Amiya Kumar Mookerji, J. - (1.) This appeal is by the revenue and it is directed against the judgment and order of Sabyasachi Mukharji J. dated August, 1972, quashing notices dated 26th March, and 31st March, 1970, under Section 148 of the Income-tax Act, 1961, for the assessment year 1961-62 issued upon the respondent.
(2.) The respondent is a company incorporated under the Indian Companies Act. For the assessment year 1961-62, the said company was assessed under Section 23(3) of the Indian Income-tax Act, 1922 (hereinafter referred to as " the old Act") and the Income-tax Officer, " E " Ward, Companies Dist. III, computed the total income of the company at Rs. 70,692. The said assessment was, however, rectified subsequently by the said officer by his three orders dated 22nd March, 1962, 7th July, 1973, and the total income was finally computed at Rs. 41,519. The said company's assessment had been completed under the relevant provisions of the old Act and also under the new Income-tax Act, 1961, up to the assessment year 1965-66. While the assessment proceeding relating to the assessment years 1965-66 and 1966-67 were pending before the assessing Income-tax Officer, the respondent-company received the summonses dated 1st February, 1967, and 8th February, 1967, issued under Section 131 of the Income-tax Act, 1961 (hereinafter referred to as " the new Act "), whereby the principal officer of the said company was required to appear before the said Income-tax Officer to produce the books of account for the assessment year 1959-60. The said company moved this court against the said two notices under Article 226 of the Constitution and obtained a rule. The said rule was made absolute by T. K. Basu J. and the summonses were cancelled. Thereafter, the respondent-company received two notices dated 26th March, 1970, and 31st March, 1970, issued by the Income-tax Officer, "G" Ward, Companies Dist. III, under Section 148 of the new Act for the assessment year 1961-62. By the said notices the respondent-company was called upon to submit the return of its income for the assessment year 1961-62, as the said Income-tax Officer had reasons to believe that the respondent-company's income had escaped assessment within the meaning of Section 147 of the new Act. By a letter dated 29th April, 1972, written to the said Income-tax Officer the respondent-company pointed out that there was absolutely no material in the possession of the Income-tax Officer on which he could have reasons to believe that the respondent-company's income had escaped assessment for the said year 1961-62. It was pointed out in the said letter that the conditions precedent for assumption of jurisdiction under the provisions of Section 147 of the new Act had not been satisfied and the Income-tax Officer had absolutely no materials on which he had reasons to believe that the respondent-company's income had escaped assessment and, as such, the said Income-tax Officer had no jurisdiction and/or authority to reopen the said assessment on a mere change of opinion. It was further contended that there was no new or fresh information in the possession of the said Income-tax Officer in consequence of which he had reasons to believe that the income of the respondent escaped assessment and that there was no omission on the part of the respondent-company to disclose fully and truly the material particulars of its income and, as such, the said notices were illegal, invalid and inoperative. Accordingly, the respondent-company by the said letter requested the Income-tax Officer to drop the said proceeding in pursuance of the said notices. As the said proceeding against the respondent-company was not dropped, the respondent-company moved this court in an application under Article 226 of the Constitution and obtained a rule nisi on 13th of May, 1970. The said rule was heard by Sabyasachi Mukharji J. and the learned judge by his order dated August 9, 1972, made the rule absolute upon the view that the materials upon which the belief was formed by the Income-tax Officer had not been indicated in the reasons or in the affidavit filed on behalf of the revenue. Accordingly, the conditions precedent for the reopening of the relevant assessment had not been fulfilled in the instant case. The revenue being aggrieved by the said judgment and order preferred this present appeal in this court.
(3.) Mr. Balai Lal Pal appearing on behalf of the revenue contended that the learned trial judge erred in applying the principles laid down by the Supreme Court in the case of Sheo Nath Singh v. Appellate Assistant Commissioner of Income-tax. Mr. Pal strenuously argued that the said decision has got no application in the facts and circumstances of the present case.;