PURUSHOTTAM DAS BANGUR Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THESE are three similar writ petitions whereby the petitioners have challenged the validity of the notices issued by the ITO, under Section 147(b) of the I.T. Act, 1961 (hereinafter referred to as " the Act "). One set of arguments has been made with respect to all these petitions as the points involved in them are identical. Consequently, we propose to dispose of them by a common order.

(2.) FIRST, we shall take the facts of Writ Petition No. 1177 of 1974. This petition is by Purushottam Das Bangur and pertains to the assessment year 1969-70 (financial year ending on March 31, 1969). During the said accounting year, the petitioner derived income from dividends on shares, share of profit from M/s. Ranganath Purshottam Das Bangur, director's fee and commission, interest on debentures and bank deposits. The assessee-petitioner alleged that he had suffered long-term capital loss on sale of certain bonus shares. The ITO, 'C' Ward, Jodhpur, by his order dated December 15, 1970 (annex. A), assessed the petitioner for the said assessment year on a total income of Rs. 1,98,381. He held, inter alia, that the petitioner had made no fresh purchase of shares during the year but had sold certain shares of Maharaja Shree Umaid Mills Ltd., between the period March 5, 1969, and March 30, 1969, at the price quoted in the official report and quotations of the Calcutta Stock Exchange Association Ltd., and had thereby incurred a loss of capital gains (long-term nature) of Rs. 1,57,792, which would be carried forward. Aggrieved by the assessment order on certain other points with which we are not concerned, the assessee-petitioner filed an appeal before the AAC of Income-tax, Range A, Jaipur, who by his order dated June 14, 1971 (annex. B), dismissed the appeal. Thereafter, by his order dated October 14, 1971, the ITO rectified his order dated December 15, 1970, under Section 154 of the Act. However, on March 28, 1974, the petitioner received a notice dated March 27, 1974, under Section 147 of the Act (annex. C) from the ITO, C-Ward, Jodhpur, whereby the petitioner was informed that the ITO had reason to believe that the assessee's income chargeable to tax for the assessment year 1969-70 had escaped assessment and, therefore, the assessing authority proposed to reassess the income for the said assessment year and, therefore, he required the assessee to deliver to him a return in the prescribed form of his income for the said year. The assessee, by his letter dated April 6, 1974 (annex. D), addressed to the ITO, objected to the issuance of the said notice on the ground that the proposed reassessment proceedings were wholly without jurisdiction and, therefore, the notice may be withdrawn and, thereafter, filed the present writ petition in this court on April 22, 1974, challenging the validity of the notice.

(3.) SECTION 45(1) of the Act deals with capital gains. It provides that any profits or gains arising from the transfer of a capital asset effected in the previous year shall, save as otherwise provided in SECTIONs 53, 54, 54B and 54D, be chargeable to income-tax under the head " Capital gains ", and shall be deemed to be the income of the previous year in which the transfer took place. SECTION 48 provides the mode of computation and deductions under the head " Capital gains ". It reads as under :