Law:

Section:

Section 147 read with section 148 of the Income-tax Act, 1961 – Income escaping assessment – Illustrations – Assessment year 1949-50 – Original assessment for relevant assessment year was completed in 1952 – In 1966, ITO issued notice under section 148 to reopen assessment – Whether since according to affidavit filed by department escaped income was more than Rs. one lakh and for such escaped income no period of limitation for issue of reassessment notice was prescribed, notice issued under section 148 was not barred by limitation – Held, yes – Whether, however, since department had failed to show any material on basis of which ITO could form belief that it was due to omission or failure on part of assessee to disclose fully and truly all material facts necessary for assessment of income for period concerned that any taxable income had escaped assessment, there was no justification for issuance of notice under section 148 – Held, yes FACTS The original assessment for the relevant assessment year was made in 1952. In 1966, the ITO issued notice under section 148 to reopen the assessment for the relevant assessment year that was originally completed in 1952. The assessee filed a return and revised return under protest claiming that no income had escaped assessment and that the notice under section 148 was illegal and barred by time. On writ, the Single Judge held that according to the affidavit filed by the department, the escaped income in the case was more than Rs. 1 lakh and since in respect of the escaped income of over a lakh of rupees the Act of 1922 did not prescribe any period of limitation, the reopening was not barred under the old Act. The Single Judge, however, held that since the department had not disclosed material on the basis of which the ITO could form the belief that there had been omission or failure on part of the assessee to disclose fully and truly all material facts, it could not be said that the belief was held by the ITO in good faith. On revenue's appeal: HELD The Single Judge was justified in holding that the reopening of the assessment was not barred by limitation. There are imperative obligations imposed by the statute and the…

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