TaxTMI 
TaxTMI 
1989 (5) TMI 5
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....Income-tax Act, 1961, was illegal and ab initio void and in that view annulling the assessment ?" Assessment year 1964-65 : " 1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the reassessment proceeding under section 147(a) of the Income-tax Act, 1961, was illegal and ab initio void and in that view annulling the assessment ? 2. If the answer to question No. 1 is in the affirmative, then whether, on the facts and in the circumstances of the case, the Tribunal misdirected itself in law in not upholding the validity of the proceeding under section 147(a) when the same was initiated within the time-limit prescribed under section 147(b) ?" The facts shortly stated are that the....
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....fore taking the approval of the Commissioner : "Books of account of the assessee for the relevant accounting year show cash credits totalling over Rs. 10,000 in the name of Suwalal Jain of 46, Strand Road, Calcutta. This alleged creditor has confessed before the Department that he did not advance any genuine loans but only acted as a name-lender to help the assessee to introduce their concealed profits. Hence, bogus credits and the interest thereon represent escaped income of the assessee. I have reason to believe that owing to the assessee's omission or failure to disclose fully and truly all material facts necessary for its assessment, income has escaped assessment." For the assessment year 1964-65, the original assessment was compl....
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....ing the assessments. Coming to the merit of the additions, it was vigorously pointed out to the Appellate Assistant Commissioner by the assessee's counsel that Suwalal Jain had later on made affidavits confirming the loans advanced to the assessee and the Income-tax Officer was not justified in discarding the entire evidence without ferreting out all the necessary information from Suwalal Jain whenever he appeared before them. It was argued that the reassessments were framed carelessly and had no leg to stand upon. The Appellate Assistant Commissioner held that the reassessment proceedings were validly initiated. He, however, found that the reassessments were made in violation of the principles of natural justice for which purpose he set as....
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....sessment. It is well-settled that the Income-tax Officer must mention in the report the materials he had before him and the reasons for coming to the conclusion that it was a fit case for issuing notice under section 148. The assessments in this case were reopened, as it appears, on the basis of the confession made by one Suwalal Jain but the details of such confession had not been incorporated in the report in some measure so as to form the factual foundation which could hold the Income-tax Officer's belief that it was a fit case for issuing notice under section 148 of the Act. In other words, there is no material to show that the assessee failed to disclose fully and truly all material facts necessary for the assessment for the assessment....