# M/s S.K. Gupta & Co v. The Income Tax Officer and others

- **Citation:** High Court of Judicature at Allahabad #39255
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2000
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-s-k-gupta-co-v-the-income-tax-officer-and-others-39255
- **Pages:** 5

## Text

INDIAN LAW REPORTS ALLAHABAD SERIES [2000
18
12. At this juncture, observations made by
the Constitution Bench of the Apex Court in
K. M.Abdullah Kunhi Versus Union of India
and others (1991 (1) S.C.C.-476, are relevant
which read as under:

"It
is
a
constitutional
mandate
commanding the concerned authority to
whom the detenu submits his representation to
consider the representation and dispose of the
same as expeditiously as possible. The word
" as soon as may be" occurring in clause (5)
of Art. 22 reflects the concern of the Framers
that the representation should be expeditiously
considered and disposed of with a sense of
urgency
without
an
avoidable
delay.
However, there can be no hard and fast rule in
this regard. It depends upon the facts and
circumstances of each case. There is no
period prescribed either under the constitution
or under the concerned detention law, within
which the representation should be dealt with.
The requirement, however, is that there
should not be supine indifference, slackness
or
callous
attitude
in
considering
the
representation . Any unexplained delay in the
disposal of representation would be breach of
the constitution imperative and it would
render the continued detention impermissible
and illegal".

13. When question of liberty is involved
and that too by means of preventive detention,
it is incumbent of all the authorities to explain
delay in consideration of the representation.
They all have to act as one unit to ensure
earlier decision of the representation of the
detenu. Every step is required to be taken by
each part of the machinery concerned to
facilitate and ensure earliest decision on the
representation of the detenu. In the present
case, the requisite care has not been taken by
respondent no. 2 in sending the representation
of the petitioner to the Central Government
and there is no valid and justified explanation
of delay with effect from 7.8.99 to 24.8.99.
In our opinion, it renders the continued
detention of the petitioner to be illegal and the
petitioner is entitled to relief.

14. For the reasons stated above, this
Habeas Corpus Petition is allowed and the
continued detention of the petitioner is found
to be illegal. The respondents are directed to
set the petitioner at liberty forthwith if his
detention is not required in any other case.

25,*,1$/ -85,6',&7,21
25,*,1$/ -85,6',&7,21
&,9,/ 6,'(
&,9,/ 6,'(
'$7(' $//$+$%$' 129(
'$7(' $//$+$%$' 129(0%(5
0%(5
%()25(
%()25(
7+( +21·%/( 0& $*$5:$/ -
7+( +21·%/( 0& $*$5:$/ -
7+( +21·%/( 6 5$)$7 $/$0 -
7+( +21·%/( 6 5$)$7 $/$0 -

&LYLO 0LVF :ULW 3HWLWLRQ 1R RI

0V 6. *XSWD &RPSDQ\ «3HWLWLRQHU
9HUVXV
,QFRPH 7D[ 2IILFHU RWKHUV«5HVSRQGHQWV

&RXQVHO IRU WKH 3HWLWLRQHU
6KUL $ 8SDGK\D\
6KUL 9% 8SDGK\D
&RXQVHO IRU WKH 5HVSRQGHQWV
6&
6KUL %KDUDW -L $JDUZDO

,QFRPH
7D[
$FW
6HFWLRQ

$Q
$VVHVVPHQW FDQ EH UHRSHQHG RQO\ LI WKH
DVVHVVLQJ RIILFHU KDV UHDVRQV WR EHOLHYH WKDW
WKH LQFRPH KDV HVFDSHG DVVHVVPHQW DQG QRW
RQ WKH GLFWDWHV RI WKH &RPPLVVLRQHU %XW WKH
SHWLWLRQHU KDV WR WDNH D VSHFLILF JURXQG LQ
WKH ZULW SHWLWLRQ +H FDQ QRW VXFFHHG RQ WKH
EDVLV
RI
DQ\
DYHUPHQW
LQ
WKH
FRXQWHU
DIILGDYLW
+HOG2
7KDW WKH SHWLWLRQHU KDYLQJ QRW DGYDQFHG VXFK
D FRQWHQWLRQ LQ WKH ZULW SHWLWLRQ KH FDQQRW
OHJDOO\
DQG
MXVWLILDEO\
UDLVH
VXFK
D
FRQWHQWLRQ 7KH SHWLWLRQHU¶V FDVH KDV WR EH
VROHO\ H[DPLQHG
RQ ZKDW LV VWDWHG LQ WKH
ZULW SHWLWLRQ
7KH VWDWHPHQW PDGH LQ WKH
FRXQWHU DIILGDYLW LV QRW DQ DGPLVVLRQ RI DQ\
DYHUPHQWV PDGH E\ WKH SHWLWLRQHU LQ WKH ZULW
1ALL] M/s S.K. Gupta & Co. V. The Income Tax Officer and others

19
SHWLWLRQ 7KHUHIRUH WKDW VWDWHPHQW LV RI QR
FRQVHTXHQFH 3DUD
$,5 6& 3
,75 3
,75 3

By the Court

1. By this petition under Article 226 of the
Constitution of India the petitioner challenges
a notice dated 26.3.1998 issued under Section
148 of the Income Tax Act 1961 for
assessment year 1987-88, copy of which is
annexure 5 to the writ petition.

2. We have heard Sri V.B. Upadhya,
Senior Advocate assisted by Sri A. Upadhya,
Advocate, learned counsel for the petitioner
and Sri Bharat Ji agarwal, Senior Advocate
for the respondents.

3. The proceedings relate to assessment
year 1987-88 for which a return of income
was filed and an assessment was made under
Section 143 (1) of the Income Tax Act.
Thereafter on 5.10.1990 the assessing officer
issued a notice under section 148 which was
received by the assessee on10.10.1990. In
compliance with the said notice a return of
income was filed on 16.11.1990. The
petitioner claimed the status of a registered
firm. On 27.3.1991 the assessment was
completed in the status of an association of
persons (AOP). On 22.4.1991 the assessing
officer i.e. the respondent no.1 passed an
order under Section 154 of the Act stating that
there had been a mistake in mentioning the
status of the assessee in the assessment order
and that in place of AOP. URF (un-registered
firm) be read throughout the assessment order.
The assessee appealed and the CIT (Appeals)
who allowed the appeal on the ground that an
assessment on an AO P could not be made
without issuing a notice to the AOP. He,
therefore, set aside the assessment directing
that the assessment be made again, in
accordance with law. Thereafter cross appeals
were filed before the Tribunal by the
department as well as by the assessee against
the order passed by the CIT (Appeals). The
Tribunal dismissed the revenues appeal and
allowed the appeal by the assessee and
quashed the assessment on the ground that in
the circumstances of the case, no assessment
could be made on the AOP.

4. During the time taken in the aforesaid
proceedings, the assessment proceedings that
had commenced on the basis of the notice
dated 5.10.1990 under Section 148 of the Act
became barred by time. Consequently, the
assessing officer issued a fresh notice under
Section 148 on 26.3.1998 and it is this notice
which is under challenge in the present writ
petition and the grounds of challenge have
been mentioned in paragraph 26 of the writ
petition which is as under:

"A- Because, the Original notice under
section 148 having not been quashed and
Return in pursuance of that notice having
been filed, the Department has no jurisdiction
to issue subsequent notice dated 26.3.1998 on
the same facts for the same Assessment year
i.e.1987-88, during the pendency of the earlier
proceedings.

B-Because, the notice having been issued
with a view to circumven the period of
limitation, is therefore illegal, arbitrary and
without jurisdiction.

C-Because, no subsequent notice can be
issued on the same facts and on the same
ground for the same Assessment year i.e.
1987-88."

5. The respondents have filed a counter
affidavit which is sworn by one Shiv Ran
Singh Chahal in which it is stated that a
search was conducted at the business premises
of the assessee as well as the residential
premises
of
the
partners
and
some
incriminating material was found and seized.
The history of the case, as stated above, is
admitted and it is stated that an application
under Section 256 (1) has been filed against
INDIAN LAW REPORTS ALLAHABAD SERIES [2000
20
the aforesaid order of the Tribunal. It is stated
that the Commissioner of income Tax directed
that the assessment for the year under
consideration may be reopened under Section
147 and in compliance of the directions of the
Commissioner, the case was reopened with
the approval of the Commissioner of Income
Tax and the impugned notice under Section
148 was issued and was duly served. It is
stated that the impugned notice was served on
the partnership firm. It is also stated that the
notice under Section 148 was issued to assess
the income which was surrendered by the
assessee itself during the course of search and
seizure operation. In the rejoinder affidavit it
is stated that from the counter affidavit itself it
is apparent that the assessment was reopened
under the dictates of the Commissioner of
Income Tax while Section 147 of the Act
provides that an assessment can be reopened
only if the assessing officer has reason to
believe
that
the
income
has
escaped
assessment.

6. Under Section 147 of the Income Tax
Act if the Assessing Officer has reason to
believe that any income chargeable to tax has
escaped assessment for any assessment year,
he
may
......assess
or
reassess
such
income.....Thus, the law equires that the
assessing
officer
should
have
the
reason/reasons to believe and sub-section (2)
of Section 148 provides that before issuing a
notice
for
an
intended
assessment/
reassessment under Section 147 the assessing
officer shall record his reasons for issuing a
notice under Section 147 and he has to have
his own reasons to believe that any income
chargeable to tax has escaped assessment.
There is no dispute on this proposition of law
and it was so held by the Hon'ble Supreme
Court in Indian & Eastern Newspapers
Society vs. Commissioner of Income Tax
AIR 1979 SC 1960 in which a question had
arisen whether proceedings under Section 147
could be initiated on the basis of report by an
internal audit party. In paragraph 13 of the
judgment,
the
Hon'ble
Supreme
Court
observed that in every case, the Income Tax
Officer must determine for himself what is the
effect and consequence of the law mentioned
in the audit note and whether in consequence
of the law which has now come to his notice
he can reasonably believe that income has
escaped assessment and that the opinion
rendered by the audit party in regard to the
law cannot, for the purpose of such belief, add
to or colour the significance of such law. In
short, the true evaluation of the law in its
bearing on the assessment must be made
directly and solely by the Income-Tax Officer.
Some other authorities were also cited on this
point but since the legal position is settled and
is not disputed, it is not necessary to refer to
them here.

7. In raising the aforesaid argument the
learned
counsel
for
the
petitioner
has
attempted to make capital out of an unguarded
statement made in the counter affidavit that
the
Commissioner
directed
that
the
assessment may be reopened under Section
147. It is to be borne in mind that in the writ
petition the petitioner has not set up a case
that before issuing the impugned notice the
Income Tax Officer did not apply his own
mind to the facts of the case and did not
himself come to have the reason to believe
that income chargeable to tax has escaped
assessment and it is for this purpose that we
have reproduced above the grounds of attack
that have been set up by the petitioner in the
writ petition. Therefore, we are of the view
that the petitioner having not advanced such a
contention in the writ petition, he cannot
legally and justifiably raise such a contention.
The petitioner's case has to be solely
examined on what is stated in the writ
petition. The statement made in the counter
affidavit is not an admission of any averments
made by the petitioner in the writ petition.
Therefore,
that
statement
is
of
no
consequence. We may mention that even in
the rejoinder affidavit, no assertion to that
effect is made on behalf of the petitioner.
What has been stated is that from contents of
1ALL] M/s S.K. Gupta & Co. V. The Income Tax Officer and others

21
the counter affidavit, it is apparent that the
assessment for the year 1987-88 was reopened
under Section 147 of the Act under the
dictates of the Commissioner.

8. In case the petitioner wanted to contend
that the Income Tax Officer had no material
on the basis of which he could have the
requisite reason to believe or that he did not
apply his own mind to the material on record
and issued the notice under Section 148 solely
under the orders of the Commissioner, it was
necessary for him to amend the petition by
incorporating therein the requisite averments
and preferably annex to the writ petition a
copy of the reasons recorded by the assessing
officer. Had he done so, the respondents
would have had an effective opportunity to
controvert the allegation and annex to the
counter affidavit the alleged direction of the
Commissioner., the reasons recorded by the
assessing officer for having a reason to
believe and for proposing to issue notice
under
Section
148
and
the
necessary
correspondence between the assessing officer
and the Commissioner for obtaining the
latter's approval for the issue of a notice that
was statutorily required to be obtained. In our
view, therefore, the petitioner is not legally
entitled to raise such a condition.

9. Even if the petitioner is allowed to rely
on the aforesaid averments in the counter
affidavit, no sound basis is laid for the
argument that the assessing officer did not
himself have the reason to believe that income
has escaped assessment. "Direct" according
to Webster's New Collegiate Dictionary
Indian Ed. Means " to show or point out the
way for" and "direction" means "guidance or
supervision of action or conduct". Direction
also means "something imposed as an
authenticative

instruction
or
order".
Therefore, direction does not necessarily
mean a command and the language used in
the counter affidavit shows that the so-called
direction was merely a guidance because
according to the counter affidavit the direction
was that the assessment may be reopened
meaning thereby the Commissioner merely
indicated a direction to the assessing officer in
which he may proceed and the ultimate
decision was left to the assessing officer.

10. As stated above, before issuing a
notice under Section 148 of the Act, the
assessing officer has to record his reasons. He
has to seek the approval of the Commissioner.
Therefore, it cannot be presumed that the
assessing officer did not apply his mind and
did not make up his own belief. Whenever
such a contention is raised, the burden is on
the assessee to show that the assessing officer
did not act according to law. For that purpose
he may take the assistance of the court and
require the production of the relevant records
and he may also obtain certified copies of the
requisite documents. Such a plea cannot be
raised a random as in the case before us. We,
therefore hold that it is not permissible to the
assessee to raise the aforesaid contention and
in any case we further hold that it is not
established that the assessing officer did not
himself examine the matter and arrived at his
own belief and that he acted solely on any
command from the Commissioner.

 11. The second contention raised on
behalf of the petitioner is that when the
Tribunal quashed the assessment, the earlier
notice issued by the assessing officer under
Section 148 and the return file by the assessee
revived and, therefore, the assessing officer
could have proceeded on those documents if it
was permissible under the law. Reliance is
placed on a judgment in S.P. Cochhar Vs
Income Tax Officer (1984) 145ITR255 in
which it was held that where an assessment is
pending, a notice under Section 148 cannot be
issued. Reliance is also placed on CIT vs. P.
Krishnankutty Menon(1990) 181 ITR 237. In
that case reassessment proceedings had been
initiated under Section 147 (b) and during the
pendency of the reassessment, further notices
under Section 147 (a) were issued. It was
held that when the assessment was open, no
INDIAN LAW REPORTS ALLAHABAD SERIES [2000
22
valid notice under Section 147(a) could be
issued. This proposition of law was also not
challenged
on
behalf
of
the
revenue.
However, what is evident is that due to the
time
taken
in
the
earlier
round
of
proceedings., the limitation for making an
assessment of the basis of the return of
income, filed in pursuance of the notice dated
5.10.1990, has expired and, therefore, it
cannot be said that either the said notice or the
return of income had revived and could be
treated to be pending. Such a situation has
been taken care of by sub-clause (b) of
Explanation 2 to Section 147. Explanation 2
states that for the purposes of section 147, the
following shall also be deemed to be cases
where income chargeable to tax has escaped
assessment namely:-

(a)..................
(b) Where a return of income has been
furnished by the assessee but no assessment
has been made and it is noticed by the
Assessing Officer that the assessee has
understand the income or has claimed
excessive loss, deduction, allowance of relief
in the return;

(c).....................

12. Thus in view of this Explanation and
the fact that because of the events, narrated
above, no assessment was made on the
assessee partnership firm, it becomes a case
where income chargeable to tax has escaped
assessment. As stated is paragraph 7 of the
counter affidavit, the income was not stated
by the assessee in the return that was filed in
pursuance of the earlier notice under Sec. 148
on 16.11.1990. The income declared in the
said return was only Rs. 99,620/- while as
stated in paragraph 16 of the counter affidavit
during the course of search and seizure
operations, the assessee had offered an
additional income of Rs, one lac. Therefore,
all the conditions mentioned in clause (b)
reproduced above were satisfied in this case
and the assessing officer could reassess the
income after issuing a notice under Section
148. It is not a case of circumventing the
period of limitation but is a case where
because of the certain circumstances, the
statute itself allows the assessing officer an
opportunity to bring to tax escaped income
although the period originally prescribed had
expired. It was also contended that the
impugned notice, copy of which is at page 38
of the paper book as annexure 5, did not
specify whether it was issued to the AOP or to
the partnership firm. No. such ground has
been set up in the writ petition. The notice
has been issued to M/s S.K. Gupta Co. which
as admitted in the petition itself, is a
partnership firm and was being assessed to tax
from before at general index register no. S
302/W1. This number is mentioned in the
notice itself making it quite clear that it has
been issued to the partnership firm. The
conduct of the assessing officer in making the
order under Section 154 also indicated that he
wanted only to assess a partnership firm and
not an AOP. Therefore, in any case there is
no infirmity in the notice on this account as
well.

13. No other point was raised in this writ
petition and for the reasons discussed above,
the same is hereby dismissed with costs to the
respondents. The interim order, if any is
discharged.
----------
$33(//$7( -85,6',&7,21
$33(//$7( -85,6',&7,21
&,9,/ 6,'(
&,9,/ 6,'(
'$7(' $//$+$%$'
'$7(' $//$+$%$'
%()25(
%()25(
7+( +21·%/( 5$9, 6'+$9$1 -
7+( +21·%/( 5$9, 6'+$9$1 -
7+( +21·%/( $ &+$.5$%$57, -
7+( +21·%/( $ &+$.5$%$57, -
6SHFLDO $SSHDO 1R RI
5DQELU 6LQJK
«$SSHOODQW
9HUVXV
'LVWULFW ,QVSHFWRU RI 6FKRROV -DORQH DW 2UDL
DQG RWKHUV
«5HVSRQGHQW

&RXQVHO
IRU
WKH
$SSHOODQW