M.N.Roy, J. - (1.) This appeal is directed against a judgment and order dated February 26, 1971, passed in Civil Rule No. 2262(W) of 1966 by P.K. Banerjee J. By the said order the learned judge was pleased to discharge the rule obtained by the appellant against initiation of proceedings under Section 148 of the Income-tax Act, 1961, for the assessment years 1950-51 to 1961-62, by the Income-tax Officer, Central Circle I, respondent No. 1.
(2.) The appellant, which carries on business, inter alia, in export and import and also trade in general merchandise, is alleged to have been regularly assessed under the Indian Income-tax Act. It has been alleged that for the assessment year 1950-51 they were assessed on March 29, 1955, under Section 23(3) of the Indian Income-tax Act, 1922, and the total income was computed at Rs. 5,52,829. Similarly, for the assessment years 1951-52 and 1952-53, they were assessed under the said section and the total income was computed at Rs. 34,562 and Rs. 2,09,486, respectively. The appellant has also alleged that similarly for the assessment years 1953-54, 1954-55, 1955-56 and 1956-57, assessments were made under the said section and the Income-tax Officer concerned determined the loss at Rs. 4,57,239, Rs. 6,12,343, Rs. 3,03,073 and Rs. 91,453, respectively. It has also been alleged that for the assessment year 1957-58, although the total income was computed at Rs. 1,54,696, ultimately there was a nil assessment for the said years after carrying forward the loss in respect of the earlier assessment years, and for the assessment year 1958-59 a loss to the tune of Rs. 1,07,988 was determined under the said section. It has further been alleged that for the assessment year 1959-60, assessment was completed under Section 23(4) of the Act of 1922 and the income was determined at nil. It has also been alleged that for the assessment year 1960-61 the income was computed at nil after setting off the loss of Rs. 2,25, 196 in respect of the assessment year 1953-54 and Rs. 3,40,813 representing a portion of the loss for the assessment year 1954-55.
(3.) Thereafter, notices under Section 148 of the Income-tax Act, 1961, were issued by the respondent No. 1 asking the appellant to submit returns of its income for the assessment years 1950-51 to 1961-62 as he had reasons to believe that the income of the appellant chargeable to tax for the said assessment years hat! escaped assessment within the meaning of Section 147 of the Income-tax Act, 1961, and as such the said Income-tax Officer proposed to reassess the income of the appellant for the assessment years in question. The brief reasons for starting the proceedings under Section 147(1) of the said Act of 1961, a specimen copy whereof has been disclosed with the affidavit-in-opposition dated November 24, 1966, is reproduced here-under as reference will have to be made to the same for the purpose of determining the points that were urged, the more so, as the validity, bona ikies and sufficiency of the reasons stated therein and the formation of the belief on the basis thereof have been challenged. The brief reasons as disclosed are in the following terms : "The premises of M/s. Grahams Trading Co. Ltd. were searched by the officials of the Enforcement Directorate and Customs Department in February, 1964, and a large number of files and documents were seized. The company was selling Ovaltine in India on consignment basis on behalf of M/s. A. Wander Ltd., London, and was also in charge of the Ovaltine propaganda department of the non-resident. A scrutiny of the seized documents has shown that for the period 1949 to 1955 the expenses of the Ovaltine propaganda department were debited by the Indian Co. in their books under appropriate headings. The dues from the non-resident on this account amounting in all to Rs. 12,28,054 for the 6 years from 1949 to 1955 were not brought into the assessee-company's books thereby deflating the aggregate profits for the period by an equal amount. There is, therefore, reason to believe that income aggregating to Rs. 12,28,054 has escaped assessment for the assessment years 1950-51 to 1956-57 on account of the assessee's failure to furnish fully and truly material facts relating to its assessment. Similarly, for the period 1956 to 1959, Rs. 2,59,570 due from A. Wander Ltd. was collected in July, 1960, but remained outside the books of the assessee. The aggregate profits of the period were, therefore, understated by that amount. There is, therefore, reason to believe that income has escaped for assessment years 1957-58 to 1960-61 also. As the amounts received in July, 1960, could possibly be also considered for the assessment year 1961-62, action is necessary for that year also. In the circumstances mentioned above the approval of the Board/Commissioner of Income-tax is solicited under Section 151(1)/(2) for issue of a notice under Section 148 for assessment years 1950-51 to 1956-57. I have reason to believe that the income escaping assessment is likely to amount to Rs. 50,000 for the year.";