Law:

Section:

Section 147 of the Income-tax Act, 1961 - Income escaping assessment - Illustrations - Assessment years 1963-64 to 1965-66 - ITO issued notice under section 148 on ground that he had information that firm 'A' was concern of assessee and income of that firm should have been assessed in hands of assessee - It was not apparent whether ITO had gathered those facts from assessment order of 'A', whether said assessment of A was made prior to or subsequent to assessment of assessee and whether facts gathered could not have been gathered from material facts at time of original assessment - On other hand, it was evident that all facts had been disclosed at time of original assessment and assessee had full discussion with ITO regarding existence, validity and genuineness of all parties with whom it had transactions including firm 'A' - Whether on facts, revenue failed to discharge onus which was on them to establish their case that facts had come to knowledge of revenue subsequent to original assessment order from which it could be said that there was omission or failure on part of assessee to disclose fully and truly material facts necessary for assessment as result of which income chargeable to tax had escaped assessment - Held, yes - Whether, therefore, impugned notice was liable to be quashed - Held, yes FACTS The assessment of the assessee-firm was sought to be re-opened on the ground that the ITO had information that firm 'A' was a concern of the assessee and income of that concern should have been assessed in the hands of the assessee. The assessee filed the instant writ petition against the notice contending that the said firm was not the concern of the assessee and that it had full discussion with the ITO with regard to the existence, the validity and the genuineness of all the parties with whom assessee had transactions including the said firm. HELD The reopening, in view of the time, lag must have been under clause (a ) of section 147. There must be materials from which the ITO could form the belief that there was omission or failure on the part of the assessee to disclose truly or fully material facts, as a result of which failure and omission the income of…

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