Law:

Section:

Section 147(a) of the Income-tax Act, 1961 - Reassessment - Non-disclosure of pri- mary facts - Assessment year 1965-66 - Assessee's assessment was reopened on basis - of three cash credits which were mentioned in notice under section 148 - High Court sustained notice in respect of one item of cash credit and quashed it in respect of fining other two items - Whether it was not for the High Court to examine validity of notice under section 148 in regard to two cash credits if High Court came to the conclusion that notice was valid at least in respect of the remaining cash credit - Held, yes - Whether reassessment could not be sustained under section 147(a) since ITO had examined said cash credits during original assessment - Held, yes Facts For the assessment year 1965-66, the ITO issued notice under section 148 to the assessee on the basis of three cash credit entries. The High Court upheld the notice in respect of one cash credit entry only. On appeal by special leave, the revenue contended that once the High Court sustained the notice in respect of one cash credit that gave full jurisdiction to the ITO to reopen the assessment and the High Court should not have examined the tenability of the assessee's contention in regard to the other two cash credits and that aspect should have been left to be considered by the ITO while making the reassessment. Held It was not for the High Court to examine the validity of the notice under section 148 in regard to the two cash credits if the High Court came to the conclusion that the notice was valid at least in respect of the remaining cash credit. Whether the ITO while making his reassessment would take into account the other two Hems should have been left to be considered by the ITO in the fresh assessment proceeding. However, the three amounts mentioned in the notice under section 148 were found in the assessee's accounts by the ITO when he examined the same in the course of the original assessment proceedings. He had called upon the assessee to substantiate the genuineness of the transactions and the assessee had produced material to support the same. The ITO accepted the documents produced and treated all the three…

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