INCOME TAX OFFICER Vs. JIYAJEERAO COTTON MILLS LTD

JUDGEMENT

(1.) This appeal is directed against the impugned judgment passed by the learned single judge dated March 3, 1983, whereby following the decision of the apex court in the case of Indian and Eastern Newspaper Society v. CIT [1979] 119 ITR 996, the learned single judge had taken the view that the reopening of proceedings under Section 148 of the Income-tax Act, 1961, was invalid, improper, baseless and without jurisdiction.

(2.) The assessment for the assessment year 1971-72 was completed under Section 143(3) on March 27, 1974. Thereafter, a notice under Section 148 read with Section 147(b) had been issued for reopening of the assessment on the ground that the income had escaped assessment and the Income-tax Officer had information in this regard as provided under Section 147(b). While issuing the notice under Section 148/147(b) dated February 20, 1976, the Income-tax Officer had reasonable belief that in the original assessment, relief under Sections 80-I and 80J had wrongly been allowed and the penalty which was imposed on account of shortfall in the production of controlled cloth that had been allowed under section 37 of the Act was wrong, in view of the circular of January 8, 1976.

(3.) Learned counsel for the appellants, Mr. Ram Chandra Prasad, submits that at the notice stage this court had limited jurisdiction to invoke the provision of article 226 of the writ jurisdiction. Once a bona fide belief is there regarding escapement of income, the Income-tax Officer can issue the notice under Section 148 read with Section 147(b), in case the Income-tax Officer has any information in his possession. He further submits that the Income-tax Officer pointed out regarding the relief under Sections 80-I and 80J that had been wrongly allowed to the assessee and in view of the circular dated January 8, 1976, the penalty imposed for shortfall in the production of the controlled cloth had wrongly been allowed under section 37 of the Act. Thus, both constitute information within the meaning of Section 147(b) of the Act. He further placed reliance on the decision of the apex court in the case of CIT v. P.V.S. Beedies Pvt. Ltd. [1999] 237 ITR 13, wherein the apex court had taken the view that the reopening of the case on the basis of the factual error pointed out by the internal audit party is permissible under law. Therefore, when the audit had pointed out the factual mistake, the reopening is justified.