Law:

Section:

Section 147 of the Income-tax Act, 1961 - Income escaping assessment - Position prior to 1-4-1989 - Assessments years 1950-51 to 1961-62 - Whether failure on part of assessee to disclose 'Note' of Chartered Accountants in balance sheet produced and report of Central Bureau of Investigation showing dealings of assessee on behalf of a non-resident company income from which was not disclosed, constituted sufficient materials with regard to escapement of income on basis of which Income-tax Officer could initiate reassessment proceedings under section 147(a) - Held, yes Section 148, read with section 147 of the Income-tax Act, 1961 - Income escaping assessment - Issue of notice for - Assessment years 1950-51 to 1961-62 - Whether there is no necessity or any requirement that reasons which induced authorities to initiate proceedings under section 147 should, as a precondition, be made available or communicated to assessee - Held, yes FACTS The assessee had been regularly assessed under the Indian Income-tax Act, 1922. Assessee's premises were searched by the Enforcement Directorate and a large number of documents were seized. There was a report from Central Bureau of Investigation (CBI) showing that the assessee was selling ovaltine in India on consignment basis on behalf a London Company, and was also incharge of the ovaltine propaganda department of the non-resident. While the expenses on this business were debited by the assessee but the dues from non-resident company were not brought into books of account of the assessee-company. The profits were, therefore, understated by the assessee. Further the assessee did not disclose 'Note' of the Chartered Accountants in the balance sheet produced. On this basis notices under section 148 of the Income-tax Act, 1961, were issued by the ITO for the assessment years 1950-51 to 1961-62 as he had reasons to believe that the income of the assessee chargeable to tax for the said assessment years had escaped assessment within the meaning of section 147 of the Act of 1961, and as such he proposed to reassess the income. Notices for the assessment years 1950-51 to 1960-61 were issued after obtaining the necessary satisfaction and…

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