LAXMIBAI A WAGLE Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THIS is a petition by Laxmibai A. Wagle (now deceased through her legal representatives), challenging the validity of a notice issued under section 148 of the Income Tax Act, 1961, praying for quashing the said notice and an order of prohibition preventing the respondent Income Tax authorities from proceeding in furtherance of the said notice. The petitioner assessed as an individual for the purpose of Income Tax and Wealth Tax, is also a partner in a partnership firm M/s A. G. Wagle. She owns various properties including agricultural land at Sanco Alois (Goa), bearing Matriz Nos. 510 and 512. She had shown in her returns for the assessment year 1984-85 that she has received a sum of Rs. 1,98,625/- from M/s. Zuari Agro Chemicals Ltd. , in consideration of water drawn by them from the agricultural land of the petitioner. A note explaining the exemption of this amount from tax liability was appended to both statements of wealth and income submitted by her. Note reads:

(2.) SHRI V. K. Bodke, learned Counsel for the petitioner submitted that since the fact of receipt of a particular income and the nature of the income was disclosed fully in the Income-Tax and Wealth Tax returns and the claim of the petitioner that the said income was not taxable, was accepted by the Income-Tax Officer, it is not now within the competence of the Income-Tax Officer to re-open the case on the ground that he had taken a mistaken view. It is also contended that unless reasons are recorded and are communicated to the assessee, a notice under sections 147 and 148 is not at all contemplated, and, therefore, the order is without jurisdiction.

(3.) SHRI S. R. Rivonkar, the learned Counsel for respondent Income-Tax authorities defended the notice and submitted that in a case where the Income-Tax Officer did not notice that the income disclosed is taxable and accepted the contention of the assessee without proper application of mind, he has jurisdiction to re-open the case under section 147 read with section 148 of the Income-Tax Act.