THAKURSIDAS BANWARILAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE legality of the proceeding under S. 147 of the IT Act, 1961, as well as the notice, dt. 30th March, 1987, issued by respondent No. 4 in exercise of power under S. 148 of the IT Act, 1961, for reopening the income -tax assessment for the asst. year 1982 -83 is the subject -matter of this proceeding.

(2.) THE petitioner filed its return of income for the asst. year 1982 -83 on 26th Nov., 1982, showing its total income of Rs. 14,340. The assessment was completed by respondent No. 4 on examination of the books of account produced in compliance with the notice issued under S. 143(2) of the Act, vide order, dt. 19th Jan., 1983. The petitioner preferred appeal against the assessment challenging disallowances of certain expenses which were also finally disposed of. A survey was conducted by the ITO along with other officers on 27th Feb., 1985, in the business premises of the petitioner/firm. According to the petitioner, some unattended and loose and rough papers were found in the premises and the same were taken possession of by the officials of the Department. The survey party wanted to take possession of those papers which was objected to by the petitioner in view of the provisions contained in Sub -S. (4) of S. 133A of the IT Act. The officers undertaking survey thereafter then and there at the shop premises prepared a notice under S. 131 of the IT Act, dt. 27th Feb., 1985, directed the petitioner to attend personally or through an authorised representative on 27th Feb., 1985, at 4.30 pm at the office of the ITO, "A" Ward at Dibrugarh requiring to produce books of account or other documents specified overleaf of the notice. The petitioner wrote a letter narrating the full facts to the concerned ITO of "A" Ward about the whole incident which took place at the shop premises of the petitioner on 27th Feb., 1985, in the course of the survey and the manner under which the rough and loose papers were taken away by the survey party. The ITO after taking possession of the loose and rough papers passed an order on 27th Feb., 1985, in exercise of the powers vested in him under S. 131(3) of the Act. The petitioner in turn by the letter, dt. 14th March, 1985, through its counsel denied its correctness. The ITO by letter dt. 6th March, 1986, intimated the petitioner about the alleged discrepancies that it found and informed the petitioner that the return of income for the year 1982 -83 did not reflect the true state of affairs of the income of the firm and accordingly issued notice on the firm to show cause as to why the assessment for the year 1982 -83 should not be reopened under S. 147 of the Act. The petitioner, by his communication, dt. 17th March, 1986, accordingly submitted his reply before the respondents questioning the legality and validity of the notice. In the above communication, the petitioner took objection also about the manner in which the survey was conducted and documents were impounded. Respondent No. 4 by his notice, dt. 30th March, 1987, issued notice under S. 148 of the IT Act which was duly replied to by the petitioner by his letter, dt. 20th April, 1987. The petitioner also made a reference particularly under S. 144A to the Dy. CIT, Range -II, Dibrugarh, for a direction under S. 144A of the IT Act in view of the fact that a notice under S. 148 of the Act was issued without indicating whether it was issued under cl. (a) or (b). The Dy. CIT by his letter, dt. 9th March, 1990, after going through all the materials on record and also on going through the documents at the time of survey in the business premises of Thakursidas Banwarilal & Co. and Surendra Auto Agencies, was of the opinion that the proceeding under S. 147 was rightly initiated. Hence, the application before this Court assailing the legality of the above order.

(3.) DR . A.K. Saraf, learned counsel for the petitioner, firstly pointed to the fact that in the instant case no affidavit so far was filed by the respondent. Dr. Saraf also submitted that in the absence of any affidavit explaining the reason as to why the impugned notices were issued, the very existence of formation of opinion has become questionable. In the absence of any rebuttal, the assertion of the petitioner is required to be accepted as true for want of affidavit from the concerned ITO. In support of his contention, Dr. Saraf, learned counsel for the petitioner, has brought to my attention the following decisions in Union of India vs. Rai Singh Deb Singh Bist 1973 CTR (SC) 129 : (1973) 88 ITR 200 (SC) : TC 51R.728, Sheo Nath Singh vs. AAC 1973 CTR (SC) 484 :(1971) 82 ITR 147 (SC) : TC 51R.631, Biju Patnaik vs. ITO (1976) 102 ITR 96 (Cal) : TC 51R.1079, Morarjee Goculdas Spinning & Weaving Co. Ltd. vs. M.M. Das, IAC (1989) 78 CTR (Bom) 133 : (1991) 189 ITR 406 (Bom) : TC 51R.1560 and 157 ITR 637 (sic). Dr. Saraf, learned counsel for the petitioner, further submitted that in the instant case the notice of the ITO was silent as to whether assessment was sought to be opened under S. 147(a) or S. 147(b). Admittedly, in the instant case, the impugned proceeding could not have been initiated under S. 147(b) after the expiry of the period of limitation, as regards S. 147(a) of the Act. Dr. Saraf further submitted that it is not a case of non -submission of return nor is it a case where the petitioner failed to disclose fully or truly all material facts necessary for his assessment and, therefore, the notice under S. 147(a) was void, illegal and unwarranted too. Dr. Saraf particularly cited the instances of submission of P&L a/c, balance sheet and other detailed particulars, that in fact there was no omission or failure on the part of the petitioner as contemplated under S. 147(a) and there has been no omission or failure on the part of the petitioner to disclose fully and truly the material facts necessary for the assessment and the ITO had no jurisdiction to issue the impugned notice and as such the impugned notice is unsustainable. In support of his contention, Dr. Saraf relied on the decisions of the Supreme Court in S. Narayanappa vs. CIT (1967) 63 ITR 219 (SC) : TC 51R.651 and Madhya Pradesh Industries Ltd. vs. ITO (1970) 77 ITR 268 (SC) : TC 51R.625.