Law:

Section:

Section 148 of the Income-tax Act, 1961 - Income escaping assessment - Issue of notice for - Assessment year 1963-64 - Whether subsequent information regarding falsity of case or casting doubt on genuineness of information upon which ITO had acted would not defeat jurisdiction of ITO if he had jurisdiction to issue notice under section 148 on materials before him - Held, yes - Whether if an inference is possible that there was no business but name-lending in relevant year and if that information came as a result of confession made by proprietor of company in whose alleged name money had been borrowed by assessee and that confession had been recorded and relied on in assessment order and a finding recorded by ITO who himself had issued under section 148 notice, it could not be said that ITO noted without jurisdiction or that there were no materials upon which any reasonable man could have formed belief that assessee had not truly and fully disclosed primary facts at time of original assessment - Held, yes FACTS In the assessment for the relevant assessment year, the ITO allowed deductions on account of payment of certain interest to various parties, including, 'M' on credits. Thereafter, in the assessment for the assessment year 1964-65 completed on 30-12-1967, the ITO came to the conclusion that the transaction with 'M' was fictitious and for this purpose he relied on certain confessions alleged to have been made by 'S', the proprietor of 'M'. The ITO, accordingly, disallowed the said interest. He recorded that 'S' had lent the name of 'M' to the assessee in order to accommodate the assessee to introduce its concealed income in the form of loans in the accounting year corresponding to the relevant assessment year. Therefore, according to the ITO, the credits figuring in the books of the assessee-company in the name of 'M', in fact, represented concealed income of the assessee. Thereafter, on appeal, the AAC passed an order for the assessment year 1964-65 on 22-8-1968. Before that, on 22-3-1968, notice under section 148 was issued reopening the assessment for the relevant assessment year. In the appellate order, the AAC observed that the transaction with 'M'…

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