JUDGMENT
B.P. Jeevan Reddy, C.J.
1. This writ petition is preferred against two notices issued under Section 148(1) of the Income-tax Act, 1961, on March 22, 1976, with respect to the assessment years 1967-68 and 1969-70. The assessments for the said two assessment years were made on October 30, 1971, and December 29, 1971, respectively. After receiving the impugned notices, the petitioner says that he filed revised returns on April 21, 1976. Along with the revised returns, the petitioner says, that he had enclosed a letter/application requesting that the reasons for reopening the assessments may be supplied to him. Since there was no reply from the Income-tax Officer to his request and reassessment proceedings were sought to be proceeded with, the petitioner came forward with this writ petition. A counter-affidavit has been filed by the Income-tax Officer. His case is that the assessment is sought to be reopened because the assessee has not disclosed certain facts in the original assessment proceedings. The facts said to have been not disclosed are the following :
The assessee had taken certain loans from Messrs. Juggilal Kamlapat, Messrs. Shroff and Co., and Messrs. J. K. (Bhopal) Pvt. Ltd., a few years earlier to the previous years relevant to the years 1967-68 and 1969-70. The assessee had not repaid that amount The creditors, after certain years, had written off the said debts as bad and irrecoverable. On that account, the Income-tax Officer wants to treat this amount as income of the assessee under Section 41 of the Income-tax Act.
2. So far as the communication of the reasons is concerned, we are of the view that once the assessee filed revised return in response to the notice under Section 148(1) of the Income-tax Act and if he contends that the very initiation of reassessment proceedings is not valid in law for the reason that reasons are not recorded or that even if recorded, they are not relevant and germane, he becomes entitled to be communicated the reasons recorded under Section 148(2) of the Act. This is for the reason that, unless the said reasons are communicated to him, he would not be in a position to effectively contend and establish that the very initiation of reassessment proceedings is bad. We may, however, make it clear that, so far as the material/information is concerned, it need not be communicated forthwith to the assessee, but if any material or piece of evidence or
information is sought to be used against the assesses, it is to be communicated to him and he ought to be given an opportunity to rebut the same.
This is a requirement of the principle of natural justice. Accordingly, we
direct that the Income-tax Officer shall communicate a copy of the reasons
recorded by him under Section 148(2) of the Income-tax Act to the petitioner forthwith. It shall be open to the petitioner to file such further or
fresh objections as he may be advised. The Income-tax Officer shall consider the same and pass final orders in accordance with law after giving an
opportunity of hearing to the assessee.
3. Learned counsel for the assessee argued that the reassessment proceedings are bad because reassessment proceedings merely amount to and are based on a change of opinion. He also contended that Section 41 has no application to the facts and circumstances of the case. But these are issues relating to the merits of the case, upon which we need not express any opinion at this stage. Indeed, it is not even stated expressly in the writ petition that the said amount was not shown as a trading liability in the account books of the assessee, and yet an argument on merits is sought to be attempted. In the state of material before us, it is not advisable for us to enter upon the merits of the said question or to express any opinion thereon. It is open to the petitioner to raise all such questions of fact and law as are open to him before the Assessing Officer. The writ petition is disposed of with the above observations.
4. No order as to costs.