ELGIN MILLS COMPANY LIMITED Vs. INSPECTING ASSISTANT COMMISSIONER

JUDGEMENT

(1.) THE petitioner, the Elgin Mills Co. Ltd., Kanpur, is questioning the validity of a notice dated March 14, 1980, issued by the respondent (the Inspecting Assistant Commissioner of Income-tax (Assessment) 'D' Range, Kanpur), under Section 148 of the Income-tax Act, 1961.

(2.) THE impugned notice is in the prescribed pro forma. Except saying that the Income-tax Officer proposes to reopen the assessment for the year 1976-77 inasmuch as he has reasonable grounds to believe that income assessable to tax has escaped assessment, the notice does not mention or contain any facts. Soon after receiving this notice, the petitioner approached this court by way of this writ petition on April 15, 1980. It was admitted on April 16, 1980, and on the stay petition it was directed that the petitioner should file his return in response to the impugned notice and the Income-tax Officer may also continue the assessment proceedings but shall not sign the assessment order. Counsel for the Revenue was given six weeks' time for filing a counter-affidavit. THE writ petition came up for hearing before us in the year 1991. After hearing the matter for some time, we thought it appropriate that the respondents be given a further opportunity of filing a counter or of producing the record and, accordingly, adjourned the matter. THE writ petition again came up on (sic). THE respondents neither filed the counter nor did they produce the record. Since the matter is eleven years old, we did not think it appropriate to adjourn the matter further. Accordingly, we heard learned counsel for the petitioner as well as learned standing counsel for the Revenue.

(3.) THIS note constitutes the basis for the impugned notice issued by the respondent under Section 148. Soon after receiving the impugned notice, the petitioner addressed a letter dated March 31, 1980, to the respondent stating that the impugned notice does not contain any reasons or grounds for which the assessment is sought to be reopened and asserting further that none of the grounds relevant for reopening of the assessment mentioned in either of the two clauses in Section 147 are attracted in this case. The representative of the petitioner also personally met the respondents. The respondents informed the petitioner's representative that he proposes to include the aforesaid amount of Rs. 51,61,166 in the income of the petitioner-company in the assessment year 1976-77 under Section 41(1) of the Act. The petitioner's representative was also apprised of the fact that action is sought to be taken under Clause (b) of Section 147. Subsequently, the petitioner received a letter dated April 8, 1980, from the respondents stating merely that he has initiated the proceedings under Clause (b) of Section 147 but without giving or setting out the reasons on the basis of which he assumed the jurisdiction in the matter. Under the said letter, the respondents called upon the petitioner to submit his return before he could consider the petitioner's request for supplying the "reasons" recorded under Sub-section (2) of Section 148. The petitioner's contention is that Section 41(1) was not attracted in the facts and circumstances of the case ; that the said amount of Rs. 51,61,166 was allowed as a deduction by the Tribunal in the assessment year 1972-73 though the said amount represented the liability which accrued in the previous assessment years. The liability for which the said amount was set apart still exists ; it has not ceased. No reverse entries have also been made by the petitioner in his account books relating to the said amount. In such circumstances, Section 41(1) has absolutely no application.