SATPAL AUTOMOBILE COMPANY Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) BY this petition under Article 226 of the Constitution, the petitioner seeks the quashing of notices issued to it under Section 148 of the I.T. Act, 1961 (hereinafter referred to as "the Act"). The petitioner, M/s. Satpal Automobiles Company, is a registered partnership firm. It was constituted of three partners and wasr granted registration under Section 185 of the Act. During the previous year relevant to the assessment year 1965-66 the wives of the three partners of the petitioner-firm, namely, Smt. Sita Bai, wife of Sobhraj, Smt. Ganga Devi, wife of Damodar Das, and Smt. Mooli Bai, wife of Khem Chand, had each made a deposit of Rs. 1,500 with the petitioner-firm. The ITO while assessing the petitioner-firm for that year did not accept the genuineness of these loans and treated the same as the petitioner's income from undisclosed sources and included the aggregate amount of Rs. 4,500 in the total income of the petitioner-firm. Similarly, in the previous year relevant to the assessment year 1966-67, each of these three ladies made a deposit of Rs. 2,500 with the petitioner-firm, but the genuineness of those deposits was not accepted and they were added in the petitioner's income as income from undisclosed sources.

(2.) IN the previous year relevant to the assessment year 1967-68 further deposits were made in the accounts of Smt. Sita Bai of Rs. 1,975 and Smt. Ganga Devi of Rs. 1,555 and the petitioner-firm claimed to have paid interest to these three ladies on the-total deposits of each of them, the amount of such payments being : <FRM>JUDGEMENT_450_ITR141_1983Html1.htm</FRM>

(3.) THE petitioners challenge the issue of these notices on the grounds, inter alia, that the only reason given, on which the assessment for these years were sought to be reopened, was that the interest paid to the wives of the three partners of the petitioner-firm had escaped assessment in the hands of the petitioner-firm. According to the petitioner, at the time of the original assessments for all these years the petitioner had filed copies of account of each of these three ladies, as also copy of interest account and the ITO himself disallowed a part of the same in respect of one of the ladies for some of the years. This being so, the view taken by the ITO that no part of the interest paid to the wives of the partners of the petitioner-firm could be allowed was based on a change of opinion and was also erroneous.