B.P. Jeevan Reddy, C.J. - (1.) THIS writ petition is directed against a notice issued under Section 148 of the Income-tax Act on July 22, 1988, with respect to the assessment year 1980-81. The petitioner is a partnership-firm constituted under a deed of partnership dated June 22, 1978. It was observing the calendar year as the "previous year". During the year 1979 (assessment year 1980-81), the petitioner commenced construction and installation of a cold storage plant. The construction went on till March, 1980. During the year 1979, the petitioner did not have any income but only investment in the setting up of the said plant. For that reason, the petitioner says, he did not file a return for the assessment year 1980-81.
(2.) THE return for the assessment year 1981-82 was filed on September 14, 1981, in response to a notice under Section 139(2) of the Act. THEreafter, on October 16, 1981, the petitioner also filed a nit return for the assessment year 1980-81. Along with this return, the petitioner says, he filed a number of documents, showing particulars of the investment during the relevant previous year. On February 15, 1983, an order of assessment was made for this assessment year (assessment year 1980-81) under Section 143(3) of the Act. In the assessment order, the Assistant Commissioner of Income-tax observed that since the construction of the cold storage plant was completed during the previous year relevant to the assessment year 1981-82, the said investment will be considered in that year, THE 'nil' income return was, accordingly, accepted. The assessment for the assessment year 1981-82 was completed under Section 143(3) of the Act on March 17, 1986. In this assessment order, the Assistant Commissioner observed that, during the assessment proceedings for the assessment year 1981-82, the assessee had submitted a valuation report, prepared by an approved valuer, showing that the construction of the cold storage plant was commenced in January, 1979, and completed in March, 1980, and disclosing investment thereon at Rs. 9,13,900. The matter was referred to the Department Valuation Cell, which valued the said construction at Rs. 20,80,000 up to March 31, 1980. A copy of the report of the Departmental Valuation Cell was sent to the assessee and his objections, submitted on more than one occasion, were duly considered and the figure of investment was revised to Rs. 18,52,470 from Rs. 20,80,000. Even so, there is a vast difference. According to Section 69 of the Act, unexplained investments made during the preceding financial year have to be taken into account in the relevant assessment year. Accordingly, the said unexplained investment has to be included in the assessment for the assessment, year 1980-81. Necessary remedial action would, therefore, have to be taken for including the said income in that assessment year. It is in pursuance of the above observations made in the assessment order relating to the assessment year 1981-82 that the impugned notice under Section 148 was issued for the assessment year 1980-81. The notice is dated July 22, 1988, which the petitioner says was served upon him on August 9, 1988. The petitioner says that, since the notice did not contain any reasons, nor did it indicate to which clause of Section 147 it was relatable, it wrote a letter on August 17, 1988, to the Assistant Commissioner, calling upon him to intimate the information in his possession on the basis of which he issued the impugned notice and also calling upon him to clarify whether the notice was in terms of Clause (a) or Clause (b) of Section 147. The petitioner says that he did not receive any reply to his letter. All the same, the petitioner filed a nil return, objecting to the impugned notice. The petitioner complains that, without passing any orders upon his letter, the Assistant Commissioner issued a notice under Section 143(2) on December 26, 1988. It is then that the petitioner approached this court by way of this writ petition.
(3.) THE writ petition was entertained and the respondents were called upon to file counter-affidavits which they have done. THE petitioner has also filed a rejoinder-affidavit and we have heard learned counsel for the parties. In the counter-affidavit filed on behalf of the respondents, it has been stated that, before issuing the impugned notice, reasons were duly recorded and the approval of the Commissioner was also obtained therefor. The Commissioner accorded the permission through his letter dated June 16, 1988. In paragraph 10 of the counter-affidavit, the reasons recorded by the Assistant Commissioner are set out. The first paragraph of the "Reasons" reads : "Return for the assessment year 1980-81 had been filed showing income at 'Nil'. At the time of the hearing of the case, it transpired that the appellant had constructed the cold storage building and also installed machinery in it The appellant was required to show the investment in it. The appellant had given in writing that since the building is still under construction the investment in the building should be considered in the year in which the construction is completed." ;