1999 (9) TMI 48 - HC - Income Tax

High Court affirms Income-tax Act proceedings validity based on notice under Section 148

The High Court upheld the validity of the proceedings initiated under Section 147 of the Income-tax Act, 1961, based on a notice issued under Section 148. ... Reassessment, Notice, Writ Issues involved: Validity of proceedings u/s 147 of the Income-tax Act, 1961 initiated through notice u/s 148.Comprehensive Details:Issue 1: Validity of Proceedings under Section 147:The petitioner challenged the initiation of proceedings u/s 147 based on a notice u/s 148, claiming lack of jurisdiction due to a typographical error in his daughter's affidavit regarding marriage expenses. The Assessing Officer inferred undisclosed income based on the affidavit. The petitioner argued that the error was rectified before the notice was served, thus the proceedings should be quashed.Legal Analysis:The High Court noted that while appellate authorities are usually approached for disputes, lack of jurisdiction can be challenged directly. Referring to precedents, including Calcutta Discount Co. Ltd. v. ITO and ITO v. Lakhmani Mewal Das, the court emphasized that the Assessing Officer must have reasonable grounds to believe in income escapement for jurisdiction under section 147.Court's Decision:Applying the legal tests, the court found the daughter's affidavit provided reasonable grounds for the Assessing Officer to suspect income escapement, thus upholding the validity of the proceedings at the initiation stage. The court clarified that the assessment merits were not delved into, allowing the petitioner to present evidence during reassessment to contest the alleged undisclosed income. Consequently, the writ petition was dismissed.