ALLAH BUX Versus SYED SHAH

1. ABDUL QADEER CHAUDHRY, J.‑ ‑The petitioner is a private limited Company and according to the petitioner the Company has been established to operate as Woollen Yarn Manufacturers. In the assessment year 1981‑82 there was no business activity as the factory of the petitioner was in the stage of erection and trial production. The petitioner for the first time filed nil return for the year 1981‑82. The computation of the return is reproduced hereinbelow:

2. "Trial and Test Production expenses

3. 47,01,490,19

4. Less realised from Trial and test production of Carpet Yarn

5. 44,87,567,40

6. 2,13,927,79

7. Capitalised and Allocated to Buildings:

8. 71,310.00

9. To plant and machinery.

10. 1,42,617.79

11. 2,13,927.79

12. According to the petitioner, no profit and loss account was prepared as the factory was still in process of erection and installation and. has not yet started commercial production. Ail details evidence, explanation, books of Accounts were produced and the learned Income‑tax officer after due scrutiny assessed the income‑tax under section 62 of the Income‑tax Ordinance, 1979 (hereinafter referred to as the Ordinance) at Rs.6,21,469 and tax demand for Rs.3,74,806 was created which was paid by the petitioner on 28‑5‑1983. The petitioner filed appeal before the Commissioner of Income‑tax against the above referred order which is still pending for decision. On 18‑9‑1984 petitioner received a notice under section 65 of the Ordinance which was replied to on 25‑9‑1984. On 20‑1‑1985 the petitioner received notice under section 61 of the Ordinance which was also replied on 22‑1‑1985. On 26‑1‑1985 petitioner received yet another notice under section 61 and in the above letter it was mentioned that the completed assessment was reopened under section 65 of the Ordinance. The petitioner being dissatisfied with the notices, dated 18‑9‑1984 issued under section 65 of the Ordinance and subsequent notices, dated 20‑1‑1985 and 26‑1‑1985 respectively filed the present constitution petition.

2. Comments were filed by the Income‑tax Officer wherein it has been stated that the conditions laid down under section 65 of the Ordinance apply in this case. In this case the income of the assessee earned by sale of assets were not taxed, therefore, the same can be termed as under assessed. The notice under section 65 has been issued for the issue of capital gain.

13. In the counter‑affidavit the respondent has stated that in clause (7) of the Articles of Association of the petitioner company it has to sell, let, exchange, lease or otherwise transfer the undertaking and property of the Company or any part thereof for such consideration as may be thought fit. The petitioner is vested with the power to sell which is an adventure and the profit received was taxable in the hands of the petitioner, which has escaped assessment. The petitioner had installed the machinery, commenced the production, and initiated normal business activity. The Then Income‑tax Officer by mistake and over sight made the assessment and certain items of taxable income escaped assessment.

3. We have heard the learned counsel for the parties. Learned counsel for the petitioner has made the following submissions:

(i) ???????? The escaped income means evasions accidental or inadvertent omission as such no conditions exist for issuing notice under section 65 of the Ordinance. On the part of the assessee there is no failure to submit all material and primary facts for the purpose of assessment, which I.T.O. has considered in his order.

(ii) ??????? The assertion as contained in comments is mere change of opinion on the facts already before him. It amounts to review and it is not contemplated under section 65 of the Ordinance.

(iii) ?????? The Inspecting Assistant Commissioner before grant of approval has to apply his mind, which he did not in this case, therefore, the notice issued under section 65 is without jurisdiction.

4. In order to appreciate the contentions raised by the learned counsel it is profitable to deal section 34 of the Income‑tax Act, 1922 (hereinafter referred to as the Act), sections 147 and. 148 of the Indian Income‑tax Act, 1962 and section 65 of the Income‑tax Ordinance, 1979 (hereinafter referred to as the Ordinance), which read as follows:‑

14. Section 34 of the Act.‑Income escaping assessment.‑‑(1) If for any reason income, profits or gains chargeable to income‑tax have escaped assessment in any. year, or have been under?assessed, or have been assessed at too low a rate, or have been the subject of excessive relief or refund under this Act, or the total income and the total world income and the tax payable has been determined under subsection (1) of section 23 the Income‑tax Officer may, serve on the person liable to pay tax on such income, profits or gains, or in the case of a company, on the principal officer, thereof, a notice containing all or any of the requirements which may be included in a notice under, subsection (2) of section 22 and may proceed to assess or re‑assess such income, profits or gains, and the provisions of this Act, shall, so far as may be, apply accordingly as if the notice were a notice issued under that subsection:

15. Provided that the tax shall be charged at the rate at which it would have been charged had the income, profits or gains not escaped assessment or full assessment, as the case may be:

16. Provided further that except in case in which an order has been made under subsection (1) of section 23 unless definite information has come into his possession the Income‑tax Officer shall not initiate proceeding under this subsection without obtaining the previous approval of the Inspecting Assistant Commissioner of Income‑tax in writing.

17. (1‑A) ?? Notice under subsection (1) may be served by the Income‑tax Officer‑‑

(a) ??????? in any case in which he has reason to believe that assessee or any other person on his behalf has not filed any return under subsection (1) or subsection (2) of section 22, at any time.

(b) ??????? in any case in which he has reason to believe that the assessee has for any . year concealed the particulars of his .income or deliberately furnished inaccurate particulars thereof or omitted or failed to disclose all material facts necessary for the assessment for such year, within six years from the end of the year in which the assessment for such year was first made and where no assessment has been made, within six years from the end of the last year in which assessment for such year could be made, had clause (ej been applicable to such case:

18. Provided that in a case where a fresh assessment is made for any year in pursuance of an order under section 31, section 33, section 33‑A or section 34‑A the period of six years referred to in this clause shall commence from the end 'of the year in which the fresh assessment is made;

(c) ??????? in any other case, within four years from the end of the year for which assessment is to be made."

19. Sections 147 and 148 of the Indian Income‑tax Act.

20. Section 147. If‑‑(a)the Income‑tax Officer has reason to believe that, by reason of the omission or failure 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 escaped assessment for that year, or

(b) ??????? Notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Income‑tax Officer has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year,

21. He may, subject to the provisions of sections 148 to 153 assess or reassess such income or recompute the loss or the depreciation allowance, as the case may be, for the assessment year concerned (hereinafter in sections 148 to 153 referred to as the relevant assessment year).

22. Explanation 1. For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely:‑

(a) ??????? where income chargeable to tax has been under assessed; or

(b) ??????? where such income has been assessed at too low a rate; or

(c) ??????? where such income has been made the subject of excessive relief under this Act or under the Indian Income‑tax Act, 1922 (XI of 1922); or

(d) ?????? where excessive loss or depreciation allowance has been computed.

23. Explanation 2.‑‑ Production before the Income‑tax Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Income‑tax Officer will not necessarily amount to disclosure within the meaning of this section.

24. Section 148.‑‑(1) Before making the assessment, reassessment or recomputations under section 147, the Income‑tax Officer shall serve on the assessee a notice containing all or any of the requirements which may be included in a notice under subsection (2) of section 139; and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that subsection.

(2) ??????? The Income‑tax Officer shall, before issuing any notice under this section, record. his reasons for doing so."

25. Section 65 of the Ordinance.

26. Section 65. Additional assessment.‑‑(1) If, in any year, for any reason,‑‑

(a) ??????? any income chargeable to tax under this Ordinance has escaped assessment; or

(b) ??????? the total income of an assessee has been under assessed or assessed at too low a rate or has been the subject of excessive relief or refund under this Ordinance; or

(c) ??????? the total income of an assessee or the tax payable by him has been assessed or determined under subsection (1) of section 59 and no order of assessment has subsequently been made under this section or any other provision of this Ordinance,

27. The Income‑tax Officer may, at any time, subject to the provisions of subsections (2), (3) and (4), issue a notice to the assessee containing all' or any of the requirements of a notice under section 56 and may proceed to assess or determine, by an order in writing, the total income of the assessee or the tax payable by him, as the case may be, and all the provisions of this Ordinance shall, so far as may be apply accordingly:

28. Provided that the tax shall be charged at the rate or rates applicable to the assessment year for which the assessment is made.

(2) No proceedings under subsection (1) shall be initiated unless definite information has come into the possession of the Income‑tax Officer or he has obtained the previous approval of the Inspecting Assistant Commissioner of Income‑tax in writing to do so.

(3) No order under subsection (1) shall be made in respect of any income year after the expiration of ten years from the end of the assessment year in which the total income was first assessable.

(4) Nothing contained in subsection (2) shall apply to any such case or class of cases to which clause (c) of subsection (1) applies as may be specified by the Central Board of Revenue.

29. Subsection (1) and sections 1‑A and 1‑B of section 34 were added in 1969 so far Pakistan Statute is concerned. Section 34 was amended from time to time so as to meet the requirement and the exigencies of the situation. Section 65 of the Ordinance has taken into account all the relevant provisions contained in section 34 of the Act. In order to interpret the law the intention of the Legislature is to be kept in view. The Income‑tax Act/Ordinance provides the structure kept in the view. The Income-tax/Ordinance provides the structure for levying and collection of tax and the purpose of the scheme of the Act/Ordinance 'relating to this object must be kept in view. The provisions of Income‑tax Ordinance is to be construed in such a way as to make it workable. Those sections, which impose the charge should be strictly construed and those which deal with the machinery of assessment and collection should not be subjected to strict construction. TI a other aspect of the case is that it is one side affair. In civil and criminal proceedings there are two parties before the Court but under' the Income‑tax Ordinance there is Income‑tax Officer and the assessee. Then there is no remedy provided against the decision of the I.‑T.O. The assessee can file appeal but the department cannot file appeal against the order of I.‑T.O.

5. Learned counsel for the petitioner in support of his contention has referred to the case of Messrs Burhan Engineering Co. Ltd. v. The Income‑tax Officer, Companies Circle 11, Karachi and another reported in 1985 P T D 465, where a Division Bench of this Court has considered escaped income while interpreting section 34 (1‑A) of the Income‑tax Act and from the cited case‑law the principals of law were deduced in para. 8 of the judgment. However, section 65 of the Ordinance was not before the Court and, therefore, no observation made. In the matter before us the interpretation of section 65 is to be considered. The learned counsel has also referred to the cases of Messrs Dada Ltd. v. Commissioner of Income‑tax reported in P L D 1974 S C 310, Kishen Kishore v. Commissioner of Income‑Tax A I R 1933 Lah. 284, Diwan Bahadur Diwan Kishen Kishore v. The Commissioner of Income‑tax Indian Cases Vol. 141 1933 page 415, Calcutta Discount Company Ltd. v. Income‑tax Officer, Companies District I, Calcutta and another, reported in I. T. R. Vol. 41, 1961 page 191 and Commissioner of Income‑tax Bombay City‑I v. Bhagwandas K. Bros. 1973 I.T.R. Vol. 91 page 256, and contends that as the whole income was disclosed by the assessee, therefore, the respondent had no authority to reopen the matter afresh. In order to consider this contention it is necessary to reproduce the relevant observations in the context of the facts stated in these authorities:‑

30. P L D 1974 S C 310. A comparison of section 22 of the Income‑tax Act and section 11 of the Business Profits Act will show that in subsection (2) of section 22 the words are 'during the previous year', whereas in subsection (1) of section 11 the corresponding, words are 'any chargeable accounting period specified in the notice'. The effect of the words 'during the previous year' is that a notice under this subsection is valid only if given within, the immediately following year. The word any in subsection (1) of section 11 is important and that shows that a notice can be given at any time.

31. The contention that failure to initiate proceedings under section 11(1) of the Business Profits Tax Act within the accounting chargeable year amounts to escapement of income is not well‑founded. The words 'escaped assessment' in section 34 of the Income-tax Act means to evade or to elude or an accidental or, inadvertent' omission. In the present case, no such thing has happened and, therefore, it is not a case of escapement of income.

32. A I R 1933 Lah. 284. The expression 'escape' in section 34 connotes failure by the taxing authority to tax the income owing to accidental or deliberate omission by the assessee to declare it or to some similar circumstances. It does not, however, include cases where the income is known or disclosed to the income‑tax authority and has been the subject of assessment which has, however, been set aside by superior authority owing to some mistake in procedure or to the income being treated in a wrong category.

33. Indian Cases Vol. 141 (1933) page 415. Where a Hindu family was found to be impartible and governed by the rule of primogeniture and under an award it was provided that all that the younger son could demand was certain specific allowance for maintenance and houses for residence:

34. Hold, that the allowance payable to the younger member was not part of income of the family or of the eldest member, but was a sort of charge on the estate and should, therefore, be deducted in calculating the assessable income of the head of the family. The rule that an allowance given by the head of a Hindu coparcenary to its members by way of maintenance is liable to be assessed as the income of the family has no application to a case of this nature. The allowance in the case of impartible estate is the separate property of the younger members upon which they can be assessed.

35. Held further, that the estate of a Hindu family though governed by the rule of primogeniture and impartible, is still the property of the family and not the sole property of the person who holds it for the time being and an assessment of the head of the family in respect of the income of the estate must be deemed to be an assessment of the income of a Hindu family, liable to super‑tax. Hari Kishan v . Chandan Lal 43 Ind. Cases 667; 105 P.R. 1917 (F.B.), Naragarsti Achammagaru v. Venkatachalapati Nayaminaru 4 M 250. Subrahmania Pandya Chokka Talvar v. Siva Subrahmany Pillai 17 M 316, Baijnath Prasad Singh v. Taj Bali Singh 38 Ind. Cases 894 A 590; 14 A K L J 913 and Baijnath Prasad Singh v. Tai Bali Singh 60 Ind. Cases 534; 43

36. A 228 19 A L 3 317; 33 C L J 388; 40 M L J 387; (1921) M.W.N. 300; 25 C.W.N. 564; 2 P L T 257; 23 Bom. L R 65.4; 3 U P L R (P C) 35; 29 M L T 358 and 48 I A 195 (P C) referred to.

37. I.T.R. Vol. 41 1961 page 191.‑‑

(i) ???????? that to confer jurisdiction under section 34 to issue notice in respect of assessments beyond the period of four years, but within a period of eight years, from the end of the relevant year, two conditions had to be satisfied. The first was that the Income‑tax Officer must have reason to believe that income profits or gains chargeable to income‑tax had been under assessed. The second was that he must have also reason to believe that such 'under‑assessment' had occurred by reason of either (1) omission or failure or (2) omission or failure on the part of an assessee to disclose fully and truly all material facts necessary for his assessment for that year. Both these conditions were conditions precedent to be satisfied before the Income‑tax Officer could have jurisdiction to issue a notice for the assessment beyond the period of four years but within the period of eight years, from the end of the year in question.

(ii) ??????? That the words 'omission or failure to disclose fully and truly and material facts necessary for his assessment for that year', used in section. 34 postulated a duty on every assessee to disclose fully and truly all material facts necessary for his assessment. What facts were material and necessary for assessment differed from case to case. In every assessment proceedings, the assessing authority would, for the purpose of computing or determining the proper tax due from' an assessee, require to know all the facts which help him in coming to the correct conclusion. From the primary facts in his possession, whether on disclosure by the assessee, or discovered by him on the basis of the facts disclosed, or otherwise, the assessing authority had to draw inferences as regards certain other facts and ultimately from the primary facts and tire further facts inferred from them, the authority had to draw the proper legal inferences, and ascertain, on a correct interpretation of the taxing enactment, the proper tax leviable. So far as primary facts were concerned, it was the assessee's duty to disclose all of them‑‑including particular entries in account books, particular portions of documents, and documents and other evidence, which could have been discovered by the assessing authority, from the documents and other evidence disclosed. The duty however, did not extent beyond the full and truthful disclosure of all primary facts. Once all the primary facts were before the assessing authority, it was for him to decide what inferences of facts could be reasonably drawn and what legal inferences had ultimately to be drawn. It was not for anybody else far less the assessee to tell the assessing authority what inferences, whether of facts or law, should be drawn.

(iii) ?????? That if there were in fact some reasonable grounds for the income‑tax Officer to believe that there had been any non‑disclosure as regards any primary fact, which could have a material bearing on the question of under‑assessment that would be sufficient to give jurisdiction to the come‑tax Officer to issue the notices under section 34. Whether these grounds were adequate or not for arriving at the conclusion that there was a non‑disclosure of material facts was not open for the Court s investigation. In other words, all that was necessary to give this special jurisdiction was that the Income‑tax Officer had, when he assumed jurisdiction, some prima facie grounds for thinking that there had been some non‑disclosure:

(iv) ?????? That the question whether the Income‑tax Officer had reason to believe that under assessment had occurred by reason of 'non?disclosure of material facts was not a mere question of limitation only but was a question of jurisdiction which could be investigated by the High Courts in an application under Article 226 of the Constitution.

(v) ??????? That though the writ of prohibition or certiorari would not issue against an executive authority, the High Courts had power to issue in a fit case an order prohibiting an executive authority from acting without jurisdiction. When such action of an executive authority acting without jurisdiction subjected, or was likely to subject, a person to lengthy proceedings and unnecessary harassment, the High Courts would issue appropriate orders or directions to prevent such consequences. The existence of such alternative remedies as appeals and reference to the High. Court was not, however, always a sufficient reason for refusing a party quick relief by a writ or order prohibiting an authority acting without jurisdiction from continuing such action Whey the constitution conferred on the High Courts the power to give relief it became the duty of the Courts to give such relief in fit cases and the Courts would be failing to perform their duty if relief were refused without adequate reasons.

38. This appeal is against an appellate decision of a Bench of the Calcutta High Court by which in reversal of the order made by the trial Judge the Bench rejected the present appellant's application under Article 226 of the Constitution. The appellant is a private limited company incorporated under the Indian Companies Act and has its registered office in Calcutta. It was assessed to income‑tax for the: assessments year 1942‑43. 1943‑44 and 1944‑45, by three separate orders, dated January 26, 1944, February 12, 1944 and February 15, 1945, respectively. These assessments were made under section 23'(3) of the Indian Income‑tax Act upon returns filed by it accompanied by statements of account. The first two assessments were made by Mr. L.D Rozario the then Income‑tax Act. Officer and the last one by Mr. K.D. Banerjee. The taxes assessed were duly paid up. On March 28, 1951, three notices purporting to be under section 34 of the Indian Income‑tax 1922, were issued by the Income‑tax Officer calling upon the Company to submit fresh returns of its, total income and the total world income assessable for the three accounting years relating to the three assessment years 1942‑43, 1943‑44 and 1944‑45. The appellant company furnished returns in compliance with the notices but on September 18, 1951, applied to the High Court of Calcutta for issue under Article 226 of the Constitution of appropriate writs or orders directing the Income‑tax Officer not to proceed to assess it on the basis of these notices. The first ground on which this prayer was based was mentioned in the petition in these terms:

39. "The said pretended notice was issued without the existence of the necessary conditions precedent which confers jurisdiction under section 34 aforementioned, whether before or after the amendment in 1948."

40. The other ground urged was that the amendment to section 34 of the Income‑tax Act in 1948 was not retrospective and that the assessment for the years 1942‑43, 1943‑44 and 1944‑45 became barred long before March, 1951.

41. The trial Judge held that the first ground was not made out but being of opinion that the amending Act of 1948, was not retrospective, he held that the notices issued were without jurisdiction. Accordingly he made an order prohibiting the Income‑tax Officer from continuing the assessment proceedings on the basis of the impugned notices.

42. 1973 I.T.R. Vol. 91 page 256. A notice under section 34(1)(b) of the Indian Income‑tax Act, 1922, can only be issued to reopen assessment where the Income‑tax Officer 'has in consequence of information in his possession reason to believe' that the income has escaped assessment or full assessment. The Income‑tax Officer cannot take any action under this section merely because he happens to change his opinion or to hold an opinion different from that of his predecessor on the same set of fact.

43. The assessee was a registered firm doing business in yarn and also commission Agency. In the books of the assessee, ther4 was an account in the name of Bombay Import and Export Agency. During the relevant period i.e. 1955‑56, 1957‑58 and 1958‑59 the assessee and the Agency firm had common partners. The assessee firm had advanced moneys to the agency firm but interest thereon, was not charged as the agency firm had incurred losses. A specific statement of account of the agency firm was filed by the assessee alongwith its returns. The Income tax Officer scrutinised the accounts and for the first assessment year i.e. 1955‑56, he put his tick mark against the amount of the agency firm. He passed assessment orders for the three assessment years on the basis of the returns submitted by, the assessee. Subsequently, the Income‑tax Officer issued a notice under section 34(1)(b) on the ground that the interest due to the assessee from the agency firm had not been included in the total income of the assessee. The Tribunal, held, that the issue of notice was not justified. On a reference': held, that all the relevant facts and inferences to be drawn therefrom were before, and known to, the Income‑tax Officer, when he passed the original assessment orders. There was no discovery of information to justify the notice under section, 340)(b).

44. In these cases, the term 'escape' has been defined. They also postulate the circumstance under which action under section 34 of the Income‑tax Act can be taken. '

45. It is further submitted by the learned counsel that there was no material before the taxing authority, which could show the non?disclosure of material, which has resulted into under assessment. Reliance has been placed on the case of Chouthmal Agarwala v. Commissioner of Income‑tax, Assam, reported in A I R 1965 Assam 7 the relevant portions reads as under:‑

(a) ??????? Income,‑tax Act, 1922, sections 34, 23(3)‑‑Escaped assessment‑‑Primary facts disclosed. No material to show that non‑disclosure of material facts resulted in under assessment reassessment held invalid.

46. The assessee, a Hindu undivided family was assessed for the year 1946 47 for Rs.39,761. Subsequently, a notice under section 34 was issued on the ground that by reason of non‑disclosure of certain material facts income had escaped assessment. The assessee consequently was reassessed under section 23(3). The case of the department was that it came to know that a sum of Rs.1,18,000 for which a draft was purchased in the name of the Karta of the joint .family was deposited in the assessee's bank account. That fact was not disclosed when the assessee was assessed. The account books of the assessee were before the Income‑tax Officer when the assessment was made. These books showed that the sum of Rs.1,18,000 was credited in the name of the Karta and two other member of the family.

47. Held, that it could not be said that the primary facts were not disclosed. There was no material to show that the Income‑tax Officer could reasonably believe that the failure to disclose the fact that the sum of Rs.1,18 000 way deposited in the bank account of the assessee resulted in under‑assessment. That being so the condition precedent for the issue of notice under section 34 did not exist and hence the proceedings started under section 34 were not valid.

(b) ?????? Income‑tax Act, 1922, section 23(3) and (4)‑‑Best Judgment assessment‑‑Assessment cannot be based on suspicion and conjecture.

48. It is true that a certain amours' of guess on the part of the department is likely to be there in each case of best judgement assessment when the account books have been rejected and tire Income‑tax Officer has to make an estimate, but the assessment cannot be upheld if it is based on mere suspicion and conjecture. It is an assessment, which can be called to be capricious.

(S) ? A I R 1955 S C 65 and (S) A I R 1957 S C 810 ref.

49. Reliance has also been placed by the learned counsel on the cases of Assessee v. Department reported in Taxation Vol. 4 (1961) page 3 and Messrs Farrukh Industries Ltd. v. The Commissioner of Income‑tax (South Zone), Karachi, reported in P L D 1983 Kar. 269.

50. The authorities quoted by the learned counsel are in‑apt to the facts and circumstances of the present case. In the peculiar circumstances of those matters the observations have been made. Though the contention of the learned counsel that mere change of opinion is no ground for reopening the matter when all the material facts were already before the Income‑tax Officer has force.

51. We agree with the contention that if the notice is given on the same material and the case is not covered by subsection 1(c) of section 65 of the Ordinance the I.‑T.O. cannot reopen the matter already decided for fresh adjudication, .it cannot be' reopened on a mere change of opinion or that the Officer has second thought of the matter. In those cases where there are two possible factual or legal view of the matter, even then the case cannot be reopened because it would also mean mere change of opinion on a point of fact or law. But if the assessee has failed to disclose all primary facts then the reassessment is justified. The principle underlying section 65 is that the income must rot be escaped. It may be due to the bona fide belief of the assessee or an I.T.O. that certain income is not liable to tax. The I.T.O. may have interpreted a law‑intentionally or otherwise which is erroneous on the face of it. If the error is apparent on record and there cannot be second view of the matter then resort to the provisions of section 65 of the Ordinance is justified. The learned counsel has himself defined the escaped income as evasion, accidental or inadvertent omission. If any of such condition exists then the same I.T.O. or his successor may issue notice under section 65 of the Ordinance. The learned counsel next submitted that if the authorities are allowed to reopen the matter then there would be no end to litigation and existence of reason is different from sufficiency of reason and even an over sight, of the I.T.O. does not possess him the authority to reopen the matter. He has referred to the cases of Union Carbide (India) Ltd. v. Income‑tax Officer Companies District 1V and others I.T.R. Vol. 87 1973 page 529, wherein the following observation has been made:

52. "The assesssee which manufactured dry electric batteries set up a new unit for production of Zinc strips. The Zinc strips were used mainly for production of the dry batteries. For the accounting years relevant to the assessment years 1958‑59 to 1961‑62, the assessee claimed and was granted relief under section 150 in respect of new unit. In 1967 the assessee received notices under section 148 in respect of these years on the ground that the relief under section 15‑C had been wrongly granted. The records showed that the assessee had filed profit and loss accounts and Directors' reports for the accounting year, concerned and specific figures of sales to the same company had been given The affidavit filed by the Income‑tax Officer showed that the notice had been issued in pursuance of a direction by the Central Board of Direct Taxes that new units set up for manufacture of components for self‑consumption would not qualify, for exemption under section 15‑C;

53. Held, on the facts that there were no materials to indicate that the assessee had not disclosed fully and truly ail material facts necessary for his assessment and the notice had been issued in pursuance of a direction by the Central Board of Direct Taxes and was a result of a desire to re‑examine facts from an altered notion of law. Therefore, the re‑assessment proceedings had not been validly initiated and were liable to be quashed.

54. The learned counsel further stated that the fishing enquiry is not justified and referred to the case of Bhimraj Panna Lal v. Commissioner of Income‑tax Bihar and Orissa reported in I.T.R. Vol. 32 (1957) page 289, the relevant observation' reads as under:‑

55. "If the Income‑tax Officer decides to start a proceeding under section 34 of the Indian Income‑tax Act, 1922, he should issue a notice containing all or any of the requirements which may be included in the notice under section 22(2); it is not, necessary to issue a separate notice under section 22 also when a notice under section 34 is issued. When such a notice is issued, the assessee is bound to file a return; it is not a matter of option on his part. The assessee is entitled to show that as a matter of fact there has been no omission and that the original assessment is correct.

56. Section 34 does not require that the whole original assessment should be reopened, and every item charged to tax should be considered afresh. Although, in one sense, the Income‑tax Officer must fix the taxable income to enable him to fix the rate in re‑assessment, he is not bound to reopen items, which are not in question; he need confine himself only to the particular item, which has been omitted.

57. The burden of proving that income has 'escaped assessment' within the meaning of section 34 is on the Income‑tax authorities.

58. Section 34 is not a charging section but a machinery section; and a machinery section should be so construed as to effectuate a charging section, and in interpretation such a provision, the rule is that that construction should be preferred which makes the machinery workable.

59. In the ordinary course, an order of assessment made after investigation by a particular Officer should not at his sweet will and pleasure be allowed to be revised. There must exist some?thing, either suppressed by the assessee or a fact or a point of law, which, was inadvertently or otherwise omitted to be considered by the Income‑tax Officer, before he proceeded to act under section 34. A mere change of opinion on the same facts and law is not covered by that section. Under section 34, the Income‑tax Officer cannot institute a fishing investigation or enquiry merely with the object of finding out facts, which would entitle him to reopen a past year's assessment. But to enable the Income‑tax Officer to initiate proceedings under section 34, it is enough that he on the information which he has with him and in good faith, considers that he has a good ground for believing that the assessee's profit has for some reason escaped assessment or been assessed at too low a rate, so that a notice can be served if the Income‑tax Officer if bona fide of opinion that the income has escaped. Action can be taken with reference to events, which happened subsequently, these events having relation to the facts on which the original assessment had been made.

60. In order to hold that income may have 'escaped assessment', there must have been either some fresh facts brought to the notice of the Income‑tax authorities, or some change in the law which were in existence during the chargeable accounting period, but which were not brought to the notice of, or taken notice of by, the Income‑tax authorities during the assessment year, but which arose subsequent to assessment, having relation to‑ the facts on' which the original assessment had been made. Under section 34(1), the belief of the income‑tax Officer that income has escaped assessment or has been under assessed must be that of an honest and reasonable person, based upon reasonable grounds; the Income‑tax Officer may act under this section on direct or circumstantial evidence, but not on mere suspicion, gossip or rumour. The powers under the present section are wide, but they are not plenary. The words of the section are 'reason to believe' and not 'reason to suspect'.

61. After the original assessment, the Income‑tax Officer got definite information that the assessee was carrying on business with one M in Aligarh, in different names, that he had remitted to Aligarh a certain amount from Ranchi, that M had sent a draft to Amritsar on behalf of the assessee, and on his instructions, and that he had earned a profit in business in peas. The Income‑tax Officer of Aligarh also furnished him with copies of the assessee's account with M for all the relevant years. The assessee admitted that he did business through M and had never shown this business in his account books. As there were admitted omissions in the account books of the assessee, and the assessee did not produce the account books before the Officer in the re‑assessment proceedings, the Income‑tax Officer expected that the assessee had more such transactions and he, therefore, estimated the income from this undisclosed business under section 23(4).

62. In the case of Paramount Electric Company Lahore v. Commissioner of Income‑tax Lahore Zone, Lahore reported in 1976 P T D 218 it has been observed as under:‑

63. "But subsection (1) of section 34 of the Act itself sufficiently indicates the requirements of this notice. In terms it empowers the Income‑tax Officer that if for any reason, income, profits or gains chargeable to income‑tax have escaped assessment in any year, he may serve on the person liable to pay tax on such income, a notice containing all or any of requirements which may be included in a notice under subsection (2) of section 22, and may proceed to reassess the income, profits or gains of the assessee and the provisions of the Act shall so far as may be applied accordingly as if the notice were a notice issued under subsection (2) of section 22 of the Act. There are no other prerequisites of the notice issued under section 34 of the Act.

64. Section‑ 34 lays down that if for 'any reason' income, profits or gains Chargeable to tax have escaped assq8sment etc. the Income‑tax Officer may serve a notice on the person liable, calling for a return from him. It is in the subjective satisfaction of the Income‑tax Officer after he is in possession of definite information that he may for 'any reason' issue the notice under this section and his action taken in this behalf is not under the ordinary circumstances justiciable. But it is of utmost importance that he must always act in good faith. In this connection in the Commissioner of Income‑tax, Bengal v. Messrs Mahallram Ramjidas A I R 1940 P C 124 their Lordships of the Privy Council observed that 'to enable the income‑tax Officer to initiate proceedings under section 34 it is enough that the Income‑tax Officer on the information which he has before him and in good faith considers that he has good ground for believing that. the assessee's profits have for some reason escaped or have been assessed at too low a rate. The Income‑tax Officer is not required by the section to convey to the assessee, or to intimate to him the nature of the alleged escapement, or to give him an opportunity of being heard, before he decides to operate the powers conferred by the section. So that for initiation of these proceedings it is 'enough' that Income‑tax Officer in good faith has reasons to believe that has been an escapement of the tax. The Income‑tax Officer may act only after he is in possession of some material to justify f reasonable and honest belief in him that escapement of income has taken place Bhimraj Pamalal v. C.I.T. (1957) 32 I T R 289. But he is not entitled to embark upon .a fishing and a roving enquiry of his own in the hope of collecting some material against the assessee to justify his action.

65. To attract the provisions of section 65(1) the Income‑tax Officer muse be satisfied on the basis of definite information before an action is taken. Action can be taken in case the assessee has failed to disclose true and correct facts or the I.‑T.O. has failed to examine the account; properly due to inadvertence or negligence. A case can also be reopened if the law has not been correctly applied to the facts of the case.

66. The next‑ submission made by the learned counsel is that in the present case action has been taken by the successor in office and hi has no jurisdiction to taken such action. Reliance has been placed or the case of Commissioner of Income‑tax v. U Lu Nyo reported in A I F 1933 Rang. 350 and Income‑tax Appellate Tribunal, Bombay v. B.P Byramji & Co. reported in A I R (33) 1946 Nag.

188. The relevant observations in the above cases are as under:‑

67. A I R 1933 Range 350.‑‑ "The Income‑tax Officer has no jurisdiction to revise the assessment for the previous year which has been completed and has become final.

68. A tobacco dealer was assessed under section 23(3). His account! were rejected and taking such materials as were before him into consideration the income‑tax Officer estimated that for the yeas 1929‑30 the assessee made a profit of ? Rs.30 a Maund on 78' maunds. In the following year another Income‑tax Officer in the course of assessment proceedings for the year 1930‑31 became dissatisfied with the assessment in respect of the tobacco business which had been made in the previous year, as he took the view that the Income‑tax Officer had estimated the quantity of tobacco at too high and the profit at too low a figure. Accordingly purporting to proceed under section 34 he re‑assessed the assessee's income for the year 1928‑29 at Rs.60 a maund on 661 maunds:

69. Held, that the assessment by the Income‑tax Officer was no under section 34, but was an attempt by the Income‑tax Office to go behind and revise the assessment made by the Income‑tax Officer in the previous year merely because he disagreed with his predecessor's finding as to the amount of the assessable income and he had no jurisdiction to do so.

70. A I R 1946 Nagpur 188.‑‑ By the .amendment of section 34 the Income‑tax Officer has no power to reopen an assessment unless he acts in consequence of 'definite information which has com( into his possession'. While a mistake of law might have beer permissible as a ground for reopening an assessment before the amendment of 1939 since the amendment it will not permit reopening of an assessment under the section. Information derived by an Income‑tax Officer from a more careful reading of the Finance Acts than that made by his predecessor is not 'definite information' at all but amounts, to nothing more than a change of opinion on the part of the authority making the assessment. The opinion of the successor might be right or wrong and the fact that it has, in the event, been held to be right is irrelevant."

71. We do not consider that the successor‑in‑office has no jurisdiction in the matter. The successor has the authority to initiate proceedings if the condition laid down in section 65" exist. He can proceed and held the enquiry and pass an order. The successor Officer possesses the same powers as his predecessor‑in‑office was enjoying. There is no tier under the law that successor I.‑T.O. cannot reopen the matter and take action under section 65 of the Ordinance.

72. It is an admitted position that principles of res judicata and estoppel are not applicable to the proceedings under the Income‑tax Act. The reason being that the authorities under the Income‑tax Act are not Courts. The two contending parties do not appear before them for the purposes of adjudication of their rights. They may act judicially bat the principle provided in section 11 of the Code of Civil Procedure and section 115 of the Evidence Act are not applicable to such proceedings. These doctrines do not apply in cases of successive assessments.

73. The learned counsel has referred to the case of Messrs Farrukh Chemical Industries Ltd. v. The Commissioner of Income‑tax (South Zone), Karachi reported in P L D 1983 Kar. 269 wherein it has been observed that although principles of res judicata and estoppel are not, strictly applicable to proceedings before the Income‑tax Department yet in order to avoid uncertainty in mind of assessee and to give some degree of finality to decisions of Department, it is necessary that department may not change decision once taken after taking decision some new facts or information laid before them making it necessary to change earlier decision.

74. We have already observed that mere change of opinion is no ground for initiating proceedings under section 65 of the Ordinance but if the sufficient reliable material has come to the notice of the I.‑T.O. or the total income of an assessee has been under assessed an action under section 65 of the Ordinance may in proper cases be taken.

75. The learned counsel for the respondent has taken a preliminary objection that the present petition is not competent as the petitioner has the alternate remedy. Only a notice has been issued to the petitioner, he should reply to that notice and submit to the jurisdiction of the I.‑T.O. and he would have the fair chance to meet the allegations made in the notice and substantiate his own plea before the respondent.

76. It is not universal proposition of law that the extraordinary jurisdiction of the High Court cannot be sought in each and every case where alternate remedy is available. In case where an authority has taken the action where it has no jurisdiction on the subject‑matter‑of the dispute and where the absence of jurisdiction is apparent on the facts of the record the constitutional remedy can be availed of. So also where the alternate remedy is cumbersome and not effectual and cannot give the proper relief in that case also the High Court may entertain a petition. But while dealing the matter on the constitutional side the basic principle before the Court would. be that the case can be decided on the basis of the available material. It does not require a detailed enquiry and the facts are admitted and only question of law and its interpretation requires the decision of the Court; but in cases where no such condition exists and an alternate remedy is provided under the statute then the High Court would entertain such objections. Reference may be made to the case of Shivram Poddar v. The Income‑tax Officer, Central Circle 11, Calcutta and another, reported in A I R 1964 S C 1095, in which it has been held as under:‑

77. "The Income‑tax Act provides a complete machinery for assessment of tax, and for relief in respect of improper or erroneous orders made by the Revenue Authorities. It is for the Revenue Authorities to ascertain the facts applicable to a particular situation, and to grant appropriate relief in the matter of assessment of tax. Resort to the High Court in exercise of its extraordinary jurisdiction conferred or recognised by the constitution in matters relating to assessment levy and collection of income‑tax may be permitted only when questions of infringement of fundamental rights arise, or where on undisputed facts the taxing authorities are shown to have assumed jurisdiction which they do not possess. In attempting to by pass the provisions of the Income‑tax Act by inviting the High Court to decide questions which are primarily within the jurisdiction of the Revenue Authorities, the party approaching the Court has often to ask the Court to make assumptions of facts which remain: to be investigated by the Revenue Authorities. In the case of Muzaffar Ali Shah and others v. Registrar Co‑operative Societies Karachi and another P L D 1968 Kar. 42" it has been observed:‑

78. "The Administrative Tribunals are the Judges of the sufficiency of the evidence and the necessity, expediency and reason2bleness of the action to be taken. The High Court in exercise of its jurisdiction under Article 98 of the Constitution cannot sit as a Court of appeal and pronounce upon the sufficiency, quality or quantum of evidence on which the finding of an Administrative Authority is based.

79. In the present case it is the contention of the respondent that there was definite information before the I.‑T.O. when hp issued the notice. In parawise comments furnished by the respondent it has been stated that the conditions laid down under section 65 apply to this case. In this case the income of the assessee earned by assets were not taxed, therefore, the same cannot be termed as under assessed. 11, the counter‑affidavit it is stated that the petitioner is vested with power to sell which is an adventure and the profit received was in law taxable in the hands of the petitioner, which has escaped assessment. The then I.‑T.O. by mistake and oversight as regards the point of fact and law made the assessment and certain items of taxable income escaped assessment, which came to light at a later stage as a consequence of information received by the Income‑tax officer after detailed examination enquiry and search of the matter.

80. The learned counsel for the respondent has also brought the record to show that there was definite information before the respondent when he issued the notice impugned in this petition. Learned counsel wanted to show this record to us but we declined to do so as statement of the learned counsel at the bar is sufficient to support the cont, of the respondent that there was definite material before the respondent Learned counsel for the respondent submitted that authorities cited by the learned counsel for the petitioner are not applicable as in present case the petitioner has directly approached the High Court whereas in the cited cases the observations were made on the point of reference. The petitioner directly came to the High Court in A I R 1964 S C whereas the other cases were the reference cases. When the observation has been made on s reference case or in a constitutional petition there would be no difference because where a point of law has been decided by the superior Courts then that point of law can be quoted and if applicable to the case before the Court then the points decided in the precedents can be followed.

81. Learned counsel for the respondent has referred to the following cases in support of his contention, relevant observations in these cases are as under: ‑

82. Pakistan Oil Mills v The Sales Tax Officer 'A' Ward Multan S C M R 175.

83. In the present case the turn‑over of cottonseed; ail was before the taxing authorities they had never applied their to the question of assessing the tax on the said turn‑o These are, in our view, therefore cases to which section has been rightly held to be applicable by the High Court.

84. ?

85. Anderton and Halstead Limited v. Birrell (H.M. Inspector Taxes) (Tax Cases 16 1829‑1912 page 200)

86. The appellant company wrote off, party in its accounts for and partly in its accounts for 1922, a debt due from a section company in which it held a majority of the shares. After discussion between the Inspector of Taxes and the Company's auditors whole of the amount written off ii) 1921: Did part of the amount written off in 1922 were allowed as deductions in computing company's profit for Income‑tax purposes as representing amounts of the debt which at the time were estimated to bad.

87. The appellant company continued, after 1922, to trade with debtor company and extended it further and increasing creditor while its indebtedness to other creditor was diminished having regard to these facts the Inspector, in 1929, submitted additional assessments to neutralise the effect of the deductions allowed computing the profits, and the additional assessments was confirmed, on appeal by the general Commissioners, who had that no part of the debt in question had been proved to bad.

88. Held, that there was no evidence that the deductions were wrong allowed by reference to the circumstances at the tine of allowance and that the additional assessments were not justified.

89. Commissioner of Income-tax Lahore Zone ? (West Pakistan) Lahore. v.Dr. Khurshid Alam Malik (1973) 28 Tax 164. ?

90. The Tribunal came to the conclusion that the Income‑tax Officer who made the first assessment was aware of the construction of the bungalow and since he was fully cognisant of it when made the order which was sought to be reopened under section 34 of the Income‑tax Act, the second Income‑tax Officer who acted under that section had no reason for doing so as the fact on the basis of which action under section 34 was taken were already before the first Income‑tax officer at the time of making the original assessment and it would only tantamount to this, that in the opinion of the second Income‑tax Officer the estimate of his predecessor was too low. The High Court, relying on the judgment of the Full Bench of the Lahore High Court in Madan Mohan v. Commissioner of Income‑tax (1935) 3 1 T R 438;

91. Held that the action under section 34 of the Income‑tax Act in respect of the assessment year under consideration was valid in law.

92. Commissioner of Income‑tax East Pakistan, Dacca, v. Wahiduzzaman 965 P T D 283 Vol. 7.

93. Income‑tax‑‑Res judicata‑‑Applicability of principle depends upon necessity of giving finality to litigation in cases where there is no statutory provision barring reopening of a matter principle applicable with limitation and not with same strictness as in disputes of civil nature‑‑Income‑‑tax Officer not a Tribunal which decides a question between assessee arid Income‑tax Commis?sioner‑‑Acceptance by Income‑tax Officer of assessee's explanation, plea, or statement of accounts, though in one sense a 'decision' is more like acceptance of a pleas, or admission that plea is correct‑‑Income‑tax Officer not a judicial tribunal--Bar of res judicata to be confined to cases where decision is 'not clearly open to some objection or a decision which is reached after proper enquiry' such as could reasonably have been reached on material before Income‑tax authority‑‑Matter may, else, always be reopened on ground of fresh evidence‑‑Only that party finding which is essential for sustaining order becomes res judicata‑‑(Supreme Court allowed reopening of question of source of certain amount invested by assessee in ail undertaking, where order of Appellate Assistant Commissioner was not based on proper enquiry, being a finding 'oil no evidence', which 'no person acting reasonably could have reached."

94. Messrs Escrots Ltd. v. Income tax Officer Lahore P T D 1975 17 P 50.

95. The Income‑tax Officer is not required by section 34 of the Income‑tax Act to intimate the assessee the nature of the allege escapement or to provide him a hearing before he decides to operate the powers conferred upon him by this section in interpreting a section of Taxing Act which deals merely with the machinery of assessment and does not impose a charge or, the ?subject that construction should be preferred which makes the machinery workable, Ut res valeat potius quam pereat.

96. The income‑tax Officer is not required to disclose information in the notice and the factum that he has obtained any approval from his superiors, All official acts are presumed to have been ? done in accordance with law unless the contrary is proved.

97. Commissioner of Income‑tax, Bengal v. Messrs Mahaliram Ramjidas I T R Vol. VIII 1940 p. 442.

98. To enable the Income‑tax Officer to initiate proceedings under section 34 of the Indian Income‑tax Act it is enough that the Income‑tax Officer on the information which he has before him and in good faith considers that he has good ground for believing that the assessee's profits have for some reason escaped assessment or have been assessed at too low a rate. The Income-?tax Officer is not required by the section to convene the assessee or to intimate to him the nature of the alleged escapement, or to give him an opportunity of being heard, before he decides to operate the powers conferred by the section.

99. In interpreting a section of a taxing Act which deals merely with the machinery of assessment and does not impose a charge on the subject, that construction should be preferred which makes the machinery workable, Ut res valeat potius quam pereat .

100. (Section 34 has been amended by the Amendment Act of 1939, but as the present wording follows that, of the English Act, this decision of the Privy Council becomes more applicable.‑ Ed.) ‑

101. Commissioner of Income‑tax, Madras v. T. S. P.I.P. Chidambaram Chettiar 1 T R Vol. 80 (1911) P. 467.

102. Held (i) that the reassessment proceedings were valid as the requirements of section 34(1)(a) were fully satisfied. The fact that there was some vague information before the Officer at the time of the original assessment that the assessee's father had secretly received a sum of Rs.1,50,000 from the mortgagor was by itself not sufficient to bring to tax that amount particularly in view of the fact that the assessee had denied the fact. The fact that the Officer could have made further enquiry into the matter but did not do so did not take the case out of section 34(1)(a) as the assessee had had failed to place truly and fully all the material facts before him. The remarks made by the officer in the order‑sheet did not amount to a decision taken by him on the basis of facts found but had to be treated as casual observations.

(ii) ??????? That since the Appellate Assistant Commissioner did not held that the notice issued under section 34(1)(a) was invalid there was no need for the income‑tax Officer to issue a fresh notice to the assessee; all that he had tb do was to afford proper opportunity to the assessee to show that the amount had not been received and such an opportunity he 'gave.

(iii) ?????? That, on the facts, the assessee must be taken to have appropriated the amount of Rs.1,50,000 towards interest due to him and the amount was taxable income of the relevant period. If the assessee intended to appropriate, the amount towards principal there was no need for him not to enter that receipt in his accounts. '

103. What presumption has to be drawn in regard to appropriation of an open payment depends on the circumstances of the case. The Privy Council in Commissioner of Income‑tax v. Kameshwar Singh 1933 I T R 94 did not lay down any firm rule that whenever a creditor received a payment from the debtor which he had not appropriated specifically towards principal or interest, the taxing authorities should proceed on the basis of the presumption that it had been appropriated towards principal. That decision was rendered on the facts of that case.

104. Held, also that the system of maintaining accounts was‑wholly irrelevant because the receipt in question had not been entered in the accounts at all.

105. P.A. Abdul Muthalif Rowther v. Income‑tax Officer 'A' Ward Palghat v. P. Gopalan Nambiyar and K. Bhaskaran I T R Vol. 102 (1976) p. 694.

106. Reassessment proceedings are started under sections 147 and 148 because income has escaped assessment for reasons, which may range from the stupidity of the Income‑tax Officer to the cupidity of the assessee. These may be fall long after the periods of time contemplated by section 139 and the various sub‑clauses and provisos thereto. To read section 148 as rendering action under section 139 impossible where notices were not issued within the periods of time mentioned' in the sub‑clauses of section 139 would be destructive of the very object and purpose of reassess?ment proceedings. Section 148 treats assessment proceedings as assessment proceedings under section 139. Interest under section 139 can, therefore, be levied in proceedings under section 148, notwithstanding that notice was not issued in the original assessment proceedings within the time specified in section 139(2) and returns were not filed within the period of the assessment year.

107. Where penal interest is charged under section 217 the point of time with respect to which it has to be seen whether the person has been previously assessed or not is the limit indicated in section 212(3) for filing the estimate concerned.

108. Muhammad Haneef Monnee v. The Income‑tax Officer, Central Circle 1, Lahore 1984 P T D 171.

109. A bare perusal of section 65 of the Income‑tax Ordinance, 1979 would show that definite information in possession of the Income‑tax Officer or previous approval of the Inspecting Assistant Commissioner in writing is a condition precedent for vesting jurisdiction in the Income‑tax Officer to initiate proceedings for additional assessment if, in any year, for any reason, any income chargeable to tax under this Ordinance has escaped assessment; or the total income of an assessee has been under assessed, or assessed at too law a rate, or has been the subject of excessive relief or refund under this Ordinance; or the total income of an assessee or the tax payable by him has been assessed or determined under subsection (1) of section 59 and no order or assessment has subsequently been made under this section or any other provision of this Ordinance. It is not the legal requirement that notice should itself specify that all the conditions specified under section 65 for initiating the proceedings have been fulfilled. The requirements are fully met if the notice indicates that the I.T.O. has reason to believe that the assessee's assessable income is hit by any of the conditions laid down in clauses (a), (b) or (c) of subsection (1) of section 65. Record of the Income‑tax Officer however, must show that definite information has come into his possession or he has obtained previous approval of the Inspecting Assistant Commissioner of Income‑tax in writing before initiating the proceedings under this section. This section does not deal with proof. It merely deals with definiteness of information or prior approval of the Inspecting Assistant Commissioner.

110. Income‑tax Officer is not required to disclose information in the notice and the factum that he has obtained any approval from superiors. All official acts are presumed to have been done in accordance with law unless the contrary is proved.

111. In Kalyanji Mavji and Co. v. Commissioner of Income‑tax West Bengal II reported in (1977) 35 Tax 237 (S C India), it has been observed that the reassessment was valid in law as the information on t the basis of which the Officer sought to reopen the assessment was based on subsequent facts.

112. Now coming to section 65 of the Ordinance an action under this section can be taken if in any year, for any reason the income has escaped assessment or income of an assessee has been under assessed or assessed at too low a rate and under subsection (2) no proceedings shall be initiated under subsection (1) unless definite information has come into the possession of the Income‑tax Officer or he has obtained the previous approval of the Inspecting A Assistant Commissioner to do so. A plain reading of subsection (2) would bring to the conclusion that en action can be taken by the income‑tax Officer if there it definite information before him about the facts mentioned in subsection 1(a) and (b) of section 65. The Income‑tax Officer or his successor‑in office the proceed with the matter. The action can also be taken if previous approval of the Inspecting Assistant Commissioner of income‑tax has been obtained by the Income‑tax Officer. The word 'or' in subsection (2) is disjunctive and not conjunctive. In the present case the respondent has not only asserted that there was definite information before him but he has also obtained the previous approval of the Inspecting, Assistant Commissioner of Income‑tax.

113. The learned counsel for the petitioner has submitted that Commissioner has not applied his mind before he granted the permission. It would be presumed that every act of an Officer is in accordance with the provisions of law unless established otherwise. The permission has been granted by the Inspecting Assistant Commissioner and it is not the requirement of the law to give detailed reasoning in support of such permission. If the Commissioner was satisfied on the material placed before him that an action under section 65(1) has to be taken against' the assessee then the question of satisfaction of the Commissioner cannot be challenged. As the learned counsel for the respondent has brought the record for our perusal though, we declined to do so on the ground that it would be pre‑judging the matter. It would be presumed that the sanction was accorded after applying his mind. The learned counsel for the respondent has stated that the company has earned income on salt of shares and sale of asbestos sheets and, therefore, such income was liable to tax. As we are not adverting to the facts of the case we would not make any comment on it and even the learned counsel for the petitioner has not referred to the facts of the case.

114. In the Ordinance there are provisions relating to the concealment of income‑tax. For the concealment of Income there is penalty as contained in section III of the Ordinance? In case of concealment an assessee may be prosecuted for concealment of income as mentioned in section 119. In cases of concealment mens rea is attached as the assessee may not have submitted correct returns and not shown the correct income for purposes of taxation and thus he has purposely concealed the income in order to avoid the payment of tax but in case of an escaped income there may be a bona fide belief on the part of the assessee or the Income‑tax Officer that the tax is. not leviable on a particular amount of Income. It is possible that the assessee or the Income‑tax Officer may be of opinion that the amount received by the assessee is only a 'wind fall' and not liable to assessment. There is thus, difference between concealment and escaped income. The scheme of the Ordinance and the real intention of the Legislature is quite clear that the income, must not be escaped. On ‑one hand section 65 may not be used as a vehicle of operation on the other hand the Income‑tax Authorities would take all appropriate measures so that the income may not be escaped from taxation. Section 65, is merely a machinery provision and it should not be strictly construed.

115. Only notice has been issued to ‑the petitioner arid tie is called upon to submit his reply. The petitioner would have fair opportunity to show that the notice has been issued wrongly and not on any new material. The respondent has not to disclose all the material in the notice. It would be pre‑judging the entire facts before hearing the other side. It is only a tentative opinion, which may ultimately terminate in the discharge of the notice. The petitioner has alternate remedy under the Ordinance. Under section 129 appeal lies to the Assistant Commissioner. Under section 134 appeal is provided to the Appellate Tribunal. Under section 136 reference can be made to the High Court and under section 138 the Commissioner has the revisional powers.

116. These are the adequate and efficacious remedies provided under the law. The proper investigation would be made by the authorities under the Ordinance and as the facts have beer; disputed by the respondent, therefore, the present petitioner is neat maintainable, and the same is hereby dismissed with no order as to cults.

117. M. Y. H. ????????????????????????????????????????????????????????????????????????????????????????????? Petition dismissed.