Law: Income Tax Act, 1961

Section: 147,148

(a) Income-tax-----Reassessment---Notice---Failure to disclose material facts necessary for assessment--- Notice of reassessment on ground that investment in shares had not been disclosed and that expenditure had been claimed in respect of machinery purchased for new business---Investment in shares made after end of relevant accounting year---Machinery purchased for modernisation of existing business---Notice of reassessment was not valid---Indian Income Tax Act, 1961, Ss. 147 & 148. (b) Income-tax--- ----Writ---Powers of High Court---Existence of alternate remedy---High Court can issue writ even when there is alternate remedy---Constitution of India, Art. 226. The existence of alternative remedies as appeals and reference to the High Court is not always a sufficient reason for refusing a party quick relief by a writ or order prohibiting an authority acting without jurisdiction, from continuing such action. When the Constitution has conferred on the High Court the power to give relief it becomes the duty of the Courts to give such relief in fit cases and the Courts would be failing to perform their duty if relief were refused without adequate reasons. Notice was issued to the assessee under section 148 of the Income Tax Act, 1961, in respect of the assessment year 1993-94 on the grounds that in the course of general enquiries by the Assistant Commissioner of Income¬tax, Central Circle-31, Bombay, the assessee stated that it had purchased 1,25,000 shares in Reliance Industries Ltd. worth Rs.3.27 crores on March 20, 1993. The Assessing Officer verified this information from the return of income filed by the assessee and found that the investment in Reliance Industries Ltd. had nowhere been mentioned by the assessee in its balance¬sheet or in the profit and loss account. The second reason for reopening the assessment was that the assessee had claimed an expenditure of Rs.1.25 crores being interest on uninstalled machinery as revenue expenditure. The inquiries conducted during the course of assessment proceedings for the assessment year 1992-93 revealed that this machinery had been purchased for the purpose of a new business which was yet to start and, as such,…

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