- (1.) THE assessment year in question is 1970-71. The subject-matter of challenge is a notice under s. 148 of the IT Act, 1961 ('the Act') in respect of the year in question. The said notice impugned in this proceeding is dt. 30th March, 1987.
(2.) THE facts briefly stated are : In 1956 the petitioner purchased premises No. 5, Clive Row, Calcutta (the said premises) at a public auction conducted by the Certificate Officer under the provisions of the Bengal Public Demands Recovery Act, 1913. The petitioner purchased the premises subject to prior encumbrances for a total price of Rs. 2,27,250. The auction under the Bengal Public Demands Recovery Act was for recovery of sales tax and the petitioner took possession of the premises. The next year a suit was filed in this Court being Suit No. 689 of 1957 against the original owner of the premises as well as the petitioner for recovery of sum of Rs. 35,34,063-11-6 by the Hongkong and Shanghai Banking Corporation (the bank) on the ground that the premises had been mortgaged to the bank by the original owner. An interlocutory application was made in the suit by the bank. The interlocutory application was disposed of by an order dt. 29th April, 1957. The order insofar as it is material provides as follows (wherein the petitioner is referred to as the defendant firm and the bank as the plaintiff bank) : "It is ordered by and with the consent of the plaintiff bank and the said defendant firm and without prejudice to the rights and contention of the parties that the said defendant firm shall collect the rents, issues and profits of the premises No. 5, Civil Row, Calcutta and pay all outgoings thereof. And it is further ordered that the plaintiff bank shall write to all the tenants withdrawing objection to the tenants paying rents to the said defendant firm and the tenants shall pay accordingly and it is further said defendant firm shall be at liberty to withdraw rents deposited by tenants with the Rent Controller and it is further ordered that the said defendant firm shall pay monthly and every month a sum of Rs. 17,500 to the plaintiff bank first of such monthly payment to be made on or before the 15th day of June next and subsequent payments on or before 15th of each month and every subsequent month. And it is further ordered that in default of the said defendant firm failing to pay any of such monthly payments as aforesaid Mr. R. Mills failing him Mr. S.S.T.B. Laver of the plaintiff bank be appointed receiver of the rents, issues and profits of 5, Clive Row, Calcutta." Pursuant to the interim order the petitioner paid Rs. 17,500 per month to the bank up to March, 1976. From 1961-62 the income from the premises was assessed in the hands of the petitioner. The petitioner claimed deduction in respect of the sum of Rs. 17,500 on account of interest. It is claimed by the petitioner that for the asst. yr. 1961-62 the petitioner disclosed all the facts leading up to the purchase of the premises including the pleadings relating to the suit filed by the bank as well as the interim order dt. 29th April, 1957 before the ITO. The ITO allowed the claim of the petitioner in respect of the said payment of Rs. 17,500 per month on account of interest. This deduction was permitted by the ITO for the asst. yrs. 1962-63 to 1976-77. The said suit was decreed on 22nd Jan., 1976 in favour of the bank. The petitioner preferred an appeal from the judgment and decree dt. 22nd Jan., 1976. The appeal was disposed of on 19th May, 1987 by an order of the Appeal Court. The decree dt. 22nd Jan., 1976 was modified by consent. It was agreed between the parties that the bank would retain Rs. 30 lakhs out of the amounts paid by the petitioner to the bank pursuant to the said interim order dt. 29th April, 1957 and would refund a sum of Rs. 9,02,292 together with a further amount of Rs. 4,40,000 on account of interest. This the bank has done.
(3.) IN the meantime a series of notices under S. 148 issued to the petitioner. These notices have been separately challenged in different proceedings as noted below :;