Anand Samrat and Company vs Income Tax Officer, Hyderabad

P. Venkatarama Reddi, J.—Questioning the notice dated 30-3-1988 issued by the respondent in purported exercise of power u/s 148 read with Section 147 of the Income Tax Act, the present writ petition was filed in the year 1988. Further proceedings pursuant to the notice were stayed by this Court.

The undisputed facts are that on 2-7-1982, a search was conducted by the Department. Pursuant to a notice u/s 148, a return was filed in the year 1983-84 showing the income of Rs.2,19,433/-. However, on 27-3-1986, an assessment order was passed determining the taxable income as Rs.20.55 lakhs on the basis of the material recovered in the course of search. The appeal filed by the petitioner against the assessment was partly allowed by the Commissioner of Income Tax (Appeals) on 27-3-1986. Thereafter, a second appeal was filed by the assessee seeking further relief. The Tribunal partly allowed the appeal by ordering reduction in the estimate and also allowing deductions u/s 80-G etc. The departmental appeal as regards the valuation of closing stock was remitted to the Income Tax Officer for fresh determination. As regards certain items, the assessee''s appeal was also remanded to the assessing authority for fresh determination. That order has become final. On 19-2-1988 the respondent passed order determining the taxable income at Rs.15,11,370/-. A month later, the successor assessing officer has issued the impugned notice u/s 148 of the Act.

No counter is filed on behalf of the Department. However, the Learned Standing Counsel sought adjournment and after seeking adjournment produced the relevant file which contains the noting of the respondent made on 30th March,1988. The respondent having referred to the order of the Tribunal and previous history of the case, merely observed that the addition towards suppressed sales made by the Income Tax Officer was lesser than the quantum of probable suppression having regard to the entries in the diary recovered at the time of search operations. The respondent then concluded that by reason of failure to disclose fully and truly all material facts, the income chargeable to tax had escaped assessment and therefore he ordered issuance of notice u/s 148. We are of the view that the initiation of reassessment proceedings u/s 147(a) is unwarranted and beyond the jurisdiction of the respondent. The reasons given in the file make it clear that the ''proposed reassessment is in negation of the principle of finality of the decision of the Tribunal and the implied bar against the initiation of re-assessment proceedings on the same set of facts twice over. The respondent out-stepped his jurisdiction in seeking to make a reassessment as if nothing had happened earlier pursuant to the material seized during the search operations. It is not open to the assessing authority to go on resorting to re-assessment proceedings piece-meal on a fresh appraisal of the material and evidence that came to light during the search. We, therefore, have no hesitation in quashing the impugned order.

The writ petition is allowed with costs of Rs.750/-.