B.C.Mitra, J. - (1.) This appeal is directed against a judgment and order dated April 30, 1970, whereby a rule nisi issued under Article 226 of the Constitution was discharged.
(2.) For the assessment year 1962-63 the appellant filed its income-tax return on November 29, 1962, showing Rs. 2,092 as its profits. According to the appellant a mistake had occurred in the preparation of the return, inasmuch as the profit of Rs. 10,718.46 arising from construction work was left out from the return, but along with the return a copy of the balance-sheet and profit and loss account was filed by the appellant. In the profit and loss account, however, the profit from the construction work was Shown. The Income-tax Officer made the assessment on November 27, 1963, and it appears from the assessment order that the profit from the construction work was taken into account in making the assessment. The appellant, however, had filed a revised return showing the general profit of Rs. 2,092 as also the profit from the construction work aggregating Rs. 12,797.65. After having made the assessment order on the basis of the first return the Income-tax Officer issued a notice to the appellant under Section 147 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). The ground for issue of this notice was that the revised return was not before the Income-tax Officer when the assessment order was made, but came to her possession later on, when it was forwarded to her on December 3, 1963. On receiving the notice under Section 147 the appellant wrote to the Income-tax Officer challenging her jurisdiction to issue such a notice and also alleging that there were no grounds for issue of the notice. Thereafter, not being satisfied with the explanation given by the Income-tax Officer, the appellant made an application under Article 226 of the Constitution, and obtained a rule nisi which was discharged by the order dated April 30, 1970.
(3.) The first ground of attack advanced by Mr. De, counsel for the appellant, on the order under appeal, was that the foundation of a notice under Sections 147 and 148 of the Act was escapement of income, and in this case there was no such escapement, because the profit from construction work which was the item left out from the first return, and included in the revised return, was in fact taken into consideration by the Income-tax Officer in making the assessment order. It was argued that this item of profit was not only before the Income-tax Officer, as it was included in the profit and loss account, but it was in fact taken into consideration by the Income-tax Officer in making the assessment order. The specific amount which provided the ground for the issue of a notice under Section 147 having been taken into consideration by the Income-tax Officer in making the assessment, it could not be said, it was argued, that any income or profit had escaped assessment.;