STAR AUTOMOBILES Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THIS is a petition under Article 226 of the Constitution of India.

(2.) THE material facts giving rise to this petition, briefly, are as follows : For the assessment year 1981-82, the petitioner-firm had filed a return disclosing income of Rs. 1,25,000. THE petitioner-firm had also furnished details of payment of interest and also details of interest received on fixed deposits. THE Income-tax Officer framed the assessment by his order dated March 21, 1984, and the total income of the assessee was assessed at Rs. 1,58,420. Subsequently, the respondent issued a notice on January 28, 1985, under Section 148 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), seeking to reassess the income of the petitioner under Section 147 of the Act. Aggrieved by that notice, the petitioner has filed this petition. THE main contention urged on behalf of the petitioner is that the conditions precedent for issuance of notice under Section 148 of the Act are not satisfied and hence the impugned notice is without jurisdiction.

(3.) THOUGH, in the aforesaid order, reference has been made to Clause (b) of Section 147 of the Act, at the time of hearing, it was conceded that reassessment would be under Section 147(a) of the Act It is well-settled that two conditions precedent are required to be fulfilled before the Income-tax Officer can exercise jurisdiction under Clause (a) of Section 147 of the Act: (i) he must have reason to believe that income has escaped assessment: and (ii) he must have reason to believe that such escapement is by reason of the omission or failure on the part of the assessee to make a return or to disclose fully and truly all material facts necessary for his assessment for the relevant year. It is also well-settled that the expression "material facts" used in Clause (a) of Section 147 of the Act refers only to primary facts. Now, in the instant case, it is not disputed that the assessee had disclosed the amount of interest accrued on the fixed deposit in the assessment year 1981-82. It is, however, contended that the details relating to the amount of interest were not furnished by the assessee. But the primary facts having been disclosed by the assessee, the Income-tax Officer had no jurisdiction to institute proceedings for reassessment. The impugned notice is without jurisdiction and deserves to be quashed.