COMMISSIONER OF INCOME TAX Vs. PUNAM CHAND BANTHIA

JUDGEMENT

(1.) This appeal is directed against the judgment and order passed by T. K. BASU J. on 19th January, 1973, whereby his Lordship was pleased to make a rule nisi absolute and directed issue of a writ in the nature of certiorari for quashing, inter alia, a notice dated 25th January, 1967, issued under Section 148 of the Income-tax Act, 1961, as well as an order of assessment. The facts leading to the making of the said application under Article 226 by the respondent are set out hereunder.

(2.) The respondent is an assessee and is being assessed as an individual. The respondent was duly assessed for the assessment years 1954-55 to 1966-67. On 27th January, 1967, the respondent was served with a notice under Section 148 of the Income-tax Act, 1961, issued by the appellant No. 2. The said notice was dated 25th January, 1967. In the said notice it was alleged that the appellant No. 2 had reason to believe that the respondent's income chargeable to tax for the assessment year 1962-63 appeared to have escaped assessment within the meaning of Section 147 of the Income-tax Act, 1961. On the basis of the said allegation the appellant No. 2 intended to reassess the income of the respondent for the said assessment year 1962-63 and by the above mentioned notice issued under Section 148 of the Act required the respondent to deliver to the appellant No. 2 within 30 days from the date of service of the said notice a return in the prescribed form of the respondent's income assessable for the assessment year 1962-63, The respondent after the receipt of the notice by a letter sent to the appellant No. 2 denied the allegations contained in the said notice and without prejudice to the respondent's rights filed a return on the basis of the original return. No further action was taken by the appellant No. 2 until 1st February, 1971. On that date by a notice issued under Section 22(1)/139 the respondent was called upon to produce books of accounts and documents specified in the said notice. The said notice was dated February 1, 1971, and was sought to be quashed and/ or set aside in the instant writ proceedings. In the affidavit filed by Anand Singh, the Income-tax Officer concerned, it was stated as follows :

(3.) It was contended on behalf of the respondent before the court of first instance that inasmuch as the impugned notice under Section 148 was issued in exercise of powers under Section 147(1)(b) of the Act the said notice was issued beyond the prescribed period of limitation and as such no proceeding could be initiated or continued by virtue of the said impugned notice. T. K Basu J. upheld the contention of the respondent-petitioner in the court of first instance and quashed the said notice and made the rule nisi absolute as mentioned hereinbefore. Before us, in the appeal, it was contended on behalf of the appellants by Mr. Suhas Sen that power under Section 147(l)(a) could be exercised even on the basis of information received if such information be material which leads the Income-tax Officer to come to the belief that the income assessable for a particular assessment year escaped assessment on account of omission or failure of the assessee to make a return or to disclose fully and truly all material facts necessary for his assessment for that year. In the instant case the Income-tax Officer concerned issued the impugned notice on the basis of information received from another Income-tax Officer who had been assessing the income of the wife of the respondent. The said Income-tax Officer assessing the wife of the respondent sent a report, inter alia, containing a statement that the sum of Rs. 40,000 which appears to have been lent by the wife to one Ratan Kumari Sethia could not be satisfactorily explained by her in her assessment proceedings.