vil Appeal Nos
93794 1 of 1980
From the JUdgment and Order dated 2221980 of the Madras High Court in CRP Nos
93478 60277 11078 and 11178 and dated 2921980 in CRP No 601 of 1977
AV Rangam for the Appellant
section Srinivasan for the RespOndents
The following Order of the Court was delivered These are five Civil Appeals by Special Leave against identical orders of a learned Single Judge of the Madras High Court
In relation to Civil Appeal No 937 of 1980 the Regional Transport Authority out of two permits granted one permit on the route Salem to Poolambadi to the appellant State Transport Undertaking and the other to the first respondent Safe Service Ltd In Civil Appeal No 938 of 1980 there was only one permit for the route Salem to Pallipatti which was granted to the State Transport Undertaking
1n other words it was denied to the Second respondent RP David
In Civil Appeal No 939 of 1980 on the route Salem to Poolambadi out of two permits one permit was granted to the State Transport Undertaking and the other to another private operator Suganeswara Motor Service denying the permit to RP David respondent herein
In Civil Appeal No 940 of 1980 on the route Salem to Erode the objection of the State Transport Undertaking on the renewal sought by Parsu raman Pillai respondent was sustained and the permit was granted to the State Transport Undertaking leaving the private operator aggrieved
In Civil Appeal No 94 1 of 1980 on the route Salem to Tiruchangode the renewal appli cation of K Ramaswamy respondent operator was declined on objection by the State Transport Undertaking who in turn on its application was granted the permit leaving the private operator K Ramaswamy respondent aggrieved
All the aggrieved parties preferred appeals before the State Trans port Appellate Tribunal
The Tribunal identically in all these Cases took the view that since a draft scheme under Section 68C of the had been pub lished by the  State Government and was under 711 consideration at the time when the matter was pending in appeal sub section 1 D of Section 68 F of the Act stood in the way for any relief being granted to the private opera tors and thus dismissed the appeals
That provision forbids permits being granted or renewed during the period interven ing between the date of publication of any draft scheme under Section 68 C of the Act and the date of publication of the approved or modified scheme in favour of any person or for any class of road transport service in relation to an area or route or portion thereof covered by such scheme
However the proviso thereto permits that where the period of operation of a permit in relation to any area route or portion thereof specified in the scheme published under Section 68 C expires after such publication such permit may be renewed for a limited period but the permit so renewed shall cease to be effective on the publication of the scheme under sub section 3 of Section 68 D of the Act
As is evident the Appellate Authority applied sub section1 D of Section 68F to all the five cases and not the proviso
The High Court on revision preferred by the private operators upset the orders of the Appellate Authori ty directing the Regional Transport Authority to re consider the matter on merit
While doing so it relied on a judgment of the Madras High Court in KA Natarajan vs
M Naina Mo hammed  Anr AIR 1978 Madras 280 to the effect that appeal before the Appellate Authority was maintainable even though a draft scheme within the terms of Section 68C of the Act had appeared on the scene
The State Transport Undertaking being aggrieved is before us by Special Leave
We have heard learned counsel on both sides
So far as Civil Appeal Nos 937 93980 are concerned these are cases of non grant of permits to the aggrieved private operators
To their cases sub section D of Section 68F of the Act was clearly attracted
No permit could be granted on their asking in the presence of the draft scheme
And when none could be granted the exercise of consideration of the claim of the aggrieved
private operators on merit was itself a futility
When the law forbade the grant of a permit in the aforesaid duration merits of grant stood nowhere
In this view of the matter we are inclined to take the view that the High Court was in error in accepting the related revi sion petitions of the private operators and remitting their cases to the Appellate Authority for reconsideration on merits
And as a consequence it was further in error in ordering that till such orders were passed by the Appellate Authority both the State Transport Under 712 taking and private operators could be allowed to run in view of the facts which glare out on the record
So far as Civil Appeal Nos
940 941 of 1980 are con cerned the respective private operators were functioning and had sought renewal of their existing permits on the routes in question and on denial of the same and corre sponding grant thereof to the State Transport Undertaking grievance arose to those private operators to take the matter in appeal
Theirs were cases which could perhaps fall within the proviso to sub section 1 D to Section 68F of the Act
Their permits were capable of being renewed for a limited period provided they had expired after the publica tion of the draft scheme under Section 68C of the Act
The controverted plea of the State Undertaking however is cate goric that the renewal application was rejected on 30th August 1974 in one case and on 19th October 1974 in the other and on such rejection both the permits were granted to the State Transport Undertaking and when the matter was in appeal before the Appellate Tribunal the draft scheme was much later published on 461976
Mr section Srinivasan learned counsel appearing for the private operators in Civil Appeal NOs
940 941 of 1980 contends that when an appeal was taken to the Appellate Authority the provisions of subsection 1 A of Section 134 of the Act were invoked and orders were obtained notwith standing the expiration of the term of the permit so as to continue the permit to be valid until the appeals before the Appellate Authority were disposed of
On that basis it is contended that the proviso to sub section 1 D of Section 68F of the Act comes to his rescue on the strength of orders in terms of sub section 1 A of Section 134 of the Act as valid permits were continuing and were capable of being renewed for a limited period so as to cease being effective on the publication of the final scheme under sub section 3 of Section 68D ofthe Act
It may not require examining the contention because it is fractionally factual
The necessary factual data has not been placed before us in the form of a counter or the suggestive orders as such
We are thus left in the dark
Still lest we cause any injus tice to Mr section Srinivasan s clients we are goaded to take the view that even though these two appeals shall also meet the same fate as that of Civil Appeal Nos
937 939 of 1980 they shall remain subjected to an alternate that in the event of orders under sub section 1 A of Section 134 being existent the Appellate Authority shall examine the question and pass such orders in relation to the appeals of these private operators in accordance with law but in case there were no such 713 orders earlier the view of the Appellate Authority dismiss ing the appeals shall stand affirmed
In view of what has been said above we allow Civil Appeal Nos
937 939 of 1980 unqualifedly and Civil Appeal Nos
940 941 of 1980 qualifiedly in the terms above stated
Parties shall bear their own costs in all these appeals
VPR Appeals al lowed


Summary:
The appellant a non resident company was carrying on the business of exporting manganese ore and was assessed to income tax for the assessment year 1953 54
Subsequently on coming to know that proceedings for under invoicing were pending against the appellant before the Customs Authori ties the respondent the Income Tax Officer issued a notice under Section 148 of the Income Tax Act 1961 to the appel lant stating that he had reasons to believe that the income of the appellant chargeable to tax for the assessment year 1953 54 had escaped assessment within the meaning of Section 147 of the Act and called upon the appellant to show cause as to why it should not be re assesseed to income
The appellant s writ petition challenging the notice was dis missed by the High Court
In the appeal before this Court on behalf of the appel lantcompany it was contended that the only material before the Income Tax Officer was the original order of the Collec tor of Customs wherein it was held that the appellant had indulged in under invoicing resulting in declaring lesser price than the prevailing market price which could at the most he an information within the ambit of Section 147 of the Act but could not be the basis or the reason to enter tain the belief as required under Section 147a of the Act and that the notice had been issued under Section 147b and not under Section 147a
Dismissing the appeal this Court HELD 11 Two conditions are required to confer juris diction on the Income Tax Officer under Section 147a of the Income Tax Act 1961
The first is that the Income Tax Officer must have reason to 628 believe that the income chargeable to income tax had been underassesseed and the second that such under assessment has occurred by reason of omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for the year 1953 54
631F 12 In the instant case the Income Tax Officer in his recorded reasons has relied upon the facts as found by the Customs Authorities that the appellant under invoiced the goods he exported
Though the said finding may not be bind ing upon the Income Tax Authorities it can be a valid reason to believe that the chargeable income has been under assesseed
The final outcome of the proceedings is not relevant
There should be existence of reasons to make the Income Tax Officer believe that there has been under assess ment of the assessee s income for a particular year
Thus the first condition was satisfied
Secondly the appellant company did not produce the books of accounts kept by it at its head office located outside the country nor the origi nal contracts of sale which were entered into with the buyers at that place or any of the accounts which related to the foreign banks
No reasons were given for the supply of manganese ore at lower than the market rate
It is for the assessee to disclose all the primary facts before the Income Tax Officer to enable him to account the true income of the asessee
Thus the proven charge of under invoicing per se satisfies the second condition
631G H 632A C 13 The appellant s assessable income has to be deter mined on the basis of the price received by it for the goods exported
If the true price had not been disclosed and there was under invoicing the logical conclusion prima facie is that there has been failure on the part of the appellant to disclose fully and truly all material facts before the Income Tax Officer
In the circumstances both the condi tions required to attract the provisions of Section 147a have been complied with
632D 2
Although the notice only mentioned Section 146 of the Act without indicating whether it was under SUb Sectiona or Sub
Section b the reasons recorded by the Income Tax Officer specifically state that the proposed action was under Section 147ai of the Act
Even otherwise the material on record and the reasons recorded by IncomeTax Officer justify the issue of the notice under Section 147a of the Act
632F