K.C.Agrawal, C.J. - (1.) THIS petition under Article 226 of the Constitution has been filed by M/s. Multimetals Ltd. for quashing the notice under Section 148 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), dated March 21, 1980, in respect of the assessment year 1975-76.
(2.) THE petitioner-company was being assessed to income-tax from year to year. For the accounting year which ended on March 31, 1975, relevant for the assessment year 1975-76, the petitioner-company submitted its return of income to the Income-tax Officer, A-Ward, Kota, along with a letter dated July 30, 1975. THE return was submitted along with a computation of total income, the balance-sheet and profit and loss account with schedules for the period ending on March 31, 1975. THE total income was computed by the petitioner-company at Rs. 71,58,105. THE return was accompanied by a statement of depreciation on fixed assets as on March 31, 1975, claiming normal depreciation at Rs. 7,26,513 and extra shift depreciation at Rs. 4,60,722 aggregating to Rs. 11,87,235. Development rebate was claimed on machinery of Rs. 4,84,132 at the rate of 25 per cent, amounting to Rs. 1,21,033. A list of commission paid on sales at Rs. 8,78,270.77 and on purchase at Rs. 2,08,924.84 was submitted. THE list included payment of Rs. 4,77,890.68 plus Rs. 1,24,877.10 to M/s. Metal Distributors Ltd., Bombay. A letter dated March 10, 1976, revising the return for the assessment year 1975-76 was submitted, a sum of Rs. 1,25,589 being the amount of provision for gratuity was included in the earlier return of income. The Income-tax Officer, A-Ward, Kota, was not satisfied with the correctness and completeness of the return and the accompanying statements filed by the petitioner-company. He did not accept the return of income under Section 143(1) of the Act He issued notices under Section 143(2) of the Act dated November 2, 1976, for November 17, 1976, dated February 3, 1977, for February 16, 1977, dated June 8, 1977, for June 24, 1977, dated September 8, 1977, for September 20, 1977, etc., requiring the petitioner-company to produce documents, accounts and other evidence on which the petitioner-company relied in support of the return of income filed by it. The representative and the accountant of the petitioner-company appeared on various dates before the Income-tax Officer, A-Ward, Kota, and produced account books, relevant vouchers, documents, the printed balance-sheet, profit and loss account and annual report for the year ending on March 31, 1975. The total income of the petitioner-company for the assessment year 1975-76 stood finally computed at Rs. 77,09,440. The income so computed became final and was binding on the assessee as well as on the Income-tax Department. The jurisdiction of the petitioner-company was transferred to respondent No. 2 who sent a letter No. 1,087 dated August 16, 1979. The reply thereto was sent, vide letter dated September 21, 1979. He sent another letter No. 1538, dated October 6/9, 1979, for October 16, 1979. The reply to which was also submitted on October 15, 1979. The attendance register was produced. A statement showing the quantity and value of various products produced and sold by the petitioner-company was submitted.
(3.) IT was submitted that depreciation at the rate of 15 per cent. was claimed on a few machines such as automatic and semi-automatic machines, tools, etc., which are covered under Article 8 of Part B under the head "III-Machinery and Plant "of the table of rates forming part of the Income-tax Rules. A note about the payment of selling agency commission to Metal Distributors and service charges to Oriental Management Service Private Limited was submitted. To the utter surprise of the petitioner-company, it received a notice under Section 148 of the Act bearing No. 3086, dated March 21, 1980. On receipt of this notice, the petitioner-company sent a letter to the Income-tax Officer on April 10, 1980, requesting the Officer concerned to disclose the reasons, if any, which led him to believe that income had escaped assessment to tax on account of any omission or failure on the part of the petitioner-company, and the notice served under Section 148 was invalid. The Income-tax Officer, instead of intimating the reasons for reassessment sent a letter calling upon the petitioner-company to file return forthwith. To the aforesaid letter, the petitioner-company sent its reply on May 30, 1980, to respondent No. 2 reading as under : "In response to your letter No. IAC(A)/80-81/245, dated May 8, 1980, we wish to submit as under : 1. That it is an age old practice of the Department to accept a letter instead of insisting on furnishing of fresh return in compliance with the notice under Section 148 of the Act. However, as desired, under protest, without prejudice and without acceding to your jurisdiction, we are submitting herewith a fresh return declaring therein income originally assessed. All the details, statements and information placed on original assessment record may please be treated as part of the return. 2. That in view of the decisions reported in Kerorimull and Co. v. ITo [1971] 79 ITR 270 (Cal), Indra Co. Ltd. v. ITo [1971] 80 ITR 559 (Cal) and 118 ITR 577 (sic), we request you to please supply us a copy of the reasons, if any, recorded. We are prepared to pay the copying fees, if any. Without going through the reasons, it would not be possible for us to judge as to whether jurisdiction has been rightly exercised by you. Before concluding, we again request you : (i) to please furnish us with a copy of the reasons, if any, recorded and sanction, if any, accorded by the Commissioner of Income-tax, Jaipur ; and (ii) to permit us to inspect the original assessment record." ;