TADIKONDA RAMULU Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) AN interesting and oft-repeated question arises for consideration in these writ petitions-what is the extent of the jurisdiction of courts under article 226 of the Constitution of India to review the action of the Income-tax Officer proposing assessment of escaped income in exercise of his powers under sections 147 and 148 of the Income-tax Act ?

(2.) THE petitioner submits that some of its ramifications are yet virgin ground and hence these petitions.

(3.) THE Income-tax Department undertook a survey operation of the petitioner's business under section 133A of the Income-tax Act, 1961. That was on May 15, 1986. THE stock registers of the petitioner and stock statements filed by it in the Corporation Bank, Guntur, were verified. On such verification, substantial variations of stock were found out. THE Income-tax Officer, in his letters dated May 23, 1986 and June 4, 1986, put these divergencies in stock to the petitioner and informed him about his proposal to initiate action under section 147 of the Income-tax Act to reopen the assessment. He afforded an opportunity to the petitioner of file his objections to that proposal. THE petitioner submitted his detailed objections on June 15, 1986. After hearing the petitioner, the Income-tax Officer found that there was reason to believe that the petitioner had not disclosed the stock held by him during the respective assessment year and that the value of the difference between the actual stock disclosed to the bank and the stock accounts produced for the assessment would represent income from undisclosed sources which could be assessed under the head "Other sources". He, therefore, stated that :