LADHURAM LAXMI NARAYAN Vs. ADDITIONAL INCOME TAX OFFICER
HIGH COURT OF GAUHATI
LADHURAM LAXMI NARAYAN
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M.C. Pathak, C.J. -
(1.) BY this application under Article 226 and/or Article 227 of the Constitution of India the petitioner has challenged the notice dated March 10, 1971, issued to him under Section 148 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), by the Income-tax Officer, respondent No. 1.
(2.) THE petitioner is a partnership-firm registered under the Indian Partnership Act having its head office at Gauhati. For the assessment year 1962-63, the petitioner filed a return showing its total income during the accounting year 1961-62, Ram Navami year 2018. Notice under Section 143(2) of the Act was issued to the petitioner in respect of the assessment year in question and it produced the books of accounts including the books of accounts of all its branches. THE Income-tax Officer, thereafter, passed an order of assessment under Section 143(3) read with Section 182(1) of the Act. THE income of the firm was determined at Rs. 1,09,430 and the allocation of the shares of the partners of the firm was made on the basis of the income so determined and the taxes were assessed and paid accordingly.
Thereafter, the impugned notice dated March 10, 1971, has been issued under Section 148 of the Act.
The learned counsel for the petitioner has submitted:
(1) that conditions precedent for issue of a notice under Section 148 of the Act within the meaning of Section 147(a) of the Act are totally absent in the present case and as such the Income-tax Officer issued the impugned notice illegally and without jurisdiction ;
(2) that since the notice is not under Section 147(a) of the Act and even if it is assumed that the notice is under Section 147(b) it is clearly barred by limitation prescribed under Section 149(1)(b); and
(3) that the sanction purported to be given by the Commissioner of Income-tax is wholly mechanical and without any application of mind on the part of the Commissioner and as such the alleged sanction cannot be termed as valid sanction as contemplated under Section 151 of the Act and hence the notice is without jurisdiction.
(3.) AT this stage it would be convenient to quote the relevant provisions of the Act.
" 147. Income escaping assessment.--If--
(a) the Income-tax Officer has reason to believe that, by reason of the omission or failure on the part of an assessee to make a return under Section 139 for any assessment year to the Income-tax Officer or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year, or
(b) notwithstanding that there has been no omission or failure as mentioned in Clause (a) on the part of the assessee, the Income-tax Officer has in cousequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year,
he may, subject to the provisions of Sections 148 to 153 assess or reassess such income or recompute the loss or the depreciation allowance. as the case may be, for the assessment year concerned (hereafter in Sections 148 to 153 referred to as the relevant assessment year).
Explanation 1.--For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely:--
(a) where income chargeable to tax has been under-assessed ; or
(b) where such income has been assessed at too low a rate ; or
(c) where such income has been made the subject of excessive relief trader this Act or under the Indian Income-tax Act, 1922 ; or
(d) where excessive loss or depreciation allowance has been computed.
Explanation 2.--Production before the Income-tax Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Income-tax Officer will not necessarily amount to disclosure within the meaning of this section."
" 148. Issue of notice where income has escaped assessment.--(1) Before making the assessment, reassessment or recomputation under Section 147, the Income-tax Officer shall serve on the assessee a notice containing all or any of the requirements which may be included in a notice under Subsection (2) of Section 139 ; and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that subsection.
(2) The Income-tax Officer shall, before issuing any notice under this section, record his reasons for doing so."
" 149, Time limit for notice.--(1) No notice under Section 148 shall be issued,--
(a) in cases falling under Clause (a) of Section 147--
(i) for the relevant assessment year, if eight years have elapsed from the end of that year, unless the case falls under Sub-clause (ii);
(ii) for the relevant assessment year, where eight years, but not more than sixteen years, have elapsed from the end of that year, unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to rupees fifty thousand or more for that year;
(b) in cases falling under Clause (b) of Section 147, at any time after the expiry of four years from the end of the relevant assessment year.
(2) The provisions of Sub-section (1) as to the issue of notice shall be subject to the provisions of Section 151.
(3) If the person on whom a notice under Section 148 is to be served is a person treated as the agent of a non-resident under Section 163 and the assessment, reassessment or recomputation to be made in pursuance of the notice is to be made on him as the agent of such non-resident, the notice shall not be issued after the expiry of a period of two years from the end of the relevant assessment year."
"151. Sanction for issue of notice.--(1) No notice shall be issued under Section 148 after the expiry of eight years from the end of the relevant assessment year, unless the Board is satisfied on the reasons recorded by the Income-tax Officer that it is a fit case for the issue of such notice.
(2) No notice shall be issued under Section 148 after the expiry of four years from the end of the relevant assessment year, unless the Commissioner is satisfied on the reasons recorded by the Income-tax Officer that it is a fit case for the issue of such notice."
The assessment year is 1962-63. Return was submitted on January 23, 1963. Assessment under Section 143(3) was made on February 14, 1963, and the notice under Section 148 was issued on March 10, 1971. The notice under Section 148 has been issued after the expiry of four years from the end of the relevant assessment year. Hence, the notice in the instant case could not be issued without the satisfaction of the Commissioner on the reasons recorded by the Income-tax Officer that it is a fit case for the issue of such notice as required under Sub-section (2) of Section 151.;
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