RAMNIWAS KANAILAL Vs. SHENDE S P ITO

JUDGEMENT

(1.) THIS petition has been filed under article 226 of the Constitution for the direction that certain notices issued by the respendent, who is an Income -tax Officer, under section 34(1)(a) of the Income -tax Act, 1922, for reassessment of the petitioner should set aside and the respondent should be permanently restrained from acting in pursuance of those notices. The impugned notices are in respect of the assessment years 1940 -41 to 1945 -46 (Samvat years 1995 to 2000) and were issued on 19th February, 1962, i.e., nearly 20 years after the period in question. The terms of section 34(1)(a) in so far as they are relevant to the present case, require that the Income -tax Officer should have reason to believe that, by reason of the omission or failure on the part of an assessee to disclose fully and truly all material facts necessary for his assessment, income, profits or gains chargeable to income -tax have escaped assessment or have been under -assessee or assessee at too low a rate. It is the case of the petitioner that the respondent, when he issued the impugned notices, had no reason to entertain the belief that the petitioner had omitted or failed to disclose fully and truly all the material facts necessary for his assessment for the said years, or that the petitioner's income in those years had been under -assessee.

(2.) ACCORDING to the petitioner, he was at one time carrying on business at Nankana Sahab in west Punjab. His business in the West Punjab was in the process of winding up since about 1936. In 1936 he came to Bombay for some probate proceedings and did business in Bombay from 1937. He had to go to West Punjab form time to time in connection with the winding up of his business there. In 1942, notices were issued on him by the income -tax authorities at Bombay under section 34 of the Income -tax Act, 1922, for the purpose of assessing his income for Samvat years 1994 to 1997 (assessment years 1939 -40 to 1942 -43). After due enquiry, assessment orders in respect of these years were issued on 19th April, 1943, by one Kazi, who was then the Income -tax Officer.

(3.) THE petitioner was assessee for the next year, i.e., Samvat year 1998 (assessment year 1943 -44), by an order of the Income -tax Officer, Kazi, dated 14th May, 1943. During the course of the assessment proceedings for Samvat year 1998, the petitioner had admittedly filed a balance -sheet. His account books were also produced before the Income -tax Officer. According to the petitioner, he had also filed statements of accounts showing the aforesaid outstandings, but those statements of accounts are not found in the records of the department. The balance -sheet for Samvat year 1998 produced by him is also no longer available. As I will presently show, the sole ground on which the respondent has issued the impugned notices dated 19th February, 1962, for reopening the assessment for Samvat years 1995 to 2000 is that the petitioner has failed to state in the balance -sheet of Samvat year 1998, which he had filed and which is now lost, the alleged outstandings of the Punjab business amounting to about Rs. 7 lakhs.