K.L Roy, J.:— This is an application under article 226 of the Constitution challenging the validity of a notice issued under section 148 of the Income-tax Act, 1961, for reassessment of the income of the petitioner for the assessment year 1952-53. This rule was issued by this court on the 3rd April, 1969, directing the respondents, the Income-tax Officer, “A” Ward, District IV(I), Calcutta, the Commissioner of Income-tax, West Bengal III, and the Union of India, to show cause why writs in the nature of mandamus, certiorari and prohibition should not issue cancelling and/or quashing the aforesaid notice and commanding the respondents to forbear from giving any effect thereto.
2. For the assessment year 1952-53, the petitioner, Sri Keshtra Mohan Roy, was assessed in the status of an individual by Sri P.C Guha, the Income-tax Officer, District IV(I), Calcutta, on the 16th September, 1956. The relevant accounting year of the petitioner ended on the 31st October, 1951. In the assessment order, after reciting that Sri L.M Battacharjee, the authorized pleader of the assessee appeared with cash book, ledger, salary book, voucher file, bank pass book and cash memos as also the audited profit and loss account and the balance-sheet in respect of the petitioner's business, the said Income-tax Officer made various comments on the defects and shortcomings in the assessee's accounts and held that the goods account did not represent the correct state of affairs and made an ad hoc addition of Rs. 25,000 to the goods account, as, in his opinion, the gross profit shown was unreasonably low. By a letter dated the 26th April, 1968, one Sri M.P Tewari, the then Income-tax Officer, “A” Ward, District IV(I), Calcutta, informed the petitioner that on examination of his assessment records cash credits between the 5th November, 1951, and the 22nd February, 1952, aggregating to Rs. 60,000 were found, and that the Income-tax Officer had reason to believe that these credits represented the petitioner's concealed income which had escaped assessment.
3. Before taking action under section 147, the Income-tax Officer was affording the petitioner an opportunity of showing cause why proceedings for reassessment should not be started against him. The hearing was fixed on the 10th May, 1968, at 11-30 a.m It is stated in paragraph 6 of the petition that on receipt of the aforesaid letter, the petitioner's authorized representative, the said Sri L.M Bhattacharjee, appeared before the respondent No. 1 and had elaborate discussions with him in the course of which it was pointed out that the said cash credits were duly shown to the Income-tax Officer who made the original assessment and on being satisfied as to the explanation rendered, the said Income-tax Officer did not include the said amounts in the income of the petitioner. It is further stated that at the said interview it was pointed out that at the time of the original assessment the audited balance-sheet and the profit and loss account as also the books of account were produced before the assessing Income-tax Officer and the very cash credits which had been referred to in the letter dated the 26th April, 1968, were examined and discussed by the said assessing Income-tax Officer who was completely satisfied that the said cash credits were nothing but genuine hundi loans of the petitioner. The petition has been verified by one Samar Roy, the accountant of the petitioner, who claims to be well acquainted with the facts and circumstances of the case and the statements in paragraph 6 are verified as true to his knowledge. As the aforesaid averments were categorically denied in the affidavit-in-opposition I gave leave to the petitioner to file an affidavit by the said Sri L.M Bhattacharjee setting out what had happened at the time of the original assessment and also what discussions took place between him and the respondent No. 1 in the meeting held on the 10th May, 1968. I also gave leave to the department to file an affidavit-in-reply to the aforesaid affidavit, if thought necessary, to be affirmed by the Income-tax Officer making the original assessment. Though this leave was granted on the 19th of February, 1970, no such affidavit has been filed by Sri Bhattacharjee. In the petition there are the usual averments that all the material facts necessary for the purpose of the assessment for the year 1952-53 were fully disclosed to the Income-tax Officer at the time of the original assessment and there was no omission or failure on his part which would entitle the respondent No. 1 to issue the impugned notice under section 148. It should be mentioned in this connection that the impugned notice under section 148 was issued on the 26th February, 1969, and as it was issued more than eight years after the end of the relevant assessment year the necessary satisfaction of the Central Board of Revenue was obtained and recorded in the notice as provided in section 151 of the Income-tax Act, 1961.
4. Objections as to the maintainability of the application on the ground that the petition was not properly signed and verified were raised by Mr. Sen, learned advocate for the department, while similar objections as to the reliability of the affidavit-in-opposition affirmed by the present incumbent to the post of the Income-tax Officer, “A” Ward, District IV(I), who could have no personal knowledge of the facts relating to the original assessment of the petitioner were also raised by the learned counsel for the petitioner and I shall deal with these objections later on.
5. In the affidavit-in-opposition in paragraph 6 it is stated that in the interview held on the 10th May, 1968, Sri Bhattacharjee maintained that the cash credits were shown to the assessing Income-tax Officer at the time of the original assessment and that he was satisfied with the explanation offered but from the records it did not appear to the deponent that the cash credits were disclosed to the assessing Income-tax Officer and as such the question of his satisfaction as to the genuineness of these credits did not arise. It is further affirmed in the said affidavit that during the course of the assessment of the petitioner for the year 1961-62, the information given by the petitioner with regard to the cash credits for that year were found to be false and an addition of Rs. 1,37,500 was made on account of cash credits in that year and the respondent-Income-tax Officer had reason to believe that the cash credits shown in the earlier years were also not genuine. Accordingly, the records of the assessments of the earlier years were scrutinized and the present notice under section 148 was issued after giving the petitioner an opportunity of showing cause against such notice. It is further affirmed that from the records it would appear that the cash credits were never shown to the assessing Income-tax Officer.
6. In paragraph 5 of the affidavit-in-reply filed on behalf of the petitioner a somewhat curious position has been taken up. It has been submitted that as the accounting year of the petitioner relevant to the assessment year 1952-53 ended on the 31st October, 1951, there was no question of the petitioner's disclosing the credits on hundi loans mentioned in the letter of the respondent, Income-tax Officer, dated 26th April, 1968, as each of such loans was outside the aforesaid accounting year of the petitioner. It is specifically averred in the said paragraph that in view of the fact that no cash credits had been taken during the accounting year relevant for the assessment year 1952-53 and no cash credits fell within the said accounting year there was no question of giving false or incorrect information as to any cash credits as alleged. This contention is quite consistent with the petitioner's claim of producing his books of account and all relevant documents in respect of the accounting year for the assessment year 1952-53 which ended on 31st October, 1951. The credits or loans taken after that date would appear, if they appear at all, in the petitioner's books for the next accounting year. But if the alleged loans or credits are not genuine and are held to be the petitioner's undisclosed income then it is well-settled now that the accounting period or accounting year for such undisclosed income would be the relevant financial year, that is to say, the year ending on the 31st March, 1952, and as such all the alleged credits would have to be considered in the petitioner's assessment for the assessment year 1952-53. Whether there were any such credits and whether the credits were genuine loans are questions to be considered at the time of the assessment proceedings and this court cannot go into such questions in a writ application. It would, therefore, seem that there has been an omission on the part of the petitioner though not a wilful or deliberate omission, may be an involuntary omission, to disclose these credits at the time of the original assessment and such failure on his part would justify the Income-tax Officer in assuming jurisdiction under section 147 of the Income-tax Act, 1961. In this view, the rule must be discharged.
7. I shall, however, deal shortly with the contention raised by Mr. Sen. Mr. Sen referred me to rules 13, 14 and 15 of the Rules framed by this court relating to applications under article 226 of the Constitution and pointed out that under these rules every petition must be signed and dated by the petitioner or his duly authorised agent and further every such petition shall be verified by the solemn affirmation made by the petitioner or a person or persons having cognizance of the facts stated and shall state clearly by reference to the paragraphs in the petition whether the statements are based on knowledge, information and belief or on records. Where a statement is based on information, the source of information should be disclosed and where the statements are based on records, sufficient particulars should be given to identify the records. Certain decisions of this court were cited by Mr. Sen for the proposition that unless the petition conforms to the above regulations it should be thrown out in limine. I find that the petition in this case has been signed by the petitioner and it has been verified by one Samar Roy who in his affidavit of verification affirms that he is the accountant of the petitioner and is well acquainted with the facts and circumstances of the case out of which the present application arose. He has also mentioned the paragraphs the statements in which are true to his knowledge, the paragraphs the statements in which are based on information believed by him to be true and the statements in the paragraphs which are his submissions to the court. I do not think that there is any material defect in the petition though in making the averments in paragraph 5 of the petition as true to his knowledge he should have stated that he was present when the interview took place. So far as the objection to the affidavit-in-opposition is concerned this is a case in which, to my pleasant surprise, I find that the respondent, Income-tax Officer, has taken the trouble to inform the petitioner nearly a year before he took recourse to section 147 of the reasons for his belief that the petitioner's income for the assessment year 1952-53 had escaped assessment and gave the petitioner an opportunity of showing cause against the proposed action. The averments in the affidavit-in-opposition as believed to be true and based on the records are in this case more satisfactory than the usual affidavit that one expects from a respondent, Income-tax Officer, in cases of this kind and full details of the reasons for the action taken have been given. I do not see that in this case the petitioner has any grievance as to the statements in the affidavit-in-opposition.
8. In the result, the rule is discharged.
9. There will be no order as to costs.
10. All interim orders are vacated.
11. The operation of this order will be stayed for four weeks.