SHRI PAL JAIN Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) CHALLENGE in this writ petition is to the validity of notice under s. 148 of the IT Act, 1961 (for short 'the Act'), dt. 31st March, 2003 by which proceedings under s. 147 of the Act have been initiated to reassess the income of the petitioner which is alleged to have escaped assessment.

(2.) BEFORE adverting to the dispute, the relevant facts may first be noticed. Petitioner claims to be carrying on trading business. He filed his return of income for the asst. yr. 1996-97 on 31st March, 1998 declaring an income of Rs. 51,850. In the documents accompanying the return, he had disclosed that he had earned long-term capital gains of Rs. 1,93,492 on sale of 5,000 shares of Nilamber Holdings Ltd. These shares were shown to have been purchased through M/s Maheshwari Sons on 24th March, 1994 for Rs. 17,750. The sale was also shown to have been made through the same party on 25th May, 1995 for Rs. 2,12,750. The capital gain was computed by adopting the indexed cost of shares at Rs. 19,258. Income from capital gains was claimed to be exempt under s. 54F of the Act, on account of the same having been invested in construction of a residential house. The return stood accepted as no assessment under s. 143(3) of the Act was made. Petitioner, thereafter, received the impugned notice under S. 148 of the Act, dt. 31st March, 2003 wherein the AO claimed that he had reason to believe that the petitioner's income chargeable to tax for the asst. yr. 1996-97 had escaped assessment within the meaning of s. 147 of the Act and, accordingly, he proposed to reassess the petitioner's income for the said assessment year. For this purpose, the petitioner was required to file his return within 30 days from the date of service of notice. In response to this notice, the petitioner filed his return on 30th April, 2003 repeating the same income as had been shown in the original return filed on 31st March, 1998. Petitioner, thereafter, filed an application for obtaining a copy of the reasons recorded by the AO for issuing the notice under S. 148 of the Act. The same were duly supplied to him. A copy of the same has been filed as Annex. P-6 with the writ petition.

(3.) WE have heard counsel for the petitioner and have perused the relevant material.