Law:

Section:

Section 147 of the Income-tax Act, 1961 - Income escaping assessment - General - Assessment year 1961-62 - Assessee's wife was partner in a firm - For assessment year 1961-62 ITO 'J' ward by a letter informed ITO 'C' ward that by an order under section 185(1) in case of firm in which assessee's wife was a partner had been treated as benamidar of her husband - On that basis ITO 'C' ward issued notice upon assessee for reopening of assessment - However, there was no specific statement indicating source on which ITO had formed belief as to escapement of income and as to omission or failure on part of assessee but acted merely on letter of ITO 'J' ward - Whether in view of facts and circumstances of case, proceedings initiated for reassessment were not valid and were to be quashed - Held, yes FACTS The wife of the assessee was partner in a firm. For the assessment year 1961-62, the ITO 'J' Ward, by a letter informed the ITO, "C" Ward, that by an order under section 185(1) for the assessment year 1961-62 in the case of the firm - O the wife of the assessee had been treated as the benamidar of her husband. Upon that letter the ITO, "C" Ward, submitted the reopening proposal to the Commissioner and obtained sanction for same. Accordingly, notice for reopening of the assessment was issued upon the assessee. On writ : HELD In the instant case there was no express statement of the ITO that he was forwarding the reopening proposal to the Commissioner on the ground of the letter from the ITO, "J" Ward, but from the facts and circumstances of the case and from the fact that there was no specific statement indicating the source on which the ITO in the instant case had formed the belief as to the escapement of income and as to the omission or failure on the part of the assessee it was apparent that he also acted merely on the letter of the ITO, "J" Ward. It was true that the letter of the ITO "J" ward could have been a source of information upon which the ITO in instant case could have independently formed his own belief. But, in the instant case, it was not clear as to whether the ITO made any effort to form any independent belief but had merely acted on the suggestion of…

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