SHAMBHU NATH SHEO PRASAD vs COMMISSIONER OF Income Tax.

Heard counsel for the parties.

The instant writ application has been preferred by the petitioner for quashing the notice issued under s. 148 of the IT Act, 1961, which is Annexure-3 to this application. The petitioner has been called upon to file return of Income Tax for the asst. yr. 1990-91. The sole ground on which the notice has been issued under s. 148 of the IT Act is challenged is that the Assessing Officer before issuing the notice has not recorded his reasons and, therefore, has improperly exercised his jurisdiction. It was submitted that unless reasons exist justifying issuance of notice under s. 148 of the IT Act, the ITO has no jurisdiction to issue such notice.

To satisfy ourselves, we required the Department to file a counter-affidavit and to produce the record before us. Accordingly, a counter-affidavit has been filed and the record produced. We may only observe that the notice does not disclose any reason, but that may not be necessary if reasons can be found recorded in the file by the Assessing Officer. It is also well-settled that reasons must disclose prima facie facts which would justify issuance of the notice, and to any person perusing the reasons it should be obvious as to how the mind of the Assessing Officer worked when he issued the notice. Such reasons must, therefore, have particular reference to the case of the assessee, though it should not be in the form of a detailed judgment containing all the reasons and the justification for the same, but must objectively satisfy any person examining the order that the Assessing Officer has applied his mind to the facts of the case and has issued the notice.

In the instant case we find that in the file the Assessing Officer has recorded his reasons and those reasons have been quoted in paragraph No. 6 of two counter-affidavits to the following effect :

"I have reason to believe that the assessee has not disclosed fully and truly all material facts necessary for his assessment. In the asst. yr. 1990-91 receipts chargeable to tax has escaped assessment for the year under consideration. Action under s. 147 has been initiated. Issue notice under s. 148."

We are satisfied that the reasons disclosed in the file are not good enough reasons to justify issuance of notice under s. 148 of the IT Act. The mere reproduction of the words of the section is not sufficient compliance with the requirement of s. 148 of the IT Act. From a perusal of the reasons it is difficult to appreciate as to what was in the mind of the ITO or what was the material on record which led him to believe that the assessee had not fully and truly disclosed all material facts necessary for assessment and consequently receipts chargeable to tax had escaped assessment for the year. It is well settled that mere change of mind on the basis of some material without anything else is not sufficient justification for reopening an assessment and, therefore, the section requires that reasons must be recorded by the Assessing Officer.

We are, therefore, satisfied that the Assessing Officer acted improperly and without jurisdiction in issuing the notice under s. 148 of the IT Act and the same accordingly quashed, and any proceeding that may have been taken in pursuance thereof is also nullified.

This writ application is allowed to the extent indicated above, but this will not prevent the Assessing Officer from issuing a fresh notice in accordance with law, if circumstances so justify.