The court emphasized the importance of disclosure of material facts during assessment proceedings and held that the absence of such disclosure could render a notice for reassessment without jurisdiction and void.

( 1 ) THE petitioner, Shiva Lal, was at all material times until the time hereinafter mentioned, the owner of several manganese ore mines and kyanite ore mines in Orissa and Bihar.

( 2 ) ON April 1, 1960, a company known as S. Lal and Co. (Private) Ltd. was incorporated under the Indian Companies Act. The shareholders of the said company were the petitioner, Shiva Lal, and his wife, Smt. Chandrakala Lal, each having 50% of the total shares.

( 3 ) THEREAFTER, the said manganese ore mines and kyanite ore mines in Orissa and Bihar, of which the petitioner was the sole owner as aforesaid, were transferred to the said company for a total consideration of Rs. 29,91,133. After payment of certain amounts to the petitioner by cheque from the company in respect of the said consideration, on April 1, 1959, a sum of Rs, 24,86,633 was shown in the books of the company as a loan from the petitioner.

( 4 ) ON February 13, 1960, a date which is relevant for the assessment year 1960-61, Rs. 5,00,000 was paid by the company to the petitioner by the issue of 5,000 fully paid up equity shares of Rs. 100 each.

( 5 ) FOR the assessment year 1960-61, the regular assessment of the petitioner was made under Section 23 (3) of the Indian Income-tax Act, 1922, by A. K. Jana, Income-tax Officer, " G " Ward, Companies District (I), Calcutta, by his order dated March 31, 1962. The copy of the order of assessment for the assessment year 1960-61, in which the name of Shri A. K. Jana appears has been tendered and exhibited in the records of this case by consent of parties.

( 6 ) ON January 19, 1967, one D. K. Gupta, Income-tax Officer, "l" Ward, Companies District (I), Calcutta, issued a notice under Section 148 of the Income-tax Act, 1961 (hereinafter referred to as " the Act") proposing to reassess the income of the petitioner for the assessment year. 1960-61 on the ground that the officer had reason to believe that the income chargeable to tax for the said assessment year had escaped assessment within the meaning of Section 147 of the Act.

( 7 ) BY a letter dated April 1, 1967, addressed to the Income-tax Officer, "l" Ward, Companies District (I), Calcutta, the petitioner through his representative, S. R. Batliboi and Co. , chartered accountants, recorded the fact that from a discussion that the said Income-tax Officer, had with Mr. A. C. Chakrabortti and M. K. M. Mehta of the said firm, chartered accountants, it appeared that it was proposed to reopen the assessment for the assessment year 1960-61 for the alleged purpose of including the capital gains arising out of the exchange of the loan asset for shares in Messrs. S. Lal and Co. Private Ltd. It is further stated in the said letter that, at the time of the original assessment, these materials with regard to the alleged exchange of the capital asset, namely, the issue of 5,000 equity shares of Rs. 100 each from the company in favour of the petitioner were placed before the Income-tax Officer, who made the original assessment and all particulars relating to the petitioner's transaction with Messrs. S. Lal and Co. Private Ltd. were also furnished before the said Income-tax Officer and there were verbal discussions also with the client's representative at the time of the original assessment. Hence, it was contended, that there was no omission or failure on the part of the petitioner to disclose fully and truly all materials necessary for the assessment for that year with regard to the said alleged capital gains. It is to be noted that no reply was received by the petitioner to the said letter of April 1, 1967, addressed by S. R. Batliboi and Co.

( 8 ) IT is the notice dated January 19, 1967, issued under Section 148 of the Act, for the assessment year 1960-61, which was challenged before me in this application.

( 9 ) DR. Debi Pal, appearing on behalf of the petitioner, contended that the conditions precedent for the assumption of jurisdiction by the Income-tax Officer, before issuing