BHIKAMCHAND SETHIA Vs. INCOME TAX OFFICER C WARD

JUDGEMENT

(1.) In this appeal, which is directed against a judgment and order of Sabyasachi Mukharji J., dated February 6, 1973, dismissing the appellant's application under Article 226 of the Constitution, we are concerned with the question regarding the validity of a notice dated 15th March, 1969, under Section 148 of the I.T. Act, 1961.

(2.) In the court of the first instance the appellant (who was the petitioner there) challenged the said notice on two grounds. Firstly, while the heading of the notice showed that it was from the ITO, Special Circle-VII, Comp. Dist. IV, the notice was signed by the ITO, Special Circle, District IV, and, therefore, it was defective. Secondly, on the usual ground, i.e., there was no material to indicate the formation of the requisite belief for taking action under Section 147(a) of the Act. The learned trial judge overruled both the contentions of the appellant and held that the notice was valid. It appears that the learned judge in coming to his above decision relied on the recorded reasons set out in para. 13 of the affidavit of one Gurupada Dasgupta affirmed on the 22nd August, 1970, as also on a letter dated 15th February, 1969, which was before the ITO at the time of the said recorded reasons. As the said letter is fully set out in the judgment under appeal it is not necessary to recite the same herein.

(3.) The only point urged on behalf of the appellant in this appeal before us is that there was no material for the formation of the requisite belief for taking action under Section 147(a)of the I.T. Act. Appellant's counsel contended that the letter dated 15th February, 1969, could not be relied upon to justify or support the fact that the ITO had the requisite belief for re-opening the assessment in the instant case because the said letter was neither relied upon by the ITO who recorded the reasons nor it was disclosed in the two affidavits filed by him in the proceedings before the court of first instance. It was further submitted that the said letter was not placed before the CIT who granted sanction for reopening of the assessment and, therefore, the Commissioner did not apply his mind to that particular letter as a material for reopening of the assessment. It was also the submission of the counsel that the said letter dated 15th February, 1969, was disclosed before the learned trial judge for the first time at the time of hearing of the case and, therefore, the appellant did not get an opportunity to rebut the same and hence there was a violation of the principles of natural justice. Counsel further submitted that the original assessment order would show that the alleged materials disclosed in the letter were already known to and considered by the ITO who made the original assessment. It was known to the assessing ITO as would appear from the assessment order that the difference in the jute purchase account was due to dhalta allowance of one seer for every 4 maunds purchased at Cossipur centre. Therefore, no new fact was disclosed to or discovered by the ITO for reopening the assessment. According to counsel, there was no omission or failure on the part of the assessee to disclose fully or truly its income. Counsel also submitted that there was no sanction by the Commissioner on the basis of the recorded reasons and the letter. Counsel has relied upon the unreported judgment dated June 16, 1972, in Matter No. 58 of 1970 (Bhawarlal Chandmull v. ITO) and also the unreported judgment dated June 18, 1972, in Appeal No. 234 of 1972 (ITO v. Bhawarlal Chandmull) whereby the said judgment dated June 16, 1972, was upheld. Reliance was also placed on the cases of Ishverlal & Bros. v. N. N. Seth, ITO [1972] 85 ITR 414 (Guj) and Bajranglal Beria v. ITO [1972] 85 ITR 335 (Assam).