- (1.) THE assessee is a HUF and filed a return showing total income of Rs. 36,532/ -. Subsequently, on the basis of the information received from the Investigation Wing, action under Section 147 of the Income Tax Act, 1961 (hereinafter referred to as the Act) was taken and, accordingly, a notice under Section 148 of the Act was issued. The Assessing Officer completed the assessment making the following additions: - (1) On account of unexplained investment in shares Rs. 3,10,500/ - (2) On account of dividend income Rs. 9,140/ - (3) On account of profit on shares Rs. 9,810/ -
(2.) THE assessee, being aggrieved, filed an appeal under Section 148 of the Act. The appellate authority dismissed the appeal questioning the validity of the issuance of notice under Section 148 of the Act. The appellate authority dismissed the appeal holding that the proceedings under Section 147 of the Act were validly initiated by the Assessing Officer and that the notice under Section 148 was properly served on the assessee. The assessee, being aggrieved, preferred a Second Appeal before the Tribunal, who by its order allowed the appeal and quashed the re -assessment order made by the Assessing Officer. The Tribunal held that the initiation of proceedings under Section 147 of the Act was invalid. The Department, being aggrieved, has filed the appeal under Section 260A of the Act, which was admitted on the following substantial questions of law: "(1) Whether the Income Tax Appellate Tribunal was justified in law in allowing the appeal of the assessee by cancelling the re -assessment proceedings made by the Assessment Officer u/s 147 of the I.T.Act, 1961 without appreciating the facts of the case and without going to the sprit of the provision of section 147 of the I.T.Act? (2) Whether the Income Tax Appellate Tribunal was justified in law in cancelling the re -assessment proceedings u/s 147 of the I.T.Act on technical ground and not adjudicated the issue on the merit of the case -
(3.) WE have heard Sri Shambhu Chopra, the learned counsel for the appellant. Having heard the learned counsel for the parties, we find that the Assessing Officer had recorded the reasons for issuing the notice under Section 148, namely - "in this case enquiries were conducted by the DDIT (Inv.) Unit II (i) Kanpur. The DDIT's report containing information in respect of investments made by the assessee in acquisition of immovable properties, purchase of car and in business as well as deposits made in various banks has been received. The assessee's jurisdiction was with erstwhile ACIT Cir 2(3) Kanpur. Therefore, ACIT II, Kanpur was requested to intimate whether the assessee has filed return for the assessment year 1995 -96. The ACIT has intimated that there is no control register and it is very difficult to ascertain as to whether the return of income has been filed or not. The assessee has not disclosed the investments as reported by the DDIT (Inv.) Unit II (i) Kanpur. We have therefore, reason to believe that the assessee has not truly and fully disclosed the particulars of income and investments in properties, cars and in bank deposits. It is estimated that the assessee has escaped assessments exceeding Rs. 1.0 lac for which provisions of section 147 of the Act are clearly attracted for which notice u/s 148 is required to be issued.";