Income‑tax‑‑‑

‑‑‑‑Re‑assessment‑‑‑Notice under S.148 on basis of material discovered during search operations‑‑ ‑Assessment order passed pursuant thereto becoming final‑‑‑Fresh notice under S.148 on same facts‑‑‑Resorting to re assessment proceedings piecemeal not permissible‑‑‑Re‑assessment proceedings taken afresh not valid‑‑‑Indian Income Tax Act, 1961, Ss. 147 & 148.

On July, 2, 1982, a search was conducted by the Department. Pursuant to a notice under section 148 of the Income Tax Act, 1961, a return was filed in the year 1983‑84 showing the income of Rs. 2,19,433 However, on March 27, 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. There was a further appeal and on February 19, 1988, the Income‑tax Officer passed order determining the taxable income at Rs.15,11,370. A month later, the successor Assessing Officer issued another notice under section 148. The Income‑tax Officer merely observed that the addition towards suppressed sales made by the Income‑tax Officer was less than the quantum of probable suppression having regard to the entries in the diary recovered at the time of search operations. On a writ petition to quash the notice:

Held, that the proposed re‑assessment was in negation of the principles 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. It was not open to the Assessing Officer to go on resorting to re assessment proceedings piecemeal on a fresh appraisal of the material and evidence that carne to light during the search. Accordingly, the notice under section 148 was liable to be quashed.

S. Dwarakanath for Petitioner.

J.V. Prasad for Respondent.

JUDGMENT

P. VENKATARAMA REDD1, J.‑‑‑Questioning the notice, dated March 30, 1988, issued by the respondent in purported exercise of power under section 148 read with section 147 of the Income Tax Act, 1961, 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 July 2, 1982, a search was conducted by the Department. Pursuant to a notice under section 148, a return was filed in the year 1983‑84 showing the income of Rs. 2,19,433. However, ‑n March 27, 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 March 27, 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 under section 80G, etc. The Departmental appeal as regards the valuation of closing stocks 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 February 19, 1988, the respondent passed an order determining the taxable income at Rs. 15,11, 370. A month later, the successor Assessing Officer has issued the impugned notice under section 148 of the Act.

No counter is filed on behalf of the Department. However, learned standing counsel sought adjournment and after seeking adjournment produced the relevant file which contains the noting of the respondent made on March 30, 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 less 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 under section 148.

We are of the view that the initiation of re‑assessment proceedings under section 147(a) is unwarranted and beyond the jurisdiction of the respondent. The reasons given in the file make it clear that the proposed re assessment 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 over‑stepped his jurisdiction in seeking to make a re‑assessment 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 piecemeal on a fresh appraisal of the material and evidence that came ;o light during the search. We, therefore, have no hesitation in quashing the impugned order.

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

M.B.A./386/FCPetition allowed.