P.N. Singhal, C.J.
1. The petitioner claims to be a Hindu Undivided family represented by Gajanand Pasari as its 'Karta'. It is being asseeseed to income-tax in Rajasthan ever-since its introduction, from the assessment year 1950 51. as the Income-tax Act was made applicable to the State with effect from April 1, 1950. The validity of the retrospective levy was successfully challenged by a writ petition in this Court. The Court judgment is dated January 16, 1951 and is reported in Madangopal Kabra v. Union of India It was however set aside on December 10, 1953 by a judgment of their Lordships of the Supreme Court reported in Union of India v. Madal Gopal Kabra : [1954]25ITR58(SC) .
2. The petitioner has stated that as there was 'no Income-tax or any other law' in the State of Raja upto 31.3.50' requiring it to maintain books of account', it 'did not murrain any books of account upto 31.3.50' It has been stated that the petitioner prepared an inventory of its assets and liabilities on April 1, 1950 and started maintaining 'proper and regular booked of account and documents' with effect from April 1, 1950. It claims that it closed its frist accounting year on March 31, 1951 and found a net pre fit of Rs. 39 328 t0. It therefore voluntarily filed its return of income tax, along with the profit end loss account and the balance sheet which are on record as Annexure. A The assessment was completed by order Annexure B dated April 25, 1952. The petitioner filed the Subsequent returns also, so that its income upto the assessment year 1965 66 bad been assessed to income tax, and the return for the year 1966 67 was pending consideration on the date of the petition The sane was the position regarding the wealth tax, and the petitioner has stand that nothing was outstanding against it.
3. As the petitioner did not file a return for assessment year 1950-61, Income-tax Officer B Ware. Jaipur, respondent No. 1, initiated action under Section 34(1)(a) of the Income-tax act of 1922 by notice Annexure E dated March 17 1959, requiring the petitioner to hie a return of its income for the period April 1, 1949 in March 31, 1950 within 35 days, on the ground that he bad reason to believe that the income had escaped assessment by reason of the omission or failure to make the return. The petitioner claim that as it bad not maintained books of account for that year, he filed his return on November 23, 1959 declaring an income of Rs 10 000/- 'on estimate' disclosing 'all primary and relevant facts necessary' for the assessment The Income-tax Officer estimated the petitioner's income at Rs. 50, 000/ to his best judgment, and completed the assessment by order Annexure G dated November 26, 1959, creating a demand for Rs. 4,729.31, which was paid of the petitioner The interne however reduced on second appeal to Rs. 25 O00/- and the excess tax was refunded in 1962.
4. In the meantime, the Income-tax Officer issued notice Annexure J dated November &, 1959 to the petitioner under Section 28(3) of the Income-tax Act, 1922 for its failure to comply with a notice under Section 22(4) requiring it to produce books of account end documents The petitioner gave explanation K, and the matter was dropped by order Annexure 1 dated July 1, 1960.
5. Respondent No. 1 thereafter issued a show cause notice (Annexure M) to the petitioner on January 23, 1967 informing it that it had not filed any balance sheet for 1950 51, and cailing upon it to file the same, along with a complete list of shares of Rs. 5,89,568, and to prove the period of their purchase as also the nature and the source of the investment, the source of acquisition of the gold and silver stock, and the nature and source of the deposits ect. It was indicated that action might have to be taken under Section 147(1)(a) of the Income-tax Act, 1961, hereinafter referred to as 'the Act'. The petitioner sent replies Annexure N dated February 1, 1967 and Annexure O date February 4, 1967 explaining the position. Respondent No. 1 then asked for a (sic) of the balance sheet as drawn on April 1, 1950, & it was supplied on 16-2-1987. It is an important document & is on record as Annexure Q. It is the same as document Annexure A. 1 filed by the respondents. The petitioner address some letters to the Income-tax Officer requesting him to droo the proceedings for thereasons mentioned therein That Officer, however, issued notice Annexure The under Section 148 of the Act on March 22, 1367 requiring it to (sic) within 30 day, a return of its income for the assessment year 1950 61, It is no in dispute before us that the notice was issued under Section 147(1) of the Act in the ground that the Income-tax Officer had reason to believe (sic) the petitioner income for that year had escaped assessment by reason of the failure on its part to disclose fully and truly all the material facts necessary for the for the assessment. The notice purported to have been issued after obtaining the necessary Satisfaction of the Central Board of Direct Taxen.
6. The petitioner sent reply Annexure U dated April 5, 1967 challenging the jurisdiction and the authority of respondent No. 1 to reopen the (sic) and asking him to grope he proceedings. It also asked for copies of certain document and for inspection of records, but to no avail. It has therefore appalled for writs of certiorari, mandamus and prohibitions for the reason mentioned in the petition. We shall deal with those reasons which have been used by the petitioner learned Counsel and will have occasion to refer to the affidavit in reply and the rejoinder, to the extent necessary.
7. It has been argued by the earned Counsel for the petitioner that notice Annexure. The invalid as it has been issued without jurisdiction, and that it should quashed an it subjects, or in likely to subject, the petitioner to a lengthy proceeding and will cause it unnecessary harassment, Reference in this connection has been made to the decisions in Calcutta Discount C Ltd. v. Income-tax Officer, Companies District I, Calcutta and Anr. : [1961]41ITR191(SC) Commissioner of Income-tax, Gujarat v. A. Raman and Co. (1966) 67 ITR 11, Income-tax Officer, Hyderabad v. Niwab Mit Barkat Ali Khan : [1974]97ITR239(SC) : : [1974]97ITR239(SC) , J.S. Parkar v. V.B. Palekar and Ors. : [1974]94ITR616(Bom) . K.P. Verghese v. Income-tax Officer. B Ward, Ernakulam and Ors. : [1970]77ITR719(Ker) , Madangopal Kabra Union of India , Madhya Pradesh Industries Ltd. v. Incomen-tax Officer, Special Investigation Circle 'B', Nagpur : [1965]57ITR637(SC) K.S. Rashid and son and Ors. v. Income-tax Investigation Commission and Ors. : [1954]25ITR167(SC) and Madhavlal Sandhoo v. V.R. Idurkar and Anr. : [1956]30ITR332(Bom) . The argument regrinding lack of jurisdiction has been advanced in various ways, with (sic) to the requirement of Section 147 of the Act It may be mentioned that it is not in dispute before us that even though the impugned notice Annexure T has been given in respect of the assessment year 1950 51, Section 147 of the Act (which name into force on April 1, 1862) would be applicable if is requirement be shown to be fulfilled, as it was in force on February 22, 1967 when the notice was given. The section deals with the case of income which has escaped assessment Clause (a) of Section 147, with which we are concerned, provides as follows:
It-
(a) the Income tax Officer has reason to believe that, by reason of the omission or future 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 assessment for that year, or
(b) ...be may, subject to the provisions of Sections 148 to 153, assess or reassess such income or recomputed the loss or the depreciation allowance, as the case may be, for the assessment year concerned (hereinafter in Sections 148 to 163 referred to as the relevant assessment year).
Then follow two Explanations-Explanation 1 provides, inter alia, that for purposes of the section income chargeable to tax shall be deemed to have escaped assessment where that income has been under-assessed, or assessed at too low a rate. Explanation 2 makes it clear that production of account books or other evidence Could with due diligence have been discovered by the Income-tax Officer 'will not necessarily amount to disclosure' within the meaning of the Section-
8. There was no failure on the part of the petitioner to make a return of its income for the assessment year 1950, 51 because it will be recalled that the return was filed on November 23, 1959 This case does not therefore relate to the first part of Clause (a) of Section 147, and the controversy before us is confined to the second part of that claus. which relays to omission or failure to 'disclose fully and truly alt material facts necessary' for the petitioner's assessment. The first question is whether the Income-tax Officer bad 'reason to believe' that income chargeable to tax had escaped assessment by reason of any such omission or failure? It has been argued by Mr. Ranka on behalf of the petitioner that there was no such reason at all and so a condition precedent to the exercise of jurisdiction under Section 147 did not exist. It has been urged that the petitioner had supplied all the primary facts at the time when the return for 1950 51 was assessed to income-tax by order Annexure B on November 26, 1959, and hat even the information contained in Annexure A 1 was supplied 10 Annexure A at the time of filing the return for the assessment year 1951 52 which was finalised by order Annexure 'B dated April 25, 1952. Reference in this connection hits been made to Section Nar yanappa and Ors. v. Commissioner of Income-tax Banglore : [1967]63ITR219(SC) . Commissioner of Income-tax, Gujarat v. A Raman and Co. (1966) 67 ITR 11, John LaL v. Commissioner of Income tax U.P. : [1973]88ITR439(SC) and Income-tax officer, Hyderabad v. Nawab Mir Barkat Ali Khan : [1974]97ITR239(SC) .
9. It is well settled, having been laid down by their lordships of the Supreme Court in Johri Lal's case : [1973]88ITR439(SC) , that the fulfillment of the said, condition is mandatory & is not a mere formality. It has also been declared to be the law in Nawab Mir. Barkat Ali Khan's case : [1974]97ITR239(SC) that the aforesaid Section 147 does not contemplate a purely subjective satisfaction of the Income-tax officer and that the 'reason' referred to in the section must haves rational connection with, or a relevant bearing on, the formation of the belief The main question therefore is whethere the Income-tax Officer had any such reason in this case
10. We have examined assessment order Annexure G dated November 26, 1969 for the assessment year 1950 61. It shows that the petitioner filed the return for its income for that year on 'an estimate basis only' on the ground that it 'did not maintain any books of account' for that year. The Income-tax Officer refused to believe that the assessee which bad bone such large business as to have capital of about Rs. 6.00 000/ in the assessment year 1951, 52 'did not maintain any form of Recounts'. He stated that it was not worth believing that it was only in assessment year 1950, 51 that the assessee earned lesser point, and that it was 'definite' that it had maintained some form of accounts which it had withheld 'to suit (its) own convenience'. That was why the Income-tax Officer had to take recourse to Section 23(4) of the Income tax Act 1922 and to make the assessment to the 'best of his judgment.' Nothing can therefore possible turn on that assessment, and it is futile to contend that the primary facts had been supplied on that occasion. A refers nee to order Annexure G shows that the petitioner simply filed a return declaring an income of Rs 10,000/-, and nothing more. Moreover, in view of its insistence that it had not maintained any accounts whatsoever, it would have been futile for the Income-tax Officer to serve a notice on the petitioner under Section 22(4) of the Act of 1922 to submit any information based on its accounts Nevertheless a notice was issued under that sub-section. but to no avail and the Income-tax Officer vas not able to obtain the primary facts for the purpors of framing the assessment.
11. Annexure A contains the balance sheet prepared as on March 31, 1951 and it is said to have been supplied at the time of filing the return of income for the assessment year 1951 52 It has bean strenuously argued by Mr. Ranka that Annexure A1 dated February 16, 1967 supplied the same information as that contained in Annexure A, and that the Income-tax Office had no jurisdiction to reopen the assessment on the pretext that fresh information came to the notice by Annexure Al or that the assessee had failed to disclose fully & truly all material facts necessary for its assessment for the year 1930-61 and that income chargeble to tax had escaped a segment for that year. The respondents have, on the other hand, stated in paragraph 15 of their reply as follows:
However, new facts came to light in the shape of assessee's balance sheet as on 1.4 50 filed by the assessee on 16.2.67 which shows the opening balance of the books for the year 1950-51 at Rs. 10,19,393/-This balance sheet was nit filed at the time of original assessment for the assessment year 1950 51.
The petitioner has, in its rejoinder, reiterated its stand in the petition with reference to Annexure A & has stated 'fiat the Income tax Officer was 'quite conscious of the capital of toe petitioner for the assessment year 1950 51'. It has been pointed out that the Income-tax Officer as well as the Appellate Assistant Commissioner were aware of the fact that it was about Rs, 6,00,000/-. It has also been stated that there was 'no necessity of filing copy of Balance Sheet as on 1.4.50' and it did not 'fall within the previous year'. The petitioner has not however ventured to state that a copy of Annexure A1. was supplied to the Income-tax Officer for assessing its income for the year 1950 51. Mr Ranka has prepared a comparative chart of the information contained in Annexure A and A1 and has argued that they were similar in all Annexure details.
12. We have examined the matter with reference to the pleadings of the parties and the arguments of their learned Counsel. Annexure A is the balance sheet prepared as on March 31, 1951. It could not therefore supply the information required for assessing the petitioner's income during assessment year 1960 51, and it is futile to contend that the Income-tax Officer ought to have taken it into consideration while drawing up his assessment order Annexure G dated November 26, 1959. It will be recalled that it was in a state of virtual helplessness that the Income-tax Officer took recourse to a best judgment assessment under Section 23(4) of the Income-tax Act. 1922, It has also to be appreciated that when the balance sheet Annexure A1 as on April 1, 19fi0 WES not before the Income tax Officer at all at the time when he drew up the assessment order Annexure G, it was not possible for him to compare it with Annexure A, and the comparison undertaken by Mr. Ranka is beside the point.
13. The fact therefore remains that balance sheet Annexure A was not relevant for assessing the petitioner's income during the assessment year 1960 51 as it had been drawn up as on March 31, 1951. Its production was not material and it was not, at any rate, primary information for purposes of the assessment made in 1969. As against this, balance sheet Annexure A1 which was supplied to the Income-tax Officer by the letter dated February 16 1967, was drawn up as on April 1, 1950 and showed, for the first time, the debits and liabilities as well as the assets and investments of the petitioner on that date. The Income-tax Officer therefore came to know for the first time in 1967, and rot in 1959, that the petitioner had the very considerable assets; and investments mentioned in Annexure A1 as on April 1, 1960, and, despite of the petitioner's contention that it had not maintained any accounts until April 1, 1950, be could have reason to believe, on receipt of the information contained in Annexure A1, that the assessee having assets or investments 1 worth several lakhs of rupees on April 1, 1950 had similar, or somewhat similar, assets or investments on March 31, I960 which had escaped assessment. He could also then entertain the belief that the entries on the debit side in favour, of the wife and the (sic) daughters of the 'Karta' of the assessee also required investigation to order to examine the question whether income chargeable to tax bad escaped assessment.
14. It cannot be doubted and has, in fact, not been disputed before us that the petitioner was in possession of the information contained in Annexure A1 even on April 1, 1950, It has been repeatedly stated before us by Mr. Ranka that the petitioner drew up that information on that date, as he wanted to maintain bocks of account from then onwards. It would therefore be an irresistible conclusion for his to hold that the petitioner deliberately withheld that information and that he omitted or failed to disclose it to the income-tax Officer until after the assessment had been completed in 1959. As has been shown, Annexure A1 contained material facts which were necessary for the assessment of the petitioner income for the assessment year 1960-51, It was therefore fresh information which came in possession of the Income-tax Officer by the letter dated February 16, 1967 and it was justifiable reason for that officer to believe that income chargeable to tax had escaped assessment by reason of the petitioner's failure to disclose fully and truly all material facts necessary for its assessment. It may be mentioned that even if it were presumed then the petitioner did not maintain accounts until April 1, 1950, it was in a position to draw up its balance sheet as on April 1, 1950 by some method or the other and there was no reason why it should not have found it possible' to draw up the balance sheet by the same method stating the poison as on the earlier day i.e. on 31-3-1950. The assessee was therefore guilty of not disclosing fully and truly all the material facts necessary for its assessment for 1950, 51 and it appears, prima facet, that the Income-tax Officer bad reason to believe, on receipt of letter Annexure A1 dated February 16, 1967, that income chargeable to tax had escaped assessment by reason of the non-disclosure. As has been held in Calcutta Discount Co. Ltd, v. Income-tax Officer Calcutta : [1961]41ITR191(SC) it is the duty, of the assesses who wants the court to hold that jurisdiction was lacking in the Income-tax Officer to Initiate the proceeding m respect of recovery which was said to have escaped assessment, to establish that the income-tax Officer had no material at all before him for believing that there had been such non-disclosure. While the petitioner has railed to discharge that onus, the respondents, have been able to establish the necessary requirements of Section 147(a), There were therefore prima facie grounds before the Income-tax Officer for taking action under Section 148 and, as has been held in Chhugamal Rajpal v. S.P. Chaliha and Ors. : [1971]79ITR603(SC) , that is quite sufficient to give the necessary jurisdiction. For the reasons mentioned by us, the belief entertained by the Income-tax Officer was the belief of an honest and reasonable person an it was based on reasonable grounds, as has been held in Sheo Nath Singh v. Appellate Assistant Commissioner of Income-sax (Central), Calcutta, and Ors. : [1971]82ITR147(SC) in which the decision in Chhugamal Rajpal's case : [1971]79ITR603(SC) has been followed. We have gone through Commissioner of Income-tax, Delhi and Raj v. Rao Thakur Narayan Singh : [1965]56ITR234(SC) , Commissioner of Income-tax, West Bengal and Anr. v. Hemchandra Kar and Ors. : [1970]77ITR1(SC) , and Commissioner of Income-tax, Gujarat v. Bhanji Lavji : [1971]79ITR582(SC) cited by Mr. Ranka, but they were different cases where the Income-tax Officer wanted to reopen the assessment on the same aid facts. So also Commissioner of Income-tax, Calcutta v. Burlop Dealers Ltd. : [1971]79ITR609(SC) cannot avail the petitioner for there the assess had produced all the relevant accounts and document and is Income-tax Officer wanted to reopen the assessment merely because ha wanted to correct on erroneous inference drawn by him earlier. Gemini Lather Stores v. Income-tax Officer, Baward Agra, and Ors. : [1975]100ITR1(SC) was also a different case for there the Income-tax Officer had himself discovered the facts relating to the assessment but by oversight did not bring some amount to tax. So also E.M. Muthappa Chettiar v. Commissioner of Income-tax, Madras : [1964]53ITR642(Mad) , Gordon Woodroffe and Co. Ltd, London v. Income-tax Officer, Madras : [1964]51ITR12(Mad) , Ram Charan Lal Ram Naram v. Income-tax Officer, Etawah, and Anr. : [1966]59ITR282(All) , Hong-kong and Shanghai Banking Corporation v. Income-tax Officer 'C Ward Calcutta (1973) TLR 926, Commissioner of Income-tax Bangalore v. Hajee C.M. Abdul Rahim Khan : [1973]91ITR64(KAR) and Abmedabad Cotton Mfg Co. Ltd v. Union of India and Anr. : [1974]95ITR639(Guj) were different case, where the assessed had disclosed the primary facts, or had done all he could for the framing of the assessment or there was negligence on the part of the taxing officer as well as the assessee.
15. An ancillary argument has bean raised by Mr. Ranka that it would be sufficient if it is shown that the primary facts were disclosed by the assessee otherwise loan in the return of the income filed by it e.g., in the previous year, or in she old records or if the Income-tax Officer already knew about the omitted facts. Our attention has. in his connection, been invited to the decisions in Dwijendra Chandra Chowdhury v. Commissioner of Income-tax, Assam : [1966]61ITR97(AP) , Dr M.R. Dalal v. Commissioner of Income-tax Bombay : [1963]49ITR492(Bom) , Dunlop Rubber Co. Ltd, (London) v. Income-tax Officer, A Ward and Ors. : [1971]79ITR349(Cal) and Jagdish Prasad v. Commissioner of Income-tax (1973) TLR 1455. The argument is futile because, as has been shown, the information which camp to notice in 1967 was with held from the Income-tax Officer at the time of the assessment in 1959 and would not have bet o found even if that officer had ransacked the whole of his earlier record.
16. It has also been pointed cut by Mr. Ranka that the wordings of the Income-tax Officer's notice Annexure dated March 22, 1967 are quite similar to his earlier notice Annexure E dated March 17, 1959 and that as notice Annexure E was followed by the petitioner's return of income which was assessed by order Annexure G dated November 26, 1959, there was no occasion for the issue of notice Annexure T. it would be enough to say in this connection that the two notices were vastly different for while notice Annexure E was issued for failure to file the return of the petitioner's income for 1950 51 and was meant to 'assess' that income on the filing of the return, notice Annexure T was issued on the other ground that there was reason to believe that me petitioners income chargeable to tax had escaped assessment and required 'reassessment'. The latter notice as therefore one under the second part of Clause (a) of Section 147 of the Act for failure to disclose fully and truly all material facts; and, as would appear from the petitioner's reply Annexure U dated May 4. 1967, that was how it was understood even by the petitioner. Morever, the notice had to be in accordance with Section 139(2) and we are unable to ague with Mr. Ranks that notice Annexure T should be treated as redundant because of the earlier notice Annexure E.
17. Before leaving this aspect of the controversy we may as well refer to an agreement of Mr. Ranka that the petitioner has disclosed the primary facts that (i) it was carrying on speculation business, (ii) it had not maintained any accounts unto April 1, 1960, (iii) it had maintained proper accounts from April 1 1960, (iv) it has filed a return of its income for 1951 52 with the profit and loss recount and the bocks of account, (v) it had filed the balance sheet (Annexure A.) as on March 31, 1961, disclosed the capital, the credits, the investment in shares and bullion, the cash in hand and the names of the creditors (vi) it bad shown that is opening capital was Rs. 6,94,518 12, (vii) its assessment upto 1956 57 had been completed, (viii) it had disclosed that the source of its capital was profits learned by speculation in the year immediately preceding 1951-52, and (ix) it had shown that its holding of shares, gold and silver was old except for the put chases made in 1951 52 We have examined these items individually, out, for reasons already stated, they cannot be said to be 'all the primary facts' necessary for the assessment of the petitioner's income for 1950 M within the meaning of the decision of their Lordships of the Supreme Court in Calcutta Discount Co.'s case : [1961]41ITR191(SC) as the information contained in Annexure Al was withheld even trough it contained the primary facts and was much more material and had a direct beating on the assessment of the petition-net's income. It would be sufficient for us to refer to the following observation of their Lordships in this connection:
Nor will he be able to contend successfully that by disclosing certain evidence, he should be derma to have disclosed other evidence which might hive been discovered by the assessing authority if he had pursued investigation on the basis of what has been disclosed. The Explanation to the section gives a quietus to all such contentions; and be position remains that so far as primary facts ate concerned, it is the assessee's duty to disclose all of them - including particular entries in account books, particulars portions of document, and documents and other evidence which could have been discovered by the assessing authority, from the documents and other evidence disclosed.
Moreover, as has been laid down by their Lordships of the Supreme Court in Kala Khan Mohammed Hanif v. Commissioner of Income-tax, Madhy a Pradesh and Bhopal : [1963]50ITR1(SC) , it is well established that the onus of proving the source of sum of money found to have been received by the assessee is on him, so that it was the duty of the petitioner to have disclosed toe source of the sum of money shown by it as its receipt in the return of 1950, 51. But that was not done and it appears prima facie that the Income-tax Officer had reason to believe that by reason of that omission or failure on the part of the petitioner there was non-disclosure of at least some of the material facts necessary for its assessment, and the income chargeable to tax bad escaped at assessment for the Tear 1950.51 within the meaning of Section 147, The sufficiency of the reasons is not justiciable.
18. It has next been argued by the learned Counsel for the petitioner that there was no reason for the Income-tax Officer to think that income chargeable to tax which had escaped assessment amounted to or was likely to amount to Rs. 50.000/- or more for 1950, 51 as required by Section 149(1)(a)(ii) of the Act. It has been urged that, as has been held in Smt. Kantamani Venkata Satyavathi v. Income-tax Officer, B Ward, Rajahmundry : [1967]64ITR516(AP) , a fishing or roving enquiry would not be permissible - particularly after the lapse of many years For this letter argument, the earned Counsel has invited our attention to S. Hastimal v. Commissioner of Income-tax, Madras : [1963]49ITR273(Mad) . Our attention has also been invited to notice Annexure M dated January 23, 1967.
19. We have gone through the reply of the respondents and it appears that the Income tax Officer had reason to believe on the basin of the figures supplied in Annexure A1, that the capital of the assessment year 1901 52 might be the revenue receipt of the assessee for 1960 51 That was for more than Rs. 50,000/. and the income which had escaped assessment was therefore likely to amount to Rs. 50,000/- or more for that year.
20. It has next been argued that as more than eight years had expired from the and of the assessment year 1950 51, it was not permissible for the Income-tax Officer to issue a notice unless the Central Board of Direct Taxes was satisfied, on the reasons noticed by the Income-tax Officer, that it was a fit case for the issue of a notice under Section 148, and that either the Board was not so satisfied or recorded its satisfaction mechanically. The argument has been supported by a reference to Chhugamal Rajpal's Case : [1971]79ITR603(SC) .
21. The petitioner's averment in this respect is contained in paragraph 26(ix) of the writ petition and it has been denied in the reply. It has been stated in the rejoinder that the Board's sanction had been accorded mechanically and was not in accordance with Section 151(1) of the Act.
22. Mr. Bhandari appearing on behalf of the respondents has shown us the relevant file and we find that the reasons mentioned by the Income-tax Officer for thinking that it was a fit case for the issue of notice under Section 148 were communicated to the Board in a detailed report, along with a copy of the balance sheet (Annexure A1). The Income tax officer stated In his report the reasons in support of his view that there were reasons to believe that by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for the year 1950, 51 income chargeable to tax had escaped assessment, and be praved for the Board's approval the under-assessed income was estimated at Rs. 2,85,517/- On its part, the Board expressly stated that it was satisfied that it was a fit. case for issue of notice under Section 148. The argument to the contrary is therefore futile. We have gone through Chhugamal Rajpal's case : [1971]79ITR603(SC) , but that was a different case where it was found that the Income-tax Officer did not have any material before him which could satisfy ton requirements of Section 147 and that the permission had been accorded mechanically. The Commissioned who accorded the permission did not even record that he was satisfied that ii was a fir case for the issue of notice under Section 144, It was also held that if the Commissioner had read the report carefully, he could never have come to any such conclusion. The facts of that case were therefore quite different.
23. In the end, the earned Counsel for the petitioner has argued that notice Annexure T is invalid as it has been issued by Income-Tax Officer, Baward. Jaipur, respondent No 1, who did not have 'territorial jurisdiction' under Section 24 of the Act. because the place of residence of business as well as the place of the petitioner were in Calcutta, This has been controverter in paragraph 26(v) of the reply. It has been stated that the petitioner is a Hindu undivided family, its 'Karta' Gajanand Pasari resides in Jaipur, its assessment for 'all she assessment years 1950-51 to 1965 63 in respect of Income-tax, and for 1957 58 to 1905 66 in respect of wealth tax, has been made by respondent No. 1' and the return for 1966-67 had also been filed before him. It has further been stated that the petitioner never challenged the jurisdiction of respondent No. 1. An additional affidavit has been filed saying that the petitioner had filed the returns of its income upto 1974, 75 at Jaipur and that in the returns for 1966-67 and 1970-71 the petitioner Sad mentioned its place of business as Jaipur. It has further been stated that the petitioner' earned Counsel Mr. Ranka had made an application stating that it was the Income-Tax Officer B ward, Jaipur, who had jurisdiction to assess the income and the case was therefore transferred to him The petitioner has filed a reply stating that its place of business and office address of the family was and is one and the same and that there was a dietician mistake in mentioning the place of business as Jaipur in the return foe 1970-71,It has also been stated that in all the returns for 1967-68 to 3975 75 the petitioner had shown his address as care Shri Biswanath Pasari, Calcutta. The same address is said to have been mentioned in the assessment orders.
24. Section 124 of the Act deals with the jurisdiction of Income-tax Officers Under Sub-section (1) of that section the Income-tax Officers perform their functions according to the direction of the Commissioner of Income-tax. Sub-section (3) provides that within the limits of the area assigned to him, the income-tax Officer shall have jurisdiction in respect of persons carrying on business and profession, or residing there Then Sub-section (4) provides that it a question arises as to whether an Income-tax Officer has jurisdiction to assess any person, it shall be determined by the Commissioner or Commissioners, or the Central Beard of Direct Taxes, as the case may be The petitioner did not move any of those authorities to decide the question of jurisdiction.
25. The nature of the jurisdiction of the Income tax Officers in such cases arose for consideration in Wallace Brothers & Co. Ltd, v. Commissioner of Income-tax, Bombay (1945) 13 ITR 39 with reference to the provisions of Section 64(3) of the Income-tax Act., 1922 which were quite similar to Section 123(4) of the Act. It was held by their Lordships of the Federal Court that the determination of the proper place of assessment was matter more of administrative convenience than of jurisdiction and 'in any event it is not for adjudication by tie Court'. The same provisions were considered by their Lordships of the Supreme Court in Pannalal Binjraj and Anr. v. Union of India and Ors. : [1957]31ITR565(SC) and it was held that there was 'no fundamental right in an assessee to be assessed in a particular area or locality' and that it was, at any rate, 'not an absolute right' hut was subject to the exigencies of tax collection. The decision in Wallace Brothers, case (1945) 13 ITR 39 was approved by their Lordships of the Supreme Court in Rai Bahadur Seth Teomal v. Commissioner of Income-tax and Anr. : [1959]36ITR9(SC) and it was hold that the question of jurisdiction under Section 64(3) was to be determined by the Commissioner of Income-tax or the Board and that the Act did not 'contemplate any other authority so that it could not even be challenged in appeal. The law on the point is therefore quite clear said we ate of the opinion that it would held good in respect of Section 124 of the Act also and the mere classification of that section under the rubric 'B Jurisdiction' would not make any difference for that, in fact and substance, appears to be a matter of no consequence on a comparison of the provisions of the two sections. Moreover the facts which have been placed on record by the respondents leave us in no doubt that the objection of the petitioner is quite frivolous, and does not deserve any consideration. Mr. Ranks has invited cur attention to the decisions in Kiran Singh and Ors. v. Chaman Paswan and Ors. : [1955]1SCR117 , Raleigh Investment Co. Ltd, v. Governor-General in Council AIR 1947 PC 78, Commissioner of income-tax (Central and Rajasthan) v. Industrial Trust Ltd. , Messers Tansukhrai Bodulal v. Income-tax Officer, Nowgong and Ors. ( , Nyalchand Malukchand Dagh v. Commissioner of Income tax, Gujarat (1966) 62 ITR 102 , Narayane Chetty and Anr. v. Income-tax Officer Nelloer, and Ors. (1959) 354 ITR 388, and Gangsdhar v. S ate of Rajasthan and Ors. , but they were different cases and it will be sufficient to say that it has not been held that lack of territorial jurisdiction of she nature pointed out by the earned Counsel for the petitioner would amount to inherent lack of jurisdiction so as to render the notice issued or the proceedings undertaken by the Income-tax Officer in a case like this null and void There is thus no force in this argu meat also.
26. No other point has been argued and as we find no force in this writ petition, we have no hesitation in dismissing it with one set of costs to the respondents.