Law:

Section:

Section 148, read with section 163, of the Income-tax Act, 1961 - Income escaping assessment - Issue of notice for - Assessment year 1989-90 - Petitioner filed return of income in capacity of representative assessee - A note was appended to return to effect that amount paid to foreign collaborator on account of lump sum consideration for technical know-how was not liable to tax - ITO issued notice under section 148 stating reasons therein - Whether since return was filed in capacity of a representative assessee with said appended note it was not necessary to issue prior notice under section 163(2) - Held, yes - Whether, therefore, notice under section 148 was valid - Held, yes FACTS The petitioner filed the return of income for the relevant assessment year, through an authorised representative. However, the petitioner appended a note stating that the return claiming that the payments made to foreign buyers did not attract the provisions of the Act. In the premises, payments made to foreign collaborators on account of lump sum consideration for technical know-how were stated to be neither royalty nor even for technical services under the provisions of section 9(1)(vi) and section 9(1)(vii). The ITO was of the opinion that lump sum consideration paid to the foreign collaborators for technical services were chargeable to income-tax. For the aforesaid reasons, he came to the conclusion that it was a fit case for issue of notice under section 148. On writ: HELD The order passed by the ITO showed that he had recorded reasons for issuance of the notice which were sufficient to clothe him with jurisdiction to proceed with the matter under section 148. It was also contented that before notice under section 148 could be issued, a notice had to be issued to the petitioner under section 163(2). The said point did not arise in the instant case because the petitioner's own case in the return filed with the Income-tax Department was that the amount paid by them to the foreign collaborator on account of lump sum consideration for technical know-how was not liable to tax under the Act. Moreover, the return was also filed in the capacity of a representative assessee with the…

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