K.L.Roy, J. - (1.) The two Finance Acts of 1965 made legal what was formerly a sort of a gentleman's agreement under the so-called Tyagi Scheme for disclosure of escaped income by assessees. Under Section 68 of the Finance Act, 1965, provision was made for declaration of income which had escaped assessment for a certain period and for the Commissioner of Income-tax to accept such disclosures and to accept income-tax on the amount of the income disclosed at certain rales in such instalments as he alight allow and to grant a certificate to every person who had made such a declaration and paid the tax setting forth the particulars of the amount declared, the amount of tax paid and the date of payment. Under Section 24 of the Finance (No. 2) Act, 1965, provision was made for disclosure of any income which has not been included in the disclosure made under Section 68 of the earlier Act and similar provisions for payment of tax and grant of certificate by the Commissioner.
(2.) The petitioner is a partnership firm which was assessed to income-tax for the assessment year 1960-61, by the Income-tax Officer, " A " Ward, District II(I), Calcutta, being the respondent No. 1 herein, under Section 23(5)(a) of the 1922 Act on a total income of Rs. 73,352 and the tax demanded was duly paid. It is contended in the petition that at the time of the original assessment all details of the petitioner's income and all documents and evidence in support thereof as required by the respondent No. 1 was produced before him by the petitioner and the assessment was made on consideration of such evidence and documents produced. One Seth Kerorimull, a partner of the petitioner-firm, made an application on the 27th May, 1965, under Section 68 of the Finance Act, 1965, disclosing certain unaccounted income for the period of the assessment years 1954-55 to 1962-63. A further application for disclosure was also made by the said Kerorimull in respect of the assessment years 1963-64 and 1964-65 which was not disclosed in the original petition. The total amount disclosed in the said two petitions was Rs. 14,25,000 which was accepted by the Commissioner of Income-tax, and the tax due thereon at the rate of 60 per cent. amounting to Rs. 8,55,000 was paid and the Commissioner of Income-tax, West Bengal III, Calcutta, the respondent No. 2 herein, granted a certificate in terms of the aforesaid section. In the said disclosure petitions Kerorimull disclosed that he had advanced to the petitioner-firm in the names of third parties a total sum of Rs. 4,31,000. Thereafter, on 14th March, 1969, a notice under Section 148 of the Income-tax Act, 1961, was served on the petitioner by respondent No. 1, requiring it to file its return for the assessment year 1960-61 as he had reason to believe that its income for the above year had escaped assessment. It was mentioned in the said notice that it was being issued after obtaining the necessary sanction of the Commissioner. In response to the said notice the petitioner filed the return for 1960-61, together with a letter dated the 28th March, 1969, wherein the petitioner took the plea that the Income-tax Officer had no reasons to believe that the petitioner's income for 1960-61 had escaped assessment as he could not take action under Section 148 on the basis of any disclosures made by one of the partners of the petitioner. It is also recorded in the said letter that the return was being filed without prejudice to its rights and contentions as to the validity and/or the legality of the notice under Section 148. A demand was made on respondent No. 1 to cancel and/or to withdraw and/or to rescind the said notice. As apparently the Respondent No. 1 did not comply with the said demand, this rule was obtained on the 3rd April, 1969, requiring the respondent-Income-tax Officer and the respondent-Commissioner of Income-tax and the Union of India to show cause why appropriate writs should not be issued for quashing the aforesaid notice under Section 148 and any proceedings held or taken thereunder.
(3.) As is usual in such cases the affidavit-in-opposition has been affirmed neither by the Income-tax Officer who made the original assessment or the Income-tax Officer who issued the notice under Section 148, but by the present incumbent to the post of the Income-tax Officer, "A" Ward, District II(I), Calcutta, who has affirmed all the material statements in the affidavit to be based on information received from the records. In paragraph 7 of the affidavit, which is also affirmed as based on information received from the records, it is stated that the Income-tax Officer had reason to believe that the amount shown to be credited in the books of account of the petitioner as and by way of hundi loans and interest shown to have been paid thereunder were not genuine and were fictitious. It would also appear from paragraph 10 of the petition that the petitioner's authorized representative was given to understand by the respondent No. 1 that the impugned notice was issued on the basis of the disclosure petition made by the said partner of the petitioner and it is contended that any particulars contained in the said disclosure proceedings are confidential and could not be used by the department in taking any proceedings against the petitioner. That the petitioner was under the impression that the reassessment proceedings were initiated on the basis of the disclosures made by one of its partners would also appear from its aforesaid letter dated the 28th March, 1969.;