Law: Income Tax Act, 1961

Section: 148,147

(a) Income-tax----Re-assessment--Notice-All matters referred for re-assessment considered in original assessment and decided upon-Explanation of assessee relating to original assessment considered and accepted--No new material for re-assessment noticed-Re-assessment proceedings, held, not valid in law. The petitioner-assessee filed a writ petition to quash a re-assessment notice dated January 16, 1974, issued under section 148 of the Income­ tax Act, 1961, with reference to the assessment year 1958-59, with the sanction of the Central Board of Direct Taxes. The notice had been issued with reference to clause (a) of section 147. Held, that the only question for consideration was whether there had been escapement of assessment on account of the fact that the assessee bad omitted or failed to disclose fully and truly all material facts necessary for his assessment. All the three facts which were referred to by the Income-tax Officer for the purpose of obtaining sanction were very much before the Income-tax Officer when the normal assessment was completed on February 15, 1963, by the Income-tax Officer. With reference to these amounts, the assessee had been asked to explain and the assessee offered explanation. The Income-tax Officer, as would appear from his letter addressed to the Inspecting Assistant Commissioner, indicated that he had applied his mind and was prepared to accept the explanation of the assessee. The papers produced by the petitioner reflected the true state of affairs. It would not be correct to say that the assessee had either omitted or failed to make a full and true disclosure of material facts. All the materials were before the revenue authorities and, with reference to them, investigation had once been made and, on the assessee's explanation, assessment was completed. This was a case where, on change of opinion, the Income-tax Officer tried to re-open the assessment. It was not a case of any new material which was not before the Income-tax Officer on the earlier occasion. The Court will not permit second thoughts on the same material for initiation of an action under section 147 of the Act. It must, therefore, be held that the notice under…

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