1997 (2) TMI 87

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....ecuted and another firm was constituted. The petitioner-firm has been submitting returns of their income and the return for the assessment year 1974-75 was submitted to the Income-tax Officer, A-Ward, Tinsukia, on September 17, 1974, showing a loss of Rs. 29,063. Thereafter on January 2, 1987, i.e., after a lapse of about more than 11 years, the petitioner-firm received a letter dated December 31, 1986, stating thereunder that it has come to the notice that an amount of Rs. 40,000 on April 11, 1973, Rs. 40,000 on May 1, 1973, and Rs. 30,000 on June 1, 1973, appearing as credited in the books of account in the name of Prabhudayal Agarwalla are bogus entries and Prabhudayal Agarwalla is simply a name-lender and he had no capacity to give loan....

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.... not necessarily amount to disclosure within the meaning of the foregoing proviso ". As such he submits that the findings arrived at by the assessing authority that the amount of loan shown was a bogus entry cannot give jurisdiction to the Income-tax Officer to initiate proceedings under section 147. But this contention of Sri Sarma has been answered by the apex court in the decision of Phool Chand Bajrang Lal v. ITO [1993] 203 ITR 456, wherein the Supreme Court pointed out, inter alia, as follows : " We are not persuaded to accept the argument of Mr. Sarma that the question regarding the truthfulness or falsehood of the transactions reflected in the return can only be examined during the original assessment proceedings and not at any st....

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....me-tax Officer and examine whether there was any material available on the record from which the requisite belief could be formed by the Income-tax Officer and further whether that material had any rational connection or a live link for the formation of the requisite belief." Sri G. K. Joshi, learned counsel for the Revenue, places reliance on Agarwal and Agarwal (Private) Ltd. v. K J. Mukherjee, ITO [1973] 92 ITR 282, wherein the Division Bench of this court pointed out that the present case is squarely covered by section 147(a) of the Income-tax Act, 1961, meaning thereby that in the opinion of the Income-tax Officer, there is reason to believe that income had escaped assessment by reason of the failure on the part of the assessee to d....