Case: Income Tax Officer Jodhpur Vs. Purushottam Das Bangur and Another

It relates to the assessment of the said respondent for the Assessment Year 1969-70. During the accounting year relevant to the said assessment year the assessee claimed that he had suffered long-term capital loss on sale of shares of Maharaja Shree Umaid Mills Ltd. during the period 5-3-1969 and 30-3-1969 at the price quoted in the Official Report and quotations of the Calcutta Stock Exchange Association. According to the assessee, he had incurred a loss of Rs. 1, 57, 792. The said claim of the assessee was accepted by the Income Tax Officer, C Ward, Jodhpur while making the assessment and the same was affirmed in appeal by the Appellate Assistant Commissioner. Subsequently, the Income Tax Officer received a letter dated 21-3-1974 from Shri S. M. Bagai, Deputy Director, Directorate of Inspector (Investigation), Special Cell, New Delhi, wherein it was stated that on information obtained from the Bombay Stock Exchange Directory the book value per equity share of Maharaja Shree Umaid Mills Ltd. rose from Rs. 318.55 for the year ending 21-12-1965 to Rs. 401 for the year ending 31-12-1970 and the earning per share rose from Rs. 8.37 per share to Rs. 44 per share during the abovementioned period and that the dividend percentage also rose from 2% to 10% for the same period, but the quotations of the shares in Calcutta Stock Exchange fell from Rs. 168 to Rs. 85 per share during this period. In the said letter of Shri Bagai it was stated that it was clear from these facts that the quotations appearing are as a result of certain manipulated transactions between the group and it cannot be said that they reflect the fair market value of the companys shares. Along with the said letter Shri Bagai had annexed the information which was gathered by him on the basis of the Bombay Stock Exchange Directory and other information. The said letter of Shri Bagai was received by the Income Tax Officer on 26-3-1974. On 27-3-1974, he issued a notice under Section 147(b) of the Act whereby the assessee was informed that the Income Tax Officer had the reason to believe that assessees income chargeable to tax for the Assessment Year 1969-70 had escaped assessment and, therefore, the assessing authority proposed to reassess the income for the said assessment year and the assessee was required to deliver to him a return in the prescribed form of his income for the said year,

Reasoning:
13. These appeals are directed against the judgment of the High Court of Rajasthan dated9 whereby the High Court has allowed Writ Petitions Nos. 1178 and 1181 of 1974 filed by the respondents and has quashed the notices dated4 issued under Section 17 of the Wealth Tax Act, 1957. This judgment of the High Court is based on its judgment in D.B. Writ Petition No. 1177 of 1974 and connected writ petitions wherein the High Court had quashed the notices issued by the Income Tax Officer under Section 147(b) of the Act. For the same reasons the High Court has quashed the notices under Section 17 of the Wealth Tax Act in these cases. The said judgment of the High Court in Purushottam Das Bangur v. ITO has been set aside in the judgment delivered in Civil Appeals Nos.3 of 1983.