Law:

Section:

Section 142 of the Income-tax Act, 1961 - Assessmant - Inquiry before assessment - Assessment year 1972-73 - Petitioner company owned several cotton spinning and weaving mills for manufacture of different varieties of cloth - In terms of Cotton Textile Order, 1948, Textile Commissioner passed order regarding production and pricing of controlled cloth - Assessing Officer having found that petitioner was passing of uncontrolled cloth, as controlled cloth issued it notice under section 142(1) requiring it to furnish information regarding rate at which different varieties of cloth were actually sold and actual sale - Petitioner had not specifically asserted that what was being stamped as controlled cloth was not infact uncontrolled cloth which was saleable in market - Whether particulars required to be furnished by petitioner by means of notices under section 142(1) had direct bearing on question of determination of correct income earned by petitioner through transactions adverted to therein during relevant assessment year and, therefore, notice was valid - Held, yes FACTS The petitioner-company owned several industrial undertakings, including a cotton spinning and weaving mills for the manufacture of different varieties of cloth. The production and distribution of the cloth by the petitioner was subject, inter alia, to the various orders and/or notifications issued by the Textile Commissioner under the Cotton Textile Control Order, 1948. Accordingly, in 1964 an order for the statutory control on production and pricing of controlled cloth including the fixation of minimum obligation for the production of such controlled cloth was issued by the Textile Commissioner under the provisions of the order. The petitioner claimed that in accordance with the above statutory orders it manufactured and packed controlled cloth and sold the same at the ex-mill prices calculated in accordance with the formula of multipliers as laid down by the Textile Commissioner. The non-controlled cloth continued to be sold at the market price obtainable for the same. Before the assessment proceedings culminated the respondent ITO issued to the petitioner a notice purporting to be under…

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