CIT-I, AGRA Vs. ANIL CHAND BANSAL

JUDGEMENT

(1.) THIS Income Tax Appeal under Section 260-A of the Income Tax Act, 1961 (for short, the Act) arises out of judgment and order dated 20.6.2002 passed by the Income Tax Appellate Tribunal, Agra Bench, Agra in ITA No. 8157/Del/1992 for the assessment year 1988-89. The appeal was admitted on 19.7.2007, on the following substantial questions of law:-

(2.) THE assessee is a partner in M/s Chandra Timber Traders of Chandra Timber Group. THE search and seizure operations were conducted on 19.1.1989 at the business and residential premises of the firm and the partners of the group. A notice under Section 148 of the Act was issued to the assessee, in pursuance to which the assessee filed a return showing his income at Rs. 26,153/-. THE A.O found that the returns of income filed in the name of the assessee's children for the assessment year 1988-89 showing income of interest and other income of Swati Bansal, Abhai Bansal and Master Ansu Bansal earning profits through M/s Param Puri Trading Co. Delhi; M/s Harien Dev Trading Co. Delhi and M/s Moti Lal & Co., Delhi was assessee's own money. THE minors were not competent to contract. THEy could not perform any other services for consideration of these profits except through their guardian. THE explanation given, that the minors had filed their income returns with details of capital account, interest and the profit and loss account and balance sheet, was not accepted. He also found that the assessments of minors had been completed under Section 143 (1) of the Act without scrutiny. Accordingly, the income offered for taxation of Rs.59,787/- in the hands of minors was added to the income of the assessee.

(3.) THE Tribunal held that the power to reopen computed assessment and to reassess the income under Section 147 of the Act is on the satisfaction of the AO that the income chargeable to tax had escaped assessment. THE power is to be exercised to satisfy the statutory conditions for initiation of proceedings. THE AO must have reason to believe that the income had escaped assessment and secondly he must have reason to believe that such escapement had occurred by reason of either omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for assessment for that year. Section 148 casts obligation on the AO to issue notice before making assessment or reassessment. Sub section (2) provides that before issuing any notice the AO has to record his reasons for doing so.