the assessment for the year 1955-56 by issuing a notice under section 148 of the Act calling upon her to file a revised return.

(3.) THE condition precedent for initiating proceedings under the said sub-section is the issue of a notice under section 148. Section 148(2) specifically provides that the Income-tax Officer shall, before issuing any notice under this section, record his reasons for doing so. THEre cannot be any dispute that the provisions of section 148 is mandatory. In this case, apart from the communication which the Income-tax Officer wrote to the Commissioner requiring his sanction under section 151, there is no separate record where the Income-tax Officer has set out his reasons for initiating proceedings under section 147(a). In the said communication the only reason given for initiating proceedings under section 147(a) is the direction of the Commissioner and there is no indication that the Income-tax Officer had entertained any belief that by reason of omission or failure on the part of the assessee to disclose fully and truly all material facts, the income chargeable to tax has escaped assessment. In this communication the Income-tax Officer has only stated that he is initiating proceedings under section 147(a) in view of the direction of the Commissioner. He has nowhere stated that he had entertained a belief that income has escaped assessment due to the non-disclosure by the assessee of material facts for the assessment year, 1955-56. We are not inclined to agree with the contention of the learned counsel for the revenue that the recording of reasons contemplated by section 148(2) and section 151 need not relate to the matters set out in section 147(a) and that the Income-tax Officer having given the direction of the Commissioner as a reason for initiating the proceedings it should be taken to be a sufficient compliance with the provisions of sections 148(2) and 151. THE learned counsel for the revenue is right when he says that the sufficiency of the reasons recorded by the Income-tax Officer is not a matter for the court to consider. But whether the reasons given were relevent to sustain a belief that income has escaped assessment as a result of the non-disclosure of income by the assessee has to be considered by the court when the jurisdiction of the Income-tax Officer to initiate proceedings under section 147 is questioned.