SURYA RESTAURANT Vs. UNION OF INDIA

JUDGEMENT

(1.) PETITIONER No. 1 is a registered partnership firm and petitioner No. 2 is one of its partners. The firm is the assessee under the Income-tax Act, 1961 (for short, "the Act"). It submitted the return which was assessed by the Income-tax Officer. Respondent No. 2, however, issued a notice dated March 11, 1993 (annexure "B") to petitioner No. 1 under Section 148 of the Act for the assessment year 1989-90 saying that he had reason to believe that income chargeable to tax for the assessed period had escaped assessment within the meaning of Section 147 of the Act and demanding delivery of the return in the prescribed form within 30 days from the date of service of this notice. The petitioners replied on March 13, 1993 (annexure "C"), indicating that the return already filed be treated as the return in response to this notice. On March 15, 1993, the petitioners demanded, vide annexure "D", that the reasons recorded for proceedings under Section 148 of the Act be communicated. Respondent No. 2 declined to do so and took the stand in reply dated November 10, 1993 (annexure "B"), that there was no provision under the Act for communicating the reasons for reopening an assessment. The petitioners being aggrieved by the initiation and refusal, have filed this writ petition under Article 226 of the Constitution of India seeking quashment of the aforesaid notice and a direction that notice under Section 148 of the Act, whenever necessary, should be accompanied by the reasons.

(2.) THE respondent have filed reply oppugning the contentions and have taken the stand that proceedings became necessary on the linchpin of material discovered on search operations under Section 132(1) of the Act and enquiry justifying reopening of assessment. It is contended that law requires the existence of the reasons and requisite belief on that basis and not the communication or disclosure on demand. It is further averred that reasons are recorded and this justified the proceedings. THE material, it is urged, is sure and not speculative, is cogent and not conjectural, is proper and not perverse. On this basis, admission is opposed.

(3.) COUNSEL for the respondents has dubbed both the grounds meritless and prayed for dismissal of the petition on the fulcrum of remedy available under the Act itself. It is contended that communication or disclosure is not essential and that existence is not disputed.