YOUSUF FAZLEHUSAIN ZAVERI Vs. AJAY SINGH

JUDGEMENT

(1.) YOUSUF Fazlehusain Zaveri commenced the business of manufacture and sale of jewellery in the name and style of Yousuf Fazlehusain Zaveri in the year 1957. On July 28, 1976, Yousuf admitted his major son to the business as a partner and petitioner No. 1 partnership firm was registered under the Indian Partnership Act. The firm is also registered with the income -tax authorities under the Income -tax Act, 1961. The previous year of the firm for the purpose of income -tax is the Samvat year and the first assessment year was 1977 -78. The firm filed its return of income for the assessment year 1978 -79 on June 27, 1978, along with the relevant supporting documents including the profit and loss account and the balance -sheet. The firm clearly mentioned that the closing stock was value at cost or market price, whichever is less. During the course of the assessment proceedings, the Income -tax Officer examined the books of account and scrutinised the gold account. The gold account was required to be maintained in accordance with the provisions of the Gold (Control) Act, 1968. On October 4, 1979, the Income -tax Officer completed the assessment and the order recites the complete quantitative details were available in respect of the business of the firm. The order further recites that the business of the firm was subject to supervision of the Central Excise authorities and consequently its book results had therefore to be accepted.

(2.) THE assessment orders under section 143(3) of the Income -tax Act in respect of the assessment years 1978 -79 to 1982 -83 were completed and assessment orders were passed on October 2, 1979, January 21, 1980, January 12, 1983, June 14, 1983, and August 23, 1983 respectively. On December 2, 1985, the Fourth Income -tax Officer 'B' Ward Bombay served notices under section 148 of the Income -tax Act upon the petitioners claiming that the officer had reason to believe that the income chargeable to tax for the assessment years 1978 -79 to 1982 -83 had escaped assessment within the meaning of section 147 of the Income -tax Act. The petitioners sought an explanation as to the information on the basis of which the proceedings were initiated. Having failed to receive any response from the respondent the petitioner approached this court by filing the present petition under article 226 of the Constitution.

(3.) LEARNED counsel appearing on behalf of the petitioner submitted that a perusal of the explanation makes it clear that the notices were issued merely because of change of opinion and not because the petitioner had suppressed any material from the income -tax authorities at the time of concluding the assessment for the relevant years. Learned counsel urged and, in our judgment, with considerable merit, that the assessment orders leave no manner of doubt that the Income -tax Officer was satisfied after scrutiny of the books of account and the gold account, that complete quantitative details were made available and the book results had to be accepted. The averments made by the petitioners in this respect in the petition are not even denied in the return and obviously so, because the orders of assessment for the relevant years clearly reflect that not only had the petitioners disclosed all the relevant information but the same was found after scrutiny to be acceptable by the Income -tax Officer. In the face of such record, it is impossible for the Income -tax Officer to exercise jurisdiction under section 148 to issue the impugned notices on the ground that there has been failure on the part of the assessee to disclose truly and fully all material facts necessary for assessment. The impugned notices are, therefore, required to be struck down.