SAURABH KUMAR PANDEY Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AS the dispute involved in these two writ petitions is one and the same and the facts are also almost the same, they have been heard together and are disposed of by this common judgment.

(2.) THE petitioners seek quashing of the notice under Section 148 of the Income-tax Act, 1961, asking them to file return within 30 days of the notice for reassessment on the ground that income chargeable to income-tax for the assessment year 1988-89, had escaped assessment within the meaning of Section 147 of the said Act. Xerox copies of the notices have been enclosed as annexure-5 to the writ petitions.

(3.) THE decision in the case of Simon Carves Ltd. [1976] 105 ITR 212 (SC), is of no avail to the petitioners. THE facts of that case, shortly stated, were that Rule 33 of the Indian Income-tax Rules, 1922, permitted the assessment of non-resident company carrying on business as construction engineers by one of the three modes as mentioned therein. THE Income-tax Officer computed the income applying one such mode which resulted in low tax liability. Subsequently, the assessment was reopened and applying a different mode of assessment, which also was permissible, the Income-tax Officer determined higher income. THE High Court held, on a reference, that this was not a case of income escaping assessment. Affirming the decision of the High Court, the Supreme Court held that Rule 33 vested discretion in the Income-tax Officer to select one of the three modes for determining the taxable income on the mere fact that the mode of computation had resulted in low tax liability. It was not sufficient to hold that the discretion was exercised or not exercised in a proper and judicious manner specially when there was no suggestion that the Income-tax Officer was actuated by some oblique motive.