Decided on October 22,1971



SRIRAMULU, J. - (1.) : In consequence of information in his possession that the assessee actually paid Rs. 38,000 for the purchase of two vehicles as against Rs. 25,000 shown by him, the ITO, after due service of notices on the assessee, reopened the assessment for 1959-60, under S. 147 of the IT Act, 1961, and revised the assessment by adding Rs. 13,000 to the income assessed originally, as he was satisfied that the assessee had not satisfactorily explained the source of the unexplained investment. The legality of the addition of Rs. 13,000 made in the reassessment was challenged before the AAC in first appeal. The AAC deleted the addition after giving the following finding and directions : ". . . . Thus, the unexplained investment was during the accounting years 1956-57 and 1957-58. The relevant assessment years for which the sum should be brought to tax are 1957-58 and 1958- 59. The addition made in the assessment year under appeal towards the unexplained investment amounting to Rs. 13,000 cannot, therefore, be sustained. I accordingly delete it and direct the ITO to assess the unexplained investment for the above-mentioned assessment years . . ."
(2.) IN consequence of the finding and to give effect to the direction contained in the order passed by the AAC in the appeal relating to the asst. yr. 1959-60, the ITO issued notices dated June 20, 1969, to the assessee, to show cause why the assessments under S. 147 of the IT Act, 1961, for the asst. yrs. 1957-58 and 1958-59 should not be reopened and unexplained investment in the respective accounting years added ? According to the assessee, the notices dated 20th March, 1969, issued by the ITO for reopening the assessments for 1957-58 and 1958-59 were time-barred and hence bad in law. The assessee, therefore, moved this Court by this writ application filed under Art. 226 of the Constitution of India, seeking the issue of a writ of prohibition against the ITO forbearing him from proceeding further in pursuance of those impugned notices.
(3.) MEANWHILE, the reassessments were completed ; the assessee then applied to this Court for permission to modify the prayer. Permission was granted. The prayer was accordingly amended. By the amended prayer, the assessee seeks the issuance of a writ of certiorari for quashing the reassessments for 1957-58 and 1958- 59. The learned counsel, Shri S. Dasaratharama Reddy, appearing for the assessee, contended that : (1) the impugned notices dated March 20, 1969, for reopening the assessments for 1957-58 and 1958-59 are time-barred and bad in law ; (2) as held by the Supreme Court in ITO, A-Ward, Sitapur vs. Murlidhar Bhagwan Das (1964) 52 ITR 335 (SC) the finding and direction given by the AAC in the appeal relating to the asst. yr. 1959-60 to reassess the unexplained investment in the asst. yrs. 1957-58 and 1958-59 are without jurisdiction and void ; (3) Explanation (2) to S. 153(3) is not applicable to the facts of this case, and even assuming that it is applicable, then the Explanation is ultra vires of S. 251(1) of the Act and the AAC had no jurisdiction to give such a finding or direction on the basis of which the ITO could reopen the assessments for differentyears ; and (4) the impugned notices issued under S. 148 for reopening the assessments for 1957-58 and 1958-59 are bad in law, because prior sanction of the CIT was not obtained as required by s.151 of the Act.;

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