Income Tax Officer, I Ward, Dist, Vi,
Calcutta & Ors Vs. Lakhmani Mewal Das [1976] INSC 89 (30 March 1976)
KHANNA, HANS RAJ KHANNA, HANS RAJ GOSWAMI,
P.K.
CITATION: 1976 AIR 1753 1976 SCR (3) 956 1976
SCC (3) 757
CITATOR INFO:
F 1977 SC 429 (10) R 1986 SC1857 (7) RF 1987
SC1897 (32)
ACT:
Income Tax Act, 1961-S. 148-Scope of-Words
& Phrases- "Reason to believe" meaning of 'rational nexus'-What
postulates.
HEADNOTE:
In March 1967, after obtaining the
satisfaction of the Commissioner the appellant issued a notice under s. 148 of
the Income Tax Act, 1961 stating that he had reason to believe that the
respondent's income chargeable to tax for the assessment year 1958-59 had
escaped assessment. The respondent replied that the I.T.O. had no competence or
jurisdiction to reopen the assessment under s. 147 of the Act on a mere change
of opinion. Since there was no reply from the appellant, the respondent moved
the High Court for a writ. The High Court held that the conditions precedent
for the exercise of jurisdiction by the Income Tax Officer were not fulfilled
because the report submitted by the Income Tax Officer to the Commissioner
under s. 147(a) was defective. On appeal to this Court it was contended that
the High Court was not right in holding that the Income Tax Officer's report
was defective.
Dismissing the appeal,
HELD: The High Court was right in holding
that the material before the Income Tax Officer could not have led to the
formation of the belief that the income of the assessee had escaped assessment
because of his failure or omission to disclose fully and truly all material
facts. [965H]
1. (a) The two conditions required to be
satisfied before the Income Tax Officer issued a notice under s. 148 of the
Income Tax Act are that he must have reason to believe (i) that the income
chargeable to tax had escaped assessment and (ii) that such income had escaped
assessment by reason of the omission or failure on the part of assessee, to
disclose fully and truly material facts necessary for assessment for that year.
Both these conditions must co-exist in order to confer jurisdiction on the
Income Tax Officer. Further the Income Tax Officer should record his reasons
before initiating proceedings under s. 148(2); before issuing the notice after
the expiry of four years from the end of the relevant assessment year, the
Commissioner should be satisfied on the reasons recorded by the Income Tax
Officer that it was a fit case for the issue of such notice. [962C-D] (b) The
duty cast upon the assessee does not extend beyond making a true and full
disclosure of the primary facts. It is then for the Income Tax Officer to draw
the correct inference from the primary facts. Where his inference subsequently
appears to be erroneous, mere change of opinion with regard to that inference
would not justify initiation of action for reopening the assessment. [962F-G]
(c) The grounds or reasons leading to the formation of the belief under s.
147(a) must have a material bearing on the question of escapement of income.
Once there exist reasonable grounds for the Income Tax Officer to form the
above belief, that would be sufficient to clothe him with jurisdiction to issue
notice. While the sufficiency of grounds which induce the Income Tax Officer to
act is not justiciable, it is open to the assessee to contend that the Income
Tax Officer did not hold the belief that there was such non-disclosure. The
expression "reason to believe" does not mean a purely subjective
satisfaction on the part of the Income-Tax Officer. It is open to the Court to
examine whether the reasons for the formation of the belief have a rational
connection with or relevant bearing on the formation of the belief and are not
extraneous or irrelevant for the purpose of the section. [962H] 957 Chhugamal
Rajpal v. S. P. Chaliha 79 I.T.R. 603, Calcutta Discount Co. Ltd. v. Income-Tax
Officer, 41 I.T.R.
191 and S. Narayanappa & Ors. v.
Commissioner of Income Tax 63 I.T.R. 219 followed.
In the instant case the grounds given by the
Income Tax Officer for reopening the assessment were (i) that the three persons
whose names were mentioned in the list of creditors, were known name lenders
and (ii) that another person shown as a creditor of the assessee had since
confessed that he was doing only name lending. The first ground mentioned by
the Income Tax Officer could not have led to the formation of the belief that
the income of the respondent had escaped assessment for that year because of
his failure or omission to disclose fully and truly all material facts. The
High Court was justified in excluding that ground from consideration. [963D-E]
As regards the second ground there is nothing to show that the confession of
another person related to a loan to the assessee and not to someone else. There
is no indication as to when the confession was made and whether it related to
the assessment year sought to be re-opened. To infer from that confession that
it related to the period of assessment and that it pertained to the loan shown
to have been advanced to the assessee would be far-fetched. [964G] 2(a).
Rational connection postulates that there must be a direct nexus or live link
between the material coming to the notice of the Income Tax Officer and the
formation of his belief that there had been escapement of income of the assessee
from assessment in the particular year. It is not any and every material,
howsoever vague and indefinite or distant, remote and far-fetched which would
warrant the formation of the belief relating to escapement of the income of the
assessee from assessment. The fact that the words "definite
information" in s. 34 of 1922 Act before its amendment in 1948 do not find
a place in s. 147 would not lead to the conclusion that action could now be
taken for reopening assessment even if the information was wholly vague,
indefinite, far-fetched and remote. [965B-D] (b) The powers of the Income Tax
Officer to reopen assessment, though wide, are not plenary. The words are
"reason to believe" and not "reason to suspect". The
provisions of the Act depart from the normal rule that there should be finality
about orders made in judicial and quasi- judicial proceedings. It is,
therefore, essential that before such action is taken the requirement of the
law should be satisfied. [965E-F] In the instant case the live link or close
nexus between the material before the Income Tax Officer and the belief which
he was to form regarding the escapement of the income was missing or at any
rate the link was too tenuous to provide a legally sound basis for reopening
the assessment. [G]
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 2526 of 1972.
Appeal from the Judgment and Order dated the
13th January, 1972 of the Calcutta High Court in Matter No. 326 of 1967.
G. C. Sharma and S. P. Nayar, for the
Appellant.
D. Pal, B. Sen, (Mrs.) Leila Seth, P. K. Pal,
S. R.
Agarwala and Parveen Kumar for the
Respondent.
The Judgment of the Court was delivered by
KHANNA, J. This appeal on certificate is against the Full Bench judgment of the
Calcutta High Court whereby on petition under article 226 of the Constitution
of India filed by the respondent that court by majority quashed notice under
section 148 of the Income-tax Act, 1961 (hereinafter referred to as the Act)
issued by appeallant No. 2 (Income-tax Officer E Ward, Hundi Circle, Calcutta)
(hereinafter referred to 958 as the appellant) for the purpose of reopening
assessment of the income of the respondent for the assessment year 1958- 59.
The respondent was assessed for the
assessment year 1958-59 under section 23(3) of the Indian Income-tax Act, 1922
on June 14, 1960. His total income was assessed to be Rs. 37,872. While making
the assessment the Income-tax Officer allowed deduction of a sum of Rs. 15,991
by way of expenses claimed by the respondent. The expenses included Rs.
10,494/4 As/3 Pies by way of interest. According to the respondent, he produced
through his authorised representative all books of accounts, bank statements
and other necessary documents in connection with the return. On March 14, 1967
the respondent received notice dated March 8, 1967 issued by the appellant
under section 148 of the Act stating that the appellant had reason to believe
that the respondent's income which was chargeable to tax for the assessment
year 1958-59 had escaped assessment within the meaning of section 147 of the
Act and that the notice was being issued after obtaining the necessary
satisfaction of the Commissioner of Income-tax. The respondent was called upon
to submit within 30 days from the date of the service of the notice a return in
the prescribed form of his income for the assessment year 1958-59. On May 2,
1967 the respondent through his lawyer stated that there was no material on
which the appellant had reason to believe that the respondent's income had
escaped assessment and, therefore, the condition precedent for the assumption
of jurisdiction by the appellant had not been satisfied. The appellant was said
to have no competence or jurisdiction to re-open the assessment under section
147 of the Act on a mere change of opinion. The appellant was also called upon
to furnish all the materials on which he had reason to believe that income had
escaped assessment. As, according to the respondent, there was no satisfactory
response from the appellant, he filed petition under article 226 of the Constitution
for quashing the impugned notice.
It was denied in the affidavit on behalf of
the appellant that all materials relevant and necessary for the assessment of
the respondent's income for the assessment year 1958-59 had been produced
before the Income-tax Officer at the time of the original assessment. It was
further stated:
"Subsequent to the assessment for the
assessment year 1958-59, it was discovered, inter alia, that some of the loans
shown to have been taken and interests alleged to have been paid thereon by the
petitioner during the relevant assessment year were not genuine.
The Income-tax Officer had reason to believe
and bona fide believed that the said alleged loans and the interest alleged to
have been paid thereon are not genuine. If necessary, I crave leave to produce
before the hon'ble Judge hearing the application, the relevant records on the
basis of which the said Income-tax Officer had reason to believe that the
income of the petitioner escaped assessment as aforesaid at the hearing of the
application." During the pendency of the proceedings the High Court
directed that a copy of the report made by the appellant to the Commissioner of
959 Income-tax for obtaining latter's sanction under section 147 be produced.
The report was accordingly produced, and the same reads as under:
"There are hundi loan credits in the
name of Narayan singh Nandalal, D. K. Naraindas, Bhagwandas Srichand, etc., who
are known name-lenders, and also hundi loan credit in the name, Mohansingh
Kanayalal, who has since confessed he was doing only name-lending.
In the original assessment these credits were
not investigated in detail. As the information regarding the bogus nature of
these credits is since known, action under section 147 (a) is called for to
reopen the assessment and assess these credits as the undisclosed income of the
assessee. The assessee is still claiming that the credits are genuine in the
assessment proceedings for 1962-63. Commissioner's sanction is solicited to
reopen the assessment for 1958-59, under section 147(a)." All the three
Judges who constituted the Full Bench found that the assessee was not being
charged with omission to disclose all facts: he was charged for having made an
untrue disclosure because the assessee had stated that he had received certain
sums of money from certain persons as loans when, in fact, he had not received
any sum at all from these persons. It was also stated by the assessee at the
time of the original assessment that he had paid interest to certain persons
when, in fact, he had not, if the information received later was true. The duty
of the assessee, it was held, was not only to make a full disclosure of all
material facts, his duty was also to make a true disclosure of facts and not to
mislead the assessing officer by disclosing certain things which did not
represent facts. The High Court accordingly held that once an assessee
infringes this rule, any subsequent discovery of fact by the assessing officer
which would raise a resonable belief in his mind that the assessee had not made
a true and correct disclosure of the facts and had thereby been responsible for
escapement of his income from assessment would attract section 147 of the Act.
Two of the learned Judges, A. K. Mukherjea
and S. K. Mukherjea JJ., however, took the view that the conditions precedent
for the exercise of jurisdiction by the Income-tax Officer under section 147 of
the Income-tax Act were not fulfilled in the case as the report submitted by
the Income- tax Officer to the Commissioner for sanction under section 147(a)
was defective. The defects in the report, in the opinion of the High Court,
were the same as had been pointed out by this Court in the case of Chhugamal
Rajpal v. S. P.
Chaliha.(1) The Commissioner, while according
permission for taking action under section 147, it was observed, acted
mechanically because the Commissioner had not expressly stated that he was
satisfied that this was a fit case for the issue of notice under section 148.
As against the majority, Sabyasachi Mukherji J. held that notice under section
148 of the Act was valid and did not suffer from any infirmity. It was 960 also
observed that the Commissioner of Income-tax had not acted improperly in giving
sanction.
In the result, by majority the High Court
quashed the notice issued by the appellant to the respondent.
In appeal before us Mr. Sharma on behalf of
the appellants has assailed the judgment of the majority of the learned Judges
in so far as they have held that the report submitted by the Income-tax Officer
to the Commissioner of Income-tax for sanction was defective. As against that,
Dr. Pal on behalf of the assessee-respondent has canvassed for the correctness
of the view taken by the majority regarding the defective nature of the report.
Dr. Pal has in his own turn assailed the finding of all the three learned
Judges of the High Court in so far as they have held that the assessee was
being charged with omission to disclose true facts.
Contention has also been advanced by Dr. Pal
that the material on the basis of which the Income-tax Officer initiated these
proceedings for reopening the assessment did not have a rational connection
with the formation of the belief that the assessee had not made a true
disclosure of the facts at the time of the original assessment.
Before dealing with the points of
controversy, it would be useful to reproduce the relevant provisions of the
Act.
Sections 147 and 148 which deal with income
escaping assessment and issue of notice where income has escaped assessment
read as under:
"147. Income escaping assessment.-If-
(a) the Income-tax Officer has reason to believe that, by reason of the
omission or failure on the part of an assessee to make a return under section
139 for any assessment year to the Income-tax Officer or to disclose fully and
truly all material facts necessary for his assessment for that year, income
chargeable to tax has escaped assessment for that year, or (b) notwithstanding
that there has been no omission or failure as mentioned in clause (a) on the
part of the assessee, the Income-tax officer has in consequence of information
in his possession reason to believe that income chargeable to tax has escaped
assessment for any assessment year, he may, subject to the provisions of
section 148 to 153, assess or ressess such income or recompute the loss or the
depreciation allowance, as the case may be, for the assessment year concerned
(hereinafter in sections 148 to 153 referred to as the relevant assessment
year).
Explanation 1.-For the purposes of this
section, the following shall also be deemed to be cases where income chargeable
to tax has escaped assessment, namely:- (a) where income chargeable to tax has
been under assessed; or 961 (b) where such income has been assessed at too low
a rate; or (c) where such income has been made the subject of excessive relief
under this Act or under the Indian Income-tax Act, 1922 (XI of 1922); or (d)
where excessive loss or depreciation allowance has been computed.
Explanation 2.-Production before the
Income-tax Officer of account books or other evidence from which material
evidence could with due diligence have been discovered by the Income-tax
Officer will not necessarily amount to disclosure within the meaning of this
section.
148. Issue of notice where income has escaped
assessment.- (1) Before making the assessment, reassessment or re-computation
under section 147, the Income-tax Officer shall serve on the assessee a notice
containing all or any of the requirements which may be included in a notice
under sub-section (2) of section 139; and the provisions of this Act shall, so
far as may be, apply accordingly as if the notice were a notice issued under
that sub-section.
(2) The Income-tax Officer shall, before
issuing any notice under this section, record his reason for doing so."
Sub-section (1) of section 149 prescribes the time limit for notice and reads
as under:
"(1) No notice under section 148 shall
be issued" (a) in cases falling under clause (a) of section 147- (i) for
the relevant assessment year, if eight years have elapsed from the end of that
year, unless the case falls under sub-clause (ii);
(ii) for the relevant assessment year, where
eight years, but not more than sixteen years, have elapsed from the end of that
year, unless the income chargeable to tax which has escaped assessment amounts
to or is likely to amount to rupees fifty thousand or more for that year;
(b) in cases falling under clause (b) of
section 147, at any time after the expiry of four years from the end of the
relevant assessment year." Section 151 pertains to the sanction for issue
of notice and reads as under:
"151. Sanction for issue of notice.-(1)
No notice shall be issued under section 148 after the expiry of eight years
from the end of the relevant assessment year, unless the Board is satisfied on
the reasons recorded by the Income-tax Officer that it is a fit case for the
issue of such notice.
962 (2) No notice shall be issued under
section 148 after the expiry of four years from the end of the relevant
assessment year, unless the Commissioner is satisfied on the reasons recorded
by the Income-tax Officer that it is a fit case for the issue of such
notice." The provisions of sections 147 to 153 of the Act correspond to
those of section 34 of the Indian Income-tax Act, 1922.
There have been some points of departure from
the old law, but it is not necessary for the purpose of the present case to
refer to them.
It would appear from the perusal of the
provisions reproduced above that two conditions have to be satisfied before an
Income-tax Officer acquires jurisdiction to issue notice under section 148 in
respect of an assessment beyond the period of four years but within a period of
eight years from the end of the relevant year, viz., (1) the Income-tax Officer
must have reason to believe that income chargeable to tax has escaped
assessment, and (2) he must have reason to believe that such income has escaped
assessment by reason of the omission or failure on the part of the assessee (a)
to make a return under section 139 for the assessment year to the Income-tax
Officer, or (b) to disclose fully and truly material facts necessary for his
assessment for that year. Both these conditions must co-exist in order to
confer jurisdiction on the Income-tax Officer. It is also imperative for the
Income-tax Officer to record his reasons before initiating proceedings as
required by section 148(2).
Another requirement is that before notice is
issued after the expiry of four years from the end of the relevant assessment
years, the Commissioner should be satisfied on the reasons recorded by the
Income-tax Officer that it is a fit case for the issue of such notice. We may
add that the duty which is cast upon the assessee is to make a true and full
disclosure of the primary facts at the time of the original assessment.
Production before the Income-tax Officer of the account books or other evidence
from which material evidence could with due diligence have been discovered by
the Income-tax Officer will not necessarily amount to disclosure contemplated
by law. The duty of the assessee in any case does not extend beyond making a
true and full disclosure of primary facts. Once he has done that his duty ends.
It is for the Income-tax Officer to draw the correct inference from the primary
facts. It is no responsibility of the assessee to advise the Income-tax Officer
with regard to the inference which he should draw from the primary facts. If an
Income-tax Officer draws an inference which appears subsequently to be
erroneous, mere change of opinion with regard to that inference would not
justify initiation of action for reopening assessment.
The grounds or reasons which lead to the
formation of the belief contemplated by section 147(a) of the Act must have a
material bearing on the question of escapement of income of the assessee from
assessment because of his failure or omission to disclose fully and truly all
material facts. Once there exist reasonable grounds for the Income- tax Officer
to form the above belief, that would be sufficient to clothe him with
jurisdiction to issue notice.
Whether the grounds are adequate or not is
not a matter for the court to investigate. The 963 sufficiency of grounds which
induce the Income-tax Officer to act is, therefore, not a justiciable issue. It
is, of course, open to the assessee to contend that the Income-tax Officer did
not hold the belief that there had been such non-disclosure. The existence of
the belief can be challenged by the assessee but not the sufficiency of reasons
for the belief. The expression "reason to believe" does not mean a
purely subjective satisfaction on the part of the Income-tax Officer. The
reason must be held in good faith. It cannot be merely a pretence. It is open
to the court to examine whether the reasons for the formation of the belief
have a rational connection with or a relevant bearing on the formation of the
belief and are not extraneous or irrelevant for the purpose of the section. To
this limited extent, the action of the Income-tax Officer in starting
proceedings in respect of income escaping assessment is open to challenge in a
court of law [see observations of this Court in the cases of Calcutta Discount
Co. Ltd. v. Income-tax Officer and S. Narayanappa & Ors. v. Commissioner of
Income-tax while dealing with corresponding provisions of the Indian Income-tax
Act, 1922].
Keeping the above principles in view, we may
now turn our attention to the facts of the present case. Two grounds were
mentioned in the report made by the Income-tax Officer for reopening the
assessment of the assessee respondent with a view to show that his income had
been under-assessed because of his failure to disclose fully and truly material
facts necessary for the assessment. One was that Mohansingh Kanayalal, who was
shown to be one of the creditors of the assessee, had since confessed that he
was doing only name- lending. The other ground was that Narayansingh Nandalal,
D. K. Naraindas, Bhagwandas Srichand, etc., whose names too were mentioned in
the list of the creditors of the assessee, were known name-lenders. So far as
the second ground is concerned, neither the majority of the Judges of the High
Court nor the learned Judge who was in the minority relied upon that ground.
Regarding that ground, the learned Judge who was in the minority observed that
no basis had been indicated as to how it became known that those creditors were
known namelenders and when it was known. The majority while not relying upon
that ground placed reliance upon the case of Chhugamal Rajpal (supra). In that
case the Income- tax Officer while submitting a report to the Commissioner of
Income-tax for obtaining his sanction with a view to issue notice under section
148 of the Act stated:
"During the year the assessee has shown
to have taken loans from various parties of Calcutta. From D.I.'s Inv. No.
A/P/Misc. (5) D.I./63-64/5623 dated August 13, 1965, forwarded to this office
under C.I.T., Bihar and Orissa, Patna's letter No. Inv. (Inv.) 15/65-
66/1953-2017 dated Patna September 24, 1965 it appears that these persons are
name-lenders and the transactions are bogus. Hence, proper investigation
regarding these loans is necessary. The names of some of the persons from whom
money is alleged to have been taken on loan on hundis are:
1. Seth Bhagwan Singh Sricharan 964
2. Lakha Singh Lal Singh
3. Radhakissen Shyam Sunder The amount of
escapement involved amounts to Rs.
1,00,000." In dealing with that report
this Court observed:
"From the report submitted by the
Income-tax Officer to the Commissioner, it is clear that he could not have had
reasons to believe that by reason of the assessee's omission to disclose fully
and truly all material facts necessary for his assessment for the accounting
year in question, income chargeable to tax has escaped assessment for that
year, nor could it be said that he, as a consequence of information in his
possession, had reasons to believe that the income chargeable to tax has
escaped assessment for that year.
We are not satisfied that the Income-tax
Officer had any material before him which could satisfy the requirements of
either clause (a) or clause (b) of section 147. Therefore he could not have
issued a notice under section 148".
Reference to the names of Narayansingh
Nandalal, D. K. Naraindas, Bhagwandas Srichand, etc., in the report of the
Income-tax Officer to the Commissioner of Income-tax in the instant case does
not stand on a better footing than the reference to the three names in the
report made by the Income-tax Officer in the case of Chuugamal Rajpal. We
would, therefore, hold that the second ground mentioned by the Income-tax
Officer, i.e., reference to the names of Narayansingh Nandalal, D. K.
Naraindas, Bhagwandas Srichand, etc., could not have led to the formation of
the belief that the income of the respondent assessee chargeable to tax had
escaped assessment for that year because of the failure or omission of the
assessee to disclose fully and truly all material facts. All the three learned
Judges of the High Court, in our opinion, were justified in excluding the
second ground from consideration.
We may now deal with the first ground
mentioned in the report of the Income-tax Officer to the Commissioner of
Income-tax. This ground relates to Mohansingh Kanayalal, against whose name
there was an entry about the payment of Rs. 74 Annas 3 as interest in the books
of the assessee, having made a confession that he was doing only name- lending.
There is nothing to show that the above confession related to a loan to the
assessee and not to someone else, much less to the loan of Rs. 2,500 which was
shown to have been advanced by that person to the assessee-respondent.
There is also no indication as to when that
confession was made and whether it relates to the period from April 1, 1957 to
March 31, 1958 which is the subject-matter of the assessment sought to be
reopened. The report was made on February 13, 1967. In the absence of the date
of the alleged confession, it would not be unreasonable to assume that the
confession was made a few weeks or months before the report.
To infer from that confession that it relates
to the period from April 1, 1957 to March 965 31, 1958 and that it pertains to
the loan shown to have been advanced to the assessee, in our opinion, would be
rather far-fetched.
As stated earlier, the reasons for the
formation of the belief must have a rational connection with or relevant
bearing on the formation of the belief. Rational connection postulates that
there must be a direct nexus or live link between the material coming to the
notice of the Income-tax Officer and the formation of his belief that there has
been escapement of the income of the assessee from assessment in the particular
year because of his failure to disclose fully and truly all material facts. It
is no doubt true that the court cannot go into the sufficiency or adequacy of the
material and substitute its own opinion for that of the Income-tax Officer on
the point as to whether action should be initiated for reopening assessment. At
the same time we have to bear in mind that it is not any and every material,
howsoever vague and indefinite or distant, remote and far- fetched, which would
warrant the formation of the belief relating to escapement of the income of the
assessee from assessment. The fact that the words "definite
information" which were there in section 34 of the Act of 1922 at one time
before its amendment in 1948 are not there in section 147 of the Act of 1961
would not lead to the conclusion that action cannot be taken for reopening
assessment even if the information is wholly vague, indefinite, far-fetched and
remote. The reason for the formation of the belief must be held in good faith
and should not be a mere pretence.
The powers of the Income-tax Officer to
reopen assessment though wide are not plenary. The words of the statute are
"reason to believe" and not "reason to suspect".
The reopening of the assessment after the
lapse of many years is a serious matter. The Act, no doubt, contemplates the
reopening of the assessment if grounds exist for believing that income of the
assessee has escaped assessment. The underlying reason for that is that
instances of concealed income or other income escaping assessment in a large
number of cases come to the notice of the income-tax authorities after the
assessment has been completed. The provisions of the Act in this respect depart
from the normal rule that there should be, subject to right of appeal and
revision, finality about orders made in judicial and quasi- judicial
proceedings. It is, therefore, essential that before such action is taken the
requirements of the law should be satisfied. The live link or close nexus which
should be there between the material before the Income-tax Officer in the
present case and the belief which he was to form regarding the escapement of
the income of the assessee from assessment because of the latter's failure or
omission to disclose fully and truly all material facts was missing in the
case. In any event, the link was too tenuous to provide a legally sound basis
for reopening the assessment.
The majority of the learned Judges in the High
Court, in our opinion, were not in error in holding that the said material
could not have led to the formation of the belief that the income of the
assessee respondent had escaped assessment because of his failure or omission
to disclose fully and truly all material facts. We would, therefore, uphold the
view of the majority and dismiss the appeal with costs.
P.B.R. Appeal dismissed.
Back
