IMPORTANT POINT
The court upheld the validity of reassessment proceedings under Section 148 based on found incriminating material, emphasizing the importance of valid grounds for reopening assessments.

JUDGMENT :

(Munnuri Laxman, J.)

1) The present writ petition has been filed with the following prayers:-

(i) Quash the impugned notices u/s 148 of the Act (Annexure-1) issued by the Non-petitioner No.2.

(ii) Hold that the reasons recorded u/s 148 as communicated vide impugned letter dated 26.8.2002 (Annexure-2) are illegal and cannot be sustained in the eyes of the law.

(iii) Restrain the respondents from taking further proceedings in pursuance of the impugned notices u/s 148 (Annexure-1).

(iv) Hold that the initiation of reassessment proceedings for all the assessment years in question, in the case of the petitioner is illegal and/or without jurisdiction.

(v) Any other appropriate relief/reliefs as may be considered just and necessary by the Hon’ble Court in the facts and circumstances of the case to do complete justice to the petitioner.

(vi) The cost of the writ petition may be kindly awarded”

2) The petitioner is a partnership firm and it is a regular assessee with the Income Tax Department. A survey was conducted in the business premises of the petitioner under Section 133 of the Income Tax Act, 1961 (hereinafter referred to as, “the Act”) on 16.10.2001. During the course of survey, nothing incriminating material was found, except a loose paper bearing No.60 (which is filed as Annexure-I/9). The statement of the assessee was recorded under Section 131 of the Act on 24.10.2001 relating to the loose paper, which was recovered in the said search. Hindi version of the said statement reads as follows:

^^iz'u %& losZ{k.k ds nkSjku vki dh QeZ esa eqYrkuh VwYl d- dh fcØh ds fcy QkbZy esa fcy la[;k 9735 fnukad 12&10&2002 ds lkFk ,d ywt isij yxk gqvk feyk gS ftlds Annexure I/9 ist 60 ds vuqlkj mijksDr fcy dh jkf'k e; lsYl VSDl bR;knh ds 5570@& crkbZ x;h gS vkSj blds vykok 7991@& dh jkf'k mij dh jde n'kkZ;h x;h gS vkSj bl izdkj bl fcy dh dqy jkf'k 13561@& crkbZ x;h gS ,oe fiNyk cdk;k : 3338@& tksM dj dqy cdk;k 16899@& crk;k x;k gS bl ywt isij dk /;ku ls ns[kus ij izrhr gksrk gS fd fcy dh jde 5570@& vkSj mij dh jde 7991@& dqy jde Øe'k% 41 izfr'kr o 59 izfr'kr vkrh gS vkSj bl izdkj fcØh dks v.Mj fcfyax fd;k x;k gS d`i;k Li"V djsa fd vki dh nksuksa QeksZa dh dqy fcØh dks 60 izfr'kr ls v.Mj fcfyax eku dj D;ksa ugha v/kksf"kr fcØh ekuh tk;@vkSj bl izdkj dh iw.kZ jde dks vki dh vk; eS tksMh tkosA

mrj %& fcy ua- 9735 fnukad 12&10&2001 ds dh dksih ls bl fcy dh jkf'k : 5670@& : feyrh gSA rFkk fiNyk cdk;k : 3338@& fcy la- 9729 fnukad 26&9&2001 dh cdk;k jkf'k gSA blds vykok bl ikVhZ dks lsEiy ds fy, eky vi:oZy ds fy, Hkstk Fkk ftldk fcy ugha curk gS rFkk eky dh vi:oZy vkus ds ckn gh fcy cuk;k tkrk gSA : 7991@& dk lUnHkZ bl vi:oy ij Hksts eky dh vuqekfur dher dk gSA pwafd vi:oy vk;s fcuk eky dh fcØh ugha ekuh tkrh gSA vr% bls v/kksf"kr fcØh u ekuus dh d`ik djsaA^^

The translated English version of the said statement reads as follows:

Question: - During the survey, a loose paper was found attached with bill number 9735 dated 12-10-2002 in the bill file of sales of Multani Tools Company in your firm. According to its Annexure 1/9 page 60, the amount of the above bill including sales tax etc. has been shown as Rs. 5570/- and besides this, an amount of Rs. 7991/- has been shown as the upper amount and thus the total amount of this bill has been shown as Rs. 13561/- and by adding the previous dues of Rs. 3338/-, the total outstanding has been shown as Rs. 16899/-. After looking at this loose paper carefully, it appears that the bill amount of Rs. 5570/- and the upper amount of Rs. 7991/-, total amount comes to 41% and 59% respectively and thus the sales have been under-billed. Please clarify why the total sales of both your firms have been under-billed by more than 60%. Why not consider it as under billing and consider it as undisclosed sale and add the entire amount to your income.

Answer- From the copy of Bill No. 9735 dated 12-10-2001, the amount of this bill is Rs. 5570/- and the previous outstanding amount of Rs. 3338/- is the real outstanding amount of Bil