Law: Income Tax Act, 1961

Section: 147,148

(a) Reassessment-----Failure to disclose material facts necessary for assessment---Information that income has escaped assessment---Notices under CIS. (a) & (b) pr S.147 are issued on different grounds---Notice issued under S.147(a)---Subsequent decision by I.T.O. to proceed under S.147(b)---Notice not issued under S.147(b)---Reassessment not valid---Indian Income-tax Act, 1961, Ss.147 & 148. Clauses (a) and (b) of section 147 of the Income-tax Act, 1961, are to be invoked for different purposes and on the basis of different materials. Clause (a) can be invoked if there is non-disclosure of material facts by the assessee and clause (b) can be invoked in consequence of information in the possession of the Income-tax Officer even though there was no omission or failure on the part of the assessee to disclose all material facts. For initiation of proceedings under clause (a) or clause (b) separate notice has to be issued under section 148. A notice under section 147(a) cannot be treated as a notice under section 147(b). The issue of a valid notice is not merely a procedural requirement but is a condition precedent for the exercise of the jurisdiction to reassess. The assessee received Rs.15 lakh consideration of a licence to cut and remove trees of spontaneous growth. The amount was to be paid in three instalments. The assessee had disclosed the receipt of Rs.5 lakh in the relevant accounting year and claimed it as a capital receipt and this was accepted by the Income-tax Officer. Subsequently another Income-tax Officer held that capital gains liable to tax on the transfer of a capital asset, i.e. forest trees of spontaneous growth, had escaped assessment and that the relevant details regarding the capital gains had not been furnished and initiated action under section 147(a) by issuing notice under section 148. Subsequently; the Income¬tax Officer made another entry in the, order sheet stating that in a connected case, the Appellate Assistant Commissioner had, held that the receipt was of revenue nature and accordingly action was initiated under section 147(b). However, no notice under section 148 was issued on the ground that notice under section 148 had…

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