Law: Income Tax Act, 1961

Section: 147,147(a),147(b),148,148(2),139

Income-tax---Reassessment---Notice---Notice need not specify whether it is under S.147(a) or 147(b)---Notice need not give reasons for reassessment which have been recorded---Failure to disclose material facts necessary for assessment---Information that income has escaped assessment---Amount shown in 'returns but claimed to be exempt as capital receipts---Claim accepted at the time of original assessment---Reassessment proceedings to assess receipts were not valid either under S.147(a) or S.147(b)---Indian Income Tax Act, 1961, S.147. Section 147 of the Income Tax Act, 1961, as it stood before the amendment, which came into effect from April 1, 1989, permitted the re­opening of assessment only if (a) the Assessing Officer has reason to believe that there is an omission on the part of the assessee to make a return under section 139 for any assessment year to the Assessing Officer or to disclose fully and truly all material facts necessary; (b) even if there is no such failure on the part of the assessee, the Assessing Officer has, in consequence of information in his possession, reason-to believe that the income chargeable to tax has escaped assessment for any assessment year. The Income-tax Act is a taxing statute. The provisions of this Act will have to be construed strictly. Therefore, unless there is a clear case, which would give the Assessing Officer the jurisdiction to re-open the assessment under section 148 read with section 147 of the Act it would not be valid and proper to re-open an assessment. Section 148 deals with the requirement to issue notice before an assessment or reassessment is made under section 148 and subsection (2) makes it mandatory on the Assessing Officer, before issuing any notice under that section, to record the reasons for doing so. Requirement of recording reasons, may be for different purposes. Requirement of recording reasons, in a speaking and reasoned order is different from the requirement of recording reasons before an authority re-opens a case. They are to be recorded to ensure that the Assessing Officer has applied his mind and has considered the material which permits him to re-open the case. In judicial scrutiny, the…

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