FARHAT HASAN Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN this writ petition, by invocation of the provisions of Article 226 of the Constitution of INdia, the challenge is against the initiation of the proceedings and further resultant impugned reassessment order, in terms of the provisions of Section 148 read with Section 147 of the INcome-tax Act, 1961 ("the Act"), recorded on March 31, 2005, by the Assistant Commissioner of INcome-tax, Central Circle-4, Patna, of the INcome-tax Department, in relation to the assessment for the year 1997-98 against the petitioner, who carries on the work of running a school known as "INternational School" in New Patliputra Colony, at Patna, mainly, on the one premise, that the grounds stated in the impugned reassessment order under Section 148 read with Section 147 of the Act are without jurisdiction, and in the result, the following short question comes to surface for our consideration and adjudication in this writ petition; Whether initiation and subsequent completion of the impugned reassessment order under Section 148 of the Act has been without jurisdiction, as there was no 'reason to believe' as provided in section 147 of the Act, as the authority had no supporting material ?

(2.) WITH a view to appreciate the merits of the petition let us first have the skeleton projection of the factual matrix and the chronology of the events leading to the rise of this petition under Article 226 of the Constitution of India:

(3.) THE authority believed that in the statement recorded on oath during the course of search process, the assessee was unable to explain in respect of both the investments as well as the receipts. It was also found by the authority that substantial gifts were being received by the assessee and her family members repeatedly over the years and that the acquisition of property including construction both at Patna and elsewhere for apparent consideration was far below the prevailing market rates which indicated accumulation of unaccounted funds, available with the assessee the source of which could be attributable to the only visible source of income, i.e., the operation of M/s. International School at Patna under the proprietorship of the assessee Smt. Farhat Hasan.