Law:

Section:

Section 147 of the Income-tax Act, 1961 - Income escaping assessment - Non-disclosure of primary facts - Assessment year 1991-92 - Assessing Officer issued notice under section 148 to initiate assessment proceedings as, according to him, income of assessee had escaped assessment within meaning of section 147 inasmuch as payments made by assessee to certain parties for rendering certain services were not genuine - That was found on perusal of a D.O. letter from Commissioner of Calcutta to Commissioner of Guwahati - Assessee, at time of his assessment, had presented before assessing authority all material and relevant facts, that is, profit and loss account, audited balance sheet, audit report and other relevant documents - Assessing authority, while assessing income of assessee, had scrutinised those facts and made order of assessment - Assessing authority had not mentioned as to whether, except letter written by Commissioner of Calcutta to Commissioner of Guwahati, he had any other material before him that alleged payments were not, in fact, made and amount paid in cheques was returned back in cash after routing it through four or five bank accounts - Whether, on facts, it could be said that Assessing Officer was unjustified in issuing notice and initiating proceedings under section 147 or 148 as there was no new material on record relating to transactions which had taken place between assessee and other parties, and as Assessing Officer had not made any independent enquiry for arriving at prima facie conclusion that income of assessee had escaped assessment - Held, yes FACTS The assessee-company was carrying on the business of growing tea leaves and was manufacturing black tea from such green leaves, and further selling it in India and abroad. For the assessment year 1991-92, Namdang Tea Co., which subsequently merged with the assessee-company, filed its return of income, along with the profit and loss account and the audited balance sheet as provided under the Companies Act, 1956 and the audit report and other relevant documents and papers. The company received a letter requiring it to furnish substantial details/documents/information covering various…

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