K.L.Roy, J. - (1.) This is an application under article 226 of the Constitution challenging the validity of certain notices issued under Section 148 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), and Served on the petitioner by the respondent-Income-tax Officer with the object of reopening the petitioner's assessments for the years 1959-60, 1960-61 and 1961-62, on the ground of the petitioner's failure to disclose fully and truly all material facts for the purpose of its assessments for these years.
(2.) Section 147 of the Act is more or less identical in terms with Section 34(1) of the repealed Income-tax Act, 1922, and provides as follows : " If- (a) the Income-tax Officer has reason to believe that, by reason of the omission or failure on the part of an assessee to make a return under Section 139 for any assessment year to the Income-tax Officer, or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year, or (b) notwithstanding that there has been no omission or failure as mentioned in Clause (a) on the part of the assessee, the Income-tax Officer has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation .allowance, as the case may be, for the assessment year concerned. . . . Explanation (2).--Production before the Income-tax Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Income-tax Officer will not necessarily amount to disclosure within the meaning of this section."
(3.) The petitioner is a company carrying on the business, inter alia, of financing hire purchase of automobiles. For the assessment years 1959-60, 1960-61 and 1961-62 the petitioner was duly assessed by the Income-tax Officer, "I" Ward, Companies District I, Calcutta, and in making these assessments the petitioner claimed an allowance of a sum of Rs. 5,000 in each year as financial commission paid to Messrs. Purushottam Chowbey & Co. This claim of the petitioner was allowed by the Income-tax Officer in making the assessments for the aforesaid years. The petitioner's appeals to the Appellate Assistant Commissioner, and, thereafter, to the Tribunal, against 'the quantum of the assessments were partially successful. By three notices "purported to be under Section 148 of the Act, all dated the 21st November, 1967, the respondent-Income-tax Officer, Central Circle XIV, Calcutta, to whom the petitioner's file had been transferred in the meanwhile, proposed to reopen the petitioner's assessment for the aforesaid years and to make reassessments in respect thereof as he had reason to believe that the petitioner's income chargeable to tax for the aforesaid assessment years had escaped assessment within the meaning of Section 147(a) of the Act. The petitioner's demand for information as ,,to the reasons which prompted the respondent-Income-tax Officer to issue the said notices were rightly rejected by the Income-tax Officer as at that stage the petitioner was not entitled to that information. Thereafter, the petitioner filed the returns for the aforesaid three years as directed by the impugned notices and thereafter again demanded of the respondent-Income-tax Officer to be informed of those reasons which had prompted him to issue the notices under Section 148. By his letter dated the 8th April, 1968, the respondent-Income-tax Officer informed the petitioner that during the course of the assessment proceedings for the year 1962-63, one Sri Man Singh Chaturvedi, a coparcener of Messrs. Purushottam Chowbey & Co., was examined and according to his statement no business services were rendered by Purushottam Chowbey & Co. to the petitioner firm during the relevant accounting years. In view of the above fact it was clear that the petitioner had failed to disclose fully and truly all material facts necessary for its assessment and, hence, its income had escaped assessment for the said years.;