T.D.SUGLA ,J. - (1.) BY these two petitions under Art. 226 of the Constitution of India, the petitioners have challenged the jurisdiction of the ITO to issue notices dated July 24, 1982, and February 18, 1984, under s. 148 r/w S. 147(a) of the IT Act, 1961, for the asst. yrs. 1979 80 and 1980 81. Petitioner No. 1 is partnership firm. It filed its returns of income for the two years on July 21, 1979, and July 25, 1980, respectively. The assessment for the asst. year 1979 80 was completed under S. 143(1) on March 1, 1982, while for the asst. year 1980 81 was completed under S. 143(3) on January 11, 1983. The ITO issued notice under S. 148 r/w s.147(a) for the asst. year 1979 80 on July 24, 1982.
(2.) FROM the reasons recorded by him for reopening the assessment (copies of which were furnished to the Court and the petitioners' advocate at the time of hearing), the material on the basis of which he formed the belief that the income of the petitioners for the year had escaped assessment by reason of failure to disclose fully and truly all material facts necessary for assessment appears to be : (i) The claim for export markets development allowance under s.35B was allowed but the assessee was not entitled to it in view of the section as it stood operative for the asst. year 1979 80 ; and (ii) The claim for depreciation on plant and machinery was allowed on the basis of triple shift working but there was no material placed by the assessee to substantiate the claim. For the asst. year 1980 81, the material appears to be a letter/ circular dated November 19, 1983, from the D.D.I. (Inv.) to the CIT regarding some appraisal reports on the basis of which the ITO recorded:"I have reason to believe that, on account of the assessee's failure to disclose fully and truly all necessary facts necessary for assessment, income chargeable to tax for the asst. yr. 1980 81 has escaped assessment."
(3.) THE petitioners, it may be stated, made certain averments about the said two years in their petitions under Art. 226 of the Constitution of India. The respondent Department, for reasons best known to it, has chosen not to file affidavits in reply. Thus, the relevant facts have to be taken as the returns of income were filed along with the statement of total income, with details of all items appearing in the balance sheet and profit and loss account. The accounts were audited by M. L. Bhuwania and Co., chartered accountants. The analysis of the claim for depreciation and export markets development allowance was furnished. In the case of the asst. year 1979 80, the ITO was satisfied with the correctness of the return on the basis of material placed by the assessee on record and completed the assessment under S. 143(1) without requiring the presence of the assessee. For the asst. year 1980 81, the assessment was finalised after enquiry under S. 143 (3) computing the total income at Rs. 64,099 as against the disclosed income of Rs. 7,918.;