Law:

Section:

Section 148, read with section 147 of the Income-tax Act, 1961 - Income escaping assessment - Issue of notice for - Assessment year 1959-60 - ITO issued notice under section 148 to assessee-company on grounds, inter alia, that on perusal of files, certain facts unknown at time of assessments emerged, namely, that 'D', manager of Delhi branch was brother-in-law of 'G', Managing Director of assessee-company which was really a one-man show of 'G', that 'D' had made gift to 'G's son and had advanced loan to 'G' and had spent on himself only a sum of Rs. 4,000 a year; and that 'D' was never allowed to draw his full salary and his emoluments were being credited in company's books in his name and was allowed to draw in driblets - In his appellate order for 1957-58, AAC had given details, of work done by 'D' in Delhi branch and also income he was earning as owner of said business in five previous years to business being taken over by assessee-company - Further, gifts had been shown in gift-tax returns and gift-tax paid thereon while amount of loan to have been shown in wealth statements of 'D' for his wealth-tax assessment - Both in previous years and also in subsequent years of assessment, ITO had been persistently trying to disallow sometimes whole, and sometimes a substantial part of remuneration credited to directors of assessee-company but assessee always obtained relief either from AAC or Tribunal or from High Court - Whether in view of fact that credit balances in directors' accounts on account of undrawn remuneration were considered in appellate order of AAC for assessment year 1958-59, it could not be urged that fact that remuneration payable to directors was credited in individual accounts in company's books and that only amounts paid either to such directors or paid on account of such directors were debited in each year was not known to department at time of making original assessment - Held, yes - Whether facts coming to ITO's knowledge in respect of gifts and loan could not in any way form any ground for a belief that payments made and/or credited to 'D' as his remuneration as a director by company were bogus or fictious as company had not been shown to…

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