GEMINI LEATHER STORES Vs. INCOME TAX OFFICER B WARD AGRA

JUDGEMENT

(1.) The appellant a partnership firm, was assessed to income-tax for the assessment year 1956-57 on a turnover of Rupees fifteen lacs by the Income- tax officer by his order dated January 22, 1958. The Income-tax Officer did not accept the return filed by the assessee and the books of account produced by it and made a best judgment assessment. The turnover so assessed was reduced by the Appellate Assistant Commissioner and further reduced by the Appellate Tribunal. On March 31, 1965 the Income- tax Officer issued a notice under Sec. 148 of the Income Tax Act, 1961 stating that he had reasons to believe that income chargeable in respect of the assessment year 1956-57 had escaped assessment within the meaning of Section 147 of the Act and directing the assessee to file a return as he proposed to reassess the income for the said assessment year. The assessee filed a writ petition before the High Court at Allahabad challenging the validity of the notice dated March 31, 1965 on the ground that the Income-tax Officer had no jurisdiction to issue the notice. A learned single Judge of the High Court dismissed the writ petition and his order was affirmed in appeal by a Division Bench. The appeal to this Court is by the assessee on certificate granted by the High Court.

(2.) The justification for taking action under Section 147 and 148 of the Income Tax Act. 1961 as stated by the Division Bench of the High Court is:

(3.) It appears that the Income-tax Officer had written a detailed order in making his best judgment assessment. Having found out all about the drafts which were not mentioned in the assessee's books of account, the Income-tax Officer gave the partners of the firm opportunity to explain the drafts. Referring to the statement of one of the partners. Shri Om Prakash, the Income-tax Officer observed in his order: