MANOO LAL KEDARNATH Vs. UNION OF INDIA

JUDGEMENT

(1.) THIS is a petition under article 226 of the Constitution for quashing the notice issued by the Income-tax Officer (Central) Circle, 4, Kanpur, dated 29th August, 1973, issued under Section 148 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), and for a direction restraining the said Income-tax Officer from taking further proceedings pursuant to the above notice. The necessary facts are these:

(2.) IN the counter-affidavit filed on behalf of the INcome-tax Officer as well as the Commissioner of INcome-tax the allegations made by the petitioner were denied and the issuance of the second notice under Section 147(a) was justified. Along with the counter-affidavit of Sri P.C. Dua, the. INcome-tax Officer, Central' Circle 4, Kanpur, a copy of the reasons for belief that income had escaped assessment was also filed.

(3.) IN Commissioner of INcome-tax v. Rao Thakur Narayan Singh [1965] 56 ITR 2.14 (SC), the same question arose for decision before the Supreme Court. IN this case, there was a reassessment for the assessment year 1942-43, bringing to tax certain forest income and interest income. The assessee preferred an appeal to the Tribunal, objecting to the INcome-tax Officer's jurisdiction to initiate reassessment proceeding in respect of the forest income on the ground that he had knowledge of such income when the original assessment was made. The Appellate Tribunal upheld the assessee's contention but, by mistake, the Appellate Tribunal set aside the entire reassessment order and restored the original one. The revenue did not fake any steps to get the mistake rectified. It also did not make any application for reference to the High Court. Thereafter, the INcome-tax Officer initiated fresh reassessment proceeding under Section 34 with reference to the interest income and made a fresh reassessment order for the assessment year 1942-43 to include that income. The Supreme Court held that as the order of the Appellate Tribunal became final, the finding of the Tribunal, even though by mistake, that the officer could not initiate reassessment proceedings in respect of the interest income also, was binding on the INcome-tax Officer and he could not reopen the assessment over again to include the interest income. Subba Rao J. (as he then was), speaking for the Supreme Court, said at page 239: