1976 (2) TMI 10

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....d other necessary particulars. The Income-tax Officer, thereupon, determined the total income as Rs. 7,95,575. This income was assessed. The total income was ascertained by the Income-tax Officer having allowed Rs. 20,000 under the head "Workmen and staff welfare expenses". The deduction of Rs. 20,000, it is alleged in the impugned notice, resulted "in the escape of" tax which is sought to be remedied by the revenue through the impugned notice. The assessment order in regard to some minor particulars was rectified on October 25, 1967, and on December 7, 1967, by separate orders of the Income-tax Officer. On appeal, by the petitioner-assessee, the Income-tax Appellate Tribunal allowed the appeal on October 3, 1969, in some aspects (the parti....

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..... The assessee did not bring to the notice of the Income-tax Officer at the time of assessment that staff welfare expenses include lump sum amount spent by its vice-president as per his discretion. Had the assessee brought this fact to the notice of the Income-tax Officer, the Income-tax Officer would have disallowed the same". The expenditure, according to the department, was not incidental to business. This fact, they assert, the department found when they scrutinised the assessee's accounts for purposes of 1968-69 Assessment. The claim for similar expenditure by the assessee was disallowed and the Appellate Assistant Commissioner confirmed the order of the Income-tax Officer. In the orders of assessment in 1972-73 and 1973-74, such an ex....

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....48 of the Act, observed, that the provision is a safeguard, which "cannot be lightly treated" and therein a duty cast on the Commissioner to be satisfied before the notice under section 147 is issued, and to note "yes" was, in the words of Hegde J., to discharge that duty only in form. The dicta in Calcutta Discount Co. Ltd. v. Income-tax Officer [1961] 41 ITR 191 (SC) was relied on in S. Narayanappa v. Commissioner of Income-tax [1967] 63 ITR 219 at 222 (SC). Ramaswami J. observed in that case that the "existence (of reasons) is different from sufficiency of the reason". In Gemini Leather Stores v. Income-tax Officer [1975] 100 ITR 1 (SC), the Supreme Court stressed that once the authorities are shown the primary facts, it is for them t....