R.M. Sahai, J. - (1.) THIS petition is directed against the notice issued to the petitioner under Section 148 of the I.T. Act. The short facts are as under :
(2.) THE petitioner started construction of a cold storage from August 19, 1960, which was completed in the assessment year 1962-63. A return under Section 139 was filed by the petitioner for the assessment year 1961-62. It was claimed that no business was done and that only installation and constructions were done in the relevant financial year. THE ITO passed an order under Section 143(3) accepting the claim made by the petitioner that no business was made in that year. The residential premises of the petitioner were searched in August, 1972, under Section 132 of the Act and in the course of investigation the valuation of the petitioner's cold storage was referred to the Valuation Officer. His report was submitted on 20th February, 1975, and therein the investment in the construction of the building portion only was estimated at Rs. 1,46,530 during the financial year for the assessment year 1961-62. The ITO, on a perusal of that report, issued a notice to the petitioner under Section 148 stating that he had reason to believe that for the assessment year 1961-62 income chargeable to tax, far in excess of Rs. 50,000, had escaped assessment by reason of failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment for that year. Sri K. M. L. Hajela, learned counsel for the petitioner, has urged that the aforesaid notice is bad for the following reasons: (1) The petitioner had made a full and complete disclosure of the particulars of his income and the ITO had passed an assessment order under Section 143(3). If the ITO had not drawn proper inference from the material facts, he cannot now reopen the assessment by merely changing his opinion as to the conclusion to be drawn from those facts. (2) (a) The notices were issued by the ITO without application of his mind to the material, i.e., the valuation report which was the foundation for formation of his belief that the income has escaped assessment. (b) The valuation report was not a relevant material and no reasonable person could have formed the belief that income far in excess of Rs. 50,000 has escaped assessment. (3) The CBDT has accorded sanction to reopen the assessment mechanically without applying its mind. (4) The notice was barred by time.
(3.) SRI Deokinandan, learned counsel for the revenue, has refuted the arguments of SRI Hajela and has urged that the valuation report clearly established that the petitioner did not show the correct investment in the cold storage. He has urged that the argument raised on behalf of the petitioner that the building, plant and machinery should be considered as separate items of investment was misconceived and that the notice issued, in the circumstances, was justified and was in accordance with the law. The conditions on the fulfilment of which the ITO acquires jurisdiction to issue a notice under Section 148 have been pointed out by the Supreme Court in a very recent decision in ITO v. Lakhmani Mewal Das [1976] 103 ITR 437, 445. The court, after pointing out the necessary conditions, proceeded to add : "We may add that the duty which is cast upon the assessee is to make a true and full disclosure of the primary facts at the time of the original assessment. Production before the ITO of the account books or other evidence from which material evidence could with due diligence have been discovered by the ITO will not necessarily amount to disclosure contemplated by law. The duty of the assessee in any case does not extend beyond making a true and full disclosure of primary facts. Once he has done that his duty ends. It is for the ITO to draw the correct inference from the primary facts. It is no responsibility of the assessee to advise the ITO with regard to the inference which he should draw from the primary facts: If an ITO draws an inference which appears subsequently to be erroneous, mere change of opinion with regard to that inference would not justify initiation of action for reopening assessment." ;