Subhro Kamal Mukherjee,J. - (1.) In this application under Article 226 of the Constitution of India (the writ petition in short), the writ petitioner questioned three notices issued under Section 148 of the IT Act, 1961 (the said Act in short), dt. 26th Sept., 1996, for the asst. yrs. 1989-90 and 1990-91 and dt. 20th Sept., 1996, for the asst. yr. 1991-92.
(2.) The relevant facts for the disposal of the writ petition are summarised as under: (a) The petitioner, a public limited company, is engaged in businesses of travel agency and tour operation. The petitioner is an agent of the airlines for selling air tickets and for rendering such services, it receives commission from such airlines. Similarly, the petitioner acts as an agent for various hotels and it gets commission from such hotels for booking accommodations on behalf of the clients of the petitioner. Apart from the aforesaid businesses of acting as the agent of airlines and of hotels, the writ petitioner, also carries on business of tour operation. The writ petitioner, however, receives only the amount of commission, which the writ petitioner is entitled to receive from the said airlines and the hotels for rendering its services as the agent. (b) Section 80HHD of the IT Act, 1961, was inserted by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1st April, 1989, inter alia, for allowing deductions in respect of the earnings in convertible foreign exchange in respect of the business of a hotel or of a tour operator. In Sub-section (6) of the said section it has been provided that any deduction under the said section shall not be admissible unless the assessee furnishes, along with the return of income, the report of an accountant, as defined in the Explanation below Sub-section (2) of Section 288, certifying that the deduction has been correctly claimed. (c) The writ petitioner duly filed its returns of income in respect of the asst. yrs. 1989-90, 1990-91 and 1991-92 and in each of the said assessment years, the writ petitioner claimed in its returns deductions under Section 80HHD and, as required under the said Act, for each of the said assessment years, the writ petitioner filed certificates, in the prescribed forms, from the chartered accountant, inter alia, certifying that the deductions have been correctly claimed. The said certificates issued by Ray and Ray, Chartered Accountants, and duly signed by one of its partners have been annexed to the writ application. (d) The AO passed the orders of assessments in respect of the said three assessment years under Sub-section (3) of Section 143 of the said Act and allowed the petitioner deductions under Section 80HHD. (e) The Dy. CIT issued three notices, as referred to hereinabove, under Section 148 of the said Act alleging that there has been escapement of assessment within the meaning of Section 147 of the said Act. The petitioner made several correspondences with the IT Department asserting that the assessments in respect of those assessment years have been correctly made and there has been no omission or failure of any nature whatsoever on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment for those assessment years. The writ petitioner also requested for supply of the reasons for the proposal for reassessment. (f) By a letter dt. 21st Aug., 1997, the Dy. CIT directed the writ petitioner to file fresh returns in respect of those assessment years overruling the contentions of the writ petitioner that the returns originally filed in respect of those assessment years could not be accepted even with modifications as the returns in compliance of the notices under Section 148 of the said Act. In the said letter, the writ petitioner was informed that the reasons as contemplated under Section 151 of the said Act have been recorded before obtaining the approval from the CIT. (g) The writ petitioner, thereafter, filed fresh returns in respect of the said assessment years in reply to the notices issued under Section 148 of the said Act. (h) Ultimately, on 13th Nov., 1997, the Dy. CIT furnished the copies of the recorded reasons.
(3.) Mr. R.N. Bajoria, learned senior advocate, appearing for the writ petitioner, submitted that where an assessment has been made under Sub-section (3) of Section 143 of the said Act, no action can be taken unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment for that assessment year. The provisions of Section 147 of the said Act, it is argued by Mr. R.N. Bajoria, do not contemplate a review on account of failure of the AO in doing his duties. Finally, it is argued by Mr. Bajoria that unless those conditions are satisfied, the AO gets no jurisdiction to issue notices.;