SABLE WAGHIRE TRUST Vs. S R ACHYUT RAO

JUDGEMENT

(1.) BY this writ petition, the petitioners challenge the notice issued by the Income-tax officer under section 148 of the Income-tax Act, 1961 ( Act ) Rule was issued in this case on 20th November, 1990 and by an interim order, further proceedings pursuant to the said notice were stayed.

(2.) THE petitioners, in their petition, have contended that the notice has been issued by the Income Tax Officer without any authority of law. They contend that the notice has been issued by the Income Tax Officer without obtaining sanction of the Commissioner of Income Tax or the Central board of Direct Taxes. They also contend that the Income Tax officer had no material before him for giving him reasons to believe that the income chargeable to tax has escaped to be assessed. The petitioners contend that the notice has been issued for making fishing enquiry. Though this petition was admitted in November, 1990 and interim order was granted in favour of the petitioners and though the respondents are served, there is no counter affidavit filed by the respondents. The learned counsel appearing for the petitioners therefore relying on a judgment of the Supreme court in the case of Madhya Pradesh Industries Ltd. vs. Income Tax Officer, (1965) 57 ITR 637 submitted that as there is no counter affidavit filed, this Court has to accept the allegations made in the petition and quash the notice which is challenged in the petition. The learned counsel also relies in support of this contention on a judgment of Division Bench of this Court in the case of devji Ravji Patel vs. Balasubramaniam, (1994) 210 ITR 925.

(3.) THE matter has come up on board after nine years. None appears for the revenue. No affidavit has been filed in support of the notice under section 148 of the Act. The petitioners, in this petition also challenge the existence of the conditions precedent for issuance of notice under section 148 of the Act. Law is well-settled on this point that if the existence of the conditions precedent for issuance of notice under section 148 of the Act is challenged by an assessee before the Court on oath, it is for the Income Tax Officer to satisfy the Court about the existence of the conditions precedent by filing affidavit and/or producing relevant records. If in consideration of the said material, the Court is satisfied that the conditions precedent did exist at the time the notice was issued, the challenge may be turned down by the Court. In the absence of any material whatsoever placed by the Income tax Officer to disprove the challenge of the assessee to the existence of the conditions precedent, the writ petition cannot be dismissed. Reference may be made in this connection to the decision of the Supreme Court in Madhya pradesh Industries Ltd. vs. Income Tax Officer, (1965) 57 itr 637. That was the case under section 34 of the Indian income Tax Act, 1922 (corresponding to section 148 of the income Tax Act, 1961 ). The notice was challenged by the assessee before the High Court by filing writ petition. The high Court dismissed the writ petition in limine. The supreme Court held that where, upon the issue of a notice under section 34 of the Indian Income-Tax Act, 1922, a claim was made in writ petition that the Income-tax Officer had no power to issue the notice and that the power was exercised not for any legitimate purpose for which it may be used, but for the purpose of making a fishing enquiry and to review a previous order made in favour of the petitioner, a rule upon the Income-tax Officer to show cause why the notice should not be set aside and an opportunity to him either to accept or to deny the facts and to set out such other material facts as had bearing on the question, was at least called for. The Supreme Court also observed that when the party claiming relief challenges on oath the existence of the conditions precedent which confer jurisdiction, and sets out facts which may, unless disproved, support his case, an order dismissing his petition in limine may not properly be made.