Law: Income Tax Act, 1961

Section: 148,147,151

Law: Income Tax Act, 1922

Section: 34,22,34(1)(a)

Section 148 of the Income-tax Act, 1961 - Income escaping assessment - Issue of notice for - Assessment year 1948-49 - Whether where ITO had information, upon enquiries, that assessee had an account in a bank, in benami name of his nephew and he had further found as a fact that such information could be acted upon, it could not be said that officer had no "reason to believe" within meaning of section 148 - Held, yes - Whether, however, it was open to assessee to satisfy ITO in course of re-opened assessment proceedings that said account was not a benami account and that deposits made therein did not represent undisclosed income of assessee and if he succeeded in establishing that fact, ITO would have no jurisdiction to impose any additional tax liability on assessee - Held, yes FACTS The assessee was assessed for the assessment year 1948-49, in the usual course. Thereafter, the Income-tax Officer addressed a letter to him stating therein, inter alia, that in the course of inquiries it had been found that he operated a bank account in the name of his nephew; that the assessee had been operating the said account by getting his nephew, to sign cheques and other papers, that diverse amounts had been put in the said account in the accounting year 1947-48, corresponding to the assessment year 1948-49 and that there was other evidence to suggest that the said account belonged solely to the assessee. The assessee was asked to show cause why the said amounts totaling Rs. 2,51,502, should not be treated as his income for the assessment year 1948-49 and, why, proceedings under section 147 should not be initiated against him. The petitioner denied the allegations contained in the said letter and contended that the Income-tax Officer had no reason for coming to the conclusion stated in the said letter. Thereafter, a notice under section 148 was served on the petitioner, wherein it was stated that the Income-tax Officer had reason to believe that the income of the petitioner in respect of which he was chargeable to tax for the assessment year 1948-49, had escaped assessment within the meaning of section 147. On writ : HELD It is clear from the decisions of the Supreme Court…

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