Law:

Section:

Section 148 of the Income-tax Act, 1961 - Income escaping assessment - Issue of notice for - Assessment year 1961-62 - Partners of assessee-firm made confessions that they had introduced their undisclosed moneys into books of account of firm in bogus names of third parties - ITO having obtained sanction from Commissioner, issued notice under section 148 to assessee-firm - Whether on material that partners had introduced money in partnership firm in fictitious names, it could not be said that there were materials for forming belief that income of assessee-firm had escaped assessment due to failure or omission on its part to disclose fully and correctly all necessary information - Held, yes - Whether, moreover, in view of fact that confession was made by partners of firm in their individual capacities and not by assessee-firm itself sanction of Commissioner was obtained on misrepresentation that confession was of assessee-firm - Held, yes - Whether, in such circumstances, impugned notice was to be quashed - Held, yes FACTS Assessment of the assessee, a registered firm was completed on 28-3-1962. On 16-10-1965, all the partners of the assessee--firm filed disclosure petitions under section 271(4A) before the Commissioner of Income-tax. In the said petitions it was admitted that the personal funds of the aforesaid four partners were invested in the books of account of the firm for the accounting year relevant to the assessment year 1961-62, in the names of various bogus parties. Thereafter, proceedings were initiated against the petitioner-firm. In the reasons recorded for re-opening the assessment under section 147( a) it was mentioned that according to the assessee's own admission at a later stage and various informations received, these unexplained credits represented the assessee's secreted income which escaped assessment by reason of omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the relevant assessment year. After obtaining necessary sanction of the Commissioner, notice under section 148 was issued. On writ: HELD The confessions and admissions of the partners indicated that it…

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