- (1.) This appeal is by the Income-tax Officer, Group Circle II (1), Ahmedabad, by certificate granted under Art. 133(1)(c) by the High Court of Gujarat against its judgment June 23, 1970, allowing the application filed by the respondent assessee and issuing a writ of mandamus quashing and setting aside the notice dated September, 12, 1969, issued by the Income-tax Officer under sec. 143 of the Income-tax Act.
(2.) The respondent who is a Hindu undivided family is an assessee owning two house properties; one in Ahmedabad and the other in Bombay. During the relevant assessment year 1965-66 both the properties were occupied by the respondent. The Income-tax Officer treated the properties as self-occupied properties. The respondent claimed that a sum of Rs. 4,052 being the municipal taxes be deducted in determining the annual valuation of the properties under sec. 23(2) of the Income-tax Act. The Income-tax Officer allowed the claim. The order of assessment was made by the Income-tax Officer on March 14, 1966. Subsequently after a lapse of over 3 years the Income-tax Officer by a letter dated July 15, 1969 called upon the respondent assessee to show cause why the amount of municipal taxes allowed as deduction should not be added back on, the ground that it was wrongly allowed. The respondent on July 13, 1969 replied that the Income-tax Officer was not competent to reopen the assessment under sec. 147 and that the municipal taxes were validly allowed as a deduction in computing the income from self occupied properties. Not satisfied with the explanation the Income-tax Officer issued a notice dated September 12, 1969, to the respondent under sec. 143 stating that whereas he had reason to believe that the income of the respondent chargeable to tax for the assessment year 1965-66 had escaped assessment within the meaning of sec. 147, he proposed to re-assess the income for the said assessment year and required the respondent to file a return of his income within 30 days from the date of receipt of the notice. The respondent then filed a writ under Art. 226 of the Constitution for a writ in the nature of mandamus for quashing the notice dated September 12, 1969' issued by the Income-tax Officer. The High Court by its judgement dated June 23, 1970 in Special Civil Application No. 1372 of 1969 (VII G.L.R. 83) allowed the application and issued the writ of mandamus quashing the notice dated September 12, 1969. On an application filed by the appellant the High Court granted a certificate and the appeal is thus before us.
(3.) It is not in dispute that for determining the annual value of the house which is in the occupation of the owner, sec. 23(2) of the Income-tax Act is applicable and that the assessee is not entitled to deduct the sum of Rs. 4,052 being the municipal tax. The Income-tax Officer when he assessed the tax for the year 1965-66 was aware of the fact that the property was self-occupied but erroneously thought that the assessee was entitled to deduction of the municipal taxes. Subsequently when tie assessments were scrutinised in the office of Comptroller and Auditor-General of India, that office pointed out to the Income-tax Officer that on a true interpretation of sec. 33(2), the deduction of municipal taxes in respect of self-occupied properties was not admissible. On receipt of this intimation from the Audit Department the Income-tax Officer trea ted the intimation as 'information' within the meaning of sec. 147(b) and in consequence of this information he was satisfied that he had reason to believe that the income of the respondent for the assessment year 1965-66 had escaped assessment and therefore proceeded to issue the impugned notice under sec. 148 read with sec. 147(b) of the Income-tax Act.;