M.N.Roy, J. - (1.) Sarvashree Ratanlal Mohta, Hanumandas Mohta, Basanta Kumar Mohta and Suresh Kumar Mohta having equal shares, formed a partnership, viz., the petitioner firm, for the purpose of carrying on the business of purchase and sale of rice and paddy, apart from manufacturing and selling of plastic goods. It has been stated that for the assessment year 1960-61 corresponding to 2015-16 Dewali (hereinafter referred to as "the said assessment year"), the petitioner firm was assessed by the ITO, B-Ward, District 24-Parganas, being respondent No. 2, who at the material time was one H. V. Upadhyay, under Section 23(3) read with Section 23(5)(a) of the Indian I.T. Act, 1922 (hereinafter referred to as the "said 1922 Act"), and the total income was computed at Rs. 7,671. Such fact, excepting the amount was admitted, and the assessment in question was made on September 5, 1960, on a total income of Rs. 13,962 taking the status of the assessee as a registered firm. The income as computed has been stated to be Rs. 7,571 by the answering respondents.
(2.) Thereafter, a notice dated September 21, 1976, as issued under Section 148 of the Income-tax Act, 1961 (hereinafter referred to as " the said Act"), was served on the petitioner, asking it to furnish a return within 30 days from the date of service of notice, as the ITO, C-Ward, District 24-Parganas, respondent No. 2, had reasons to believe that the income of the petitioner chargeable to tax had escaped assessment within the meaning of Section 148 of the said Act. It was also the case of the answering respondents that such notice was duly served on September 23, 1976, on the petitioner, after obtaining the due and necessary sanction of the Central Board of Direct Taxes and the said notice was served within the period prescribed under Section 149(a)(ii) of the said Act. The petitioner has stated that the said notice was served at the end of the 16th year under Section 149 as mentioned above, apart from claiming that the sanction from the Central Board, as mentioned above, was obtained without any basis, materials or evidence. The answering respondents have of course stated that there were materials and grounds on which the proceedings under Section 147(a) read with Section 149(a)(ii) of the said Act, were in existence and the necessary sanction, as mentioned above, was obtained, on placement of material facts and evidence.
(3.) The petitioner has of course stated that respondent No. 3, as mentioned above, acted illegally, in issuing the notice as mentioned above, without duly forming his belief on any material whatsoever and, as such, the requirements of Section 147 read with Section 149(a)(ii) of the said Act, were not fulfilled in the instant case and, as such, the concerned notice became illegal, invalid, void and barred by time. Such facts have of course been denied and disputed by the answering respondents through their affidavit-in-opposition dated July 27, 1981, which was filed by Abani Mohan Sen, respondent No. 1, and he has stated that such affidavit was filed by him, after taking charge of the ward and making himself acquainted with the facts and circumstances of the case, on retirement of his predecessor, viz., respondent No. 2, who made the assessment. The reasons for the concerned initiation, which were as under, were disclosed during the hearing of these proceedings ; "The assessee, M/s. Ratanlal Mohta & Sons, have brought in their business Rs. 1,35,000 being peak credits in two names, viz., Sri Jawaharlal Jalal and Kanaiyalal Agrawala. No details and particulars of these credits were furnished before the Income-tax Officer at the time of original assessment. These two persons were subsequently found to be bogus persons. The assessee itself also admitted the credits in the names of these two persons along with some others as being not genuine loans but represented its own money introduced in the two aforesaid names, vide their above refund petition dated 22-6-65, before the Commissioner of Income-tax, West Bengal under Section 271(4A). Further, on enquiries made in connec- tion with various amounts shown as loans in the names of various parties by issuing summons to them under Section 131 for verifying the genuineness of the same loans in connection with penalty proceedings for the assessment year 1961-62, it was found that none of the alleged loan creditors appeared or complied with the notices and in some cases the parties were not even traceable. In the circumstances stated above, I have on the basis of these informations, which have come into my possession, reasons to believe that the assessee-firm has introduced its own concealed income in its books in the garb of alleged loans in fictitious names to the tune of Rs. 1,35,000 and the so-called payments shown as interest on such loans and that income has escaped assessment--approximate tax effect Rs. 6,188--and I direct the said reasons to be kept in the record ".;