1. ' SAEEDUZZAMAN SIDDIQUI, J.--This petition under Article 199 of the Constitution is filed by the petitioner to challenge the issuance of notice dated 11-4-1987 by the Income-tax Officer Circle V, Hyderabad, under section 65 of the Income-tax Ordinance, 1979 for additional assessment for the assessm ent year 1985-86 in respect of the firm as well as its partners. It is an admitted position in the case that the return of income filed by the petitioner for the assessment year 1985-86 was finalized by the Assistant Income-tax Officer, Circle V, Hyderabad, under section 62 of the Income- tax Ordinance, 1979. The reasons for issuance of notice under section 65 of the Ordinance by the successor Income-tax Officer are given in the notice as follows: ' To ' M/s Car Tunes, ' Plot No, A /25, S .1. T .E. , Hyderabad.
2. Subject: Additional assessm ent of assessm ent year 1985-86 Firm as well partners.
3. ' Assessm ents of assessm ent year 1985-86, of firm as well as partners, have been reopened for additional assessm ents under the provisions of section 65 of the Ordinance, with the prior permission of Inspecting Assistant Commissioner cf Income Tax, Hyderabad Range Hyderabad, on the basis of information and reasons to believe that information and facts result in escapement of income as under:
(1) In the partnership deed executed in writing on 22-6-1985 it is stated that the partnership shall be deemed to have been commenced with effect from 1st July, 1984. Whereas lease-deed with S.1.
4. T . E. , Limited Hyderabad regarding Plot No, A /25 was executed on 8-5-1984 i.e, prior to commencement of the partnership.
(2) The lease of M/s Car Tunes as per S.I.T.E. Limited record is in the ownership of Mr. Rizwan Majeed.
5. Whereas the partnership deed does not contain that the plot in question and investment was leased in the name of Mr. Rizwan Majeed and the investment was made by Mr. Rizwan Majeed.
(3) In the balance sheet investment in the construction is declared of Rs,18,82,650 in construction of 236 4.5 sq. Ft. Whereas investment in construction of Godown/Office building and Shades could not reasonably be less than as under: {{TABLE}}
(i) Godown Area 19650 Sq.Ft. at the rate of Rs,90 per sq. Ft. 17,68,500'
(ii) Remaining Area 4044 sq. Ft. Construction at the rate of Rs,150 per sq. Ft. 6,06.600
(iii) Construction of Shades 2,00,000 Total Rs, 25,75,100
(4) Investment in construction of godowns/office building and Sheds has not been examined.
6. Details of Machinery purchased/installed have not been obtained. Investment in machinery has not been examined. Cash flow from partners have not been examined. I. Mr. Abdul Majeed.
(1) Mr. Abdul Majeed became partner of the firm from 1st July, 1984. As per photo stat copy of his bank statement of Account No,5009 his credit balance by 26-12-1984 was Rs,707. His saving is declared of Rs,2,63,499 upto 28-2-1985. Whereas as per the bank statement his credit balance on 13-3-1985 is of Rs,342.
(2) Source of income investment of Rs,10,74,937 is explained, inter alia, pension and salary etc. , documentary evidence regarding saving as on 1st July, 1984 is not given. Whereas his credit balance as on 13-3-1985 was Rs,342 only.
(3) Source of investment in property against which rental income is declared to have been saved has not been furnished. II. Mr. Ahsanul Haq.
7. Source of remittances of Rs,2,04,582 is not declared. He had not worked by himself abroad and therefore, the remittances of other person could not be his money. The remittances are of petty amounts and evidence regarding saving is not furnished. III. Mr. Rizwan Majeed.
8. Nature and source of remittances has not been examined. The amount is remitted in the name of Miss Shamim Abdul Majeed. Bank statement, in evidence that the remittances were left in saving and not utilized is not furnished.
9. Find attached with the notices u/s 65 in the name of firm and the partners. Encl: as above.
10. (Sd.)
11. (ABDUL RAZZAK), Income-tax Officer, Circle V, Hyderabad.
12. ' Learned counsel for the petitioner contended before us that the notice issued by the Income-tax Officer under section 65 of the Income-tax Ordinance is wholly without jurisdiction as neither any new material was available before the Income-tax Officer justifying the reopening of the finalized assessm ent nor there wasany escaped assessment in the case which warranted action under section 65 of the Ordinance. It is urged that in the return filed by the petitioner for the assessment year 1985-86 which was finalized by the Asstt. Income-tax Officer, Circle V, Hyderabad all the items mentioned in the notice issued under section 65 of the Income-tax Ordinance, 1979, were fully disclosed and on the basis of evidence produced by the petitioner before the Income-tax Officer the return was finalized and assessment order dated 24-6-1986 was passed. It is accordingly contended that the successor Income-tax Officer could not reopen the assessment on the basis of a change of opinion in respect of the same material which was considered and accepted by his predecessor. Learned counsel for the respondent on the other hand contended that mere issuance of notice by the Income-tax Officer furnished no cause of action to the petitioner for moving this Court in exercise of its Constitutional jurisdiction as an alternate remedy is available to the petitioner under the Income-tax Ordinance against the notice issued by the Income-tax Officer. It is also contended by the learned counsel for the Department that the issues raised in the petition relate to determination of factual aspect of the case which cannot be decided by this Court in exercise of its Constitutional jurisdiction and should be left to be decided appropriately by functionaries under Income-tax Ordinance of 1979. The following cases were cited at the Bar in the case in support of respective contentions of the parties: Calcutta Discount Co.Ltd. v. Income-tax Officer, Companies Distt. I Calcutta and another (1961)(41) ITR 191, Commissioner of Income-tax v. U Lu Nyo (AIR 1933 Rangoon 350), Gemini Leather Stores v. Income-tax Officer, B-Ward, Agra and others (1975 (100) ITR 1), Commissioner of Income-tax v. Ambika Mills Ltd. (1976 (101) ITR 669) and Union Carbide (India) Ltd. v. Income-tax Officer, Companies Distt. IV and another (1973 (87) ITR 529).
13. ' It is however not necessary to examine the above-noted cases here in detail as the legal position which appears to be well settled in this regard is, that where assessment has been finalized by the Income-tax Officer in accordance with the law, it cannot be reopened on the ground that the Income-tax Officer on a second thought has changed his opinion on the factual or legal aspect of the case or that a successor officer takes a different view of the material considered A by his predecessor. Action can be taken by the Income-tax Officer who passed the assessment order or by his predecessor for reopening of the decided cases under section 65 of the Ordinance of 1979 if he is satisfied on the basis of definite information that the assessee had failed to disclose true and correct facts, or on the facts disclosed by the assesssee the income is found to have been under- assessed or there is case of escapement of income from assessment. In the case before us it is an admitted position that the basis of reopening of the case for additional assessment are only those facts which are mentioned in the notice issued to the petitioner. We accordingly asked Mr. Shaikh Haider, learned counsel for the Department to point out precisely the new and fresh material noticed by the Income-tax Officer for the purposes of reopening of the assessment under section 65 of the Ordinance. The learned counsel in reply stated before us that most of the items mentioned in the notice were those which were disclosed in the return filed by the petitioner before the predecessor Income-tax Officer and which were accepted by him. He, however, asserted that Item No,3 of the impugned notice was not considered by the predecessor Income-tax Officer and, therefore, it could validly form the ground for reopening of the assessment. We have already reproduced the impugned notice in extenso in the earlier part of this order and we may state here that item No,3 referred by the learned counsel for the Department relates to the valuation of construction. A careful examination of impugned notice will show that item No,3 mentioned therein was not at all a new discovery by the successor Income-tax Officer. This item was not only disclosed by the assessee (petitioner) in their return of income-tax filed before the Department but its valuation as shown by them was accepted by the Income-tax Officer who examined the return, as Rs,18,82,650 on the basis of evidence produced before him. The successor Income-tax Officer, however, did not find the valuation disclosed by the petitioner and accepted by his predecessor as proper and proposed its valuation at Rs,25,75,100. It is, therefore, quite obvious that on the same material which formed the basis of assessment in favour of petitioner for the disputed assessment year by the Income-tax Officer, his successor-in-office proposed to reopen the case taking the view that the valuation accepted by his predecessor was not fair. Similarly, the wealth statements of the three partners of petitioner mentioned in the impugned notice were finalized by the Income- tax Officer after taking into consideration the documents submitted before him but his successor was of the view that the documents did not establish fully the source of the wealth. It is therefore, quite clear that the issuance of notice under section 65 of the Income-tax Ordinance was based on a mere change of opinion by the successor Income-tax Officer which could not justify the action in law.
(5) In the case of Arafat Woollen Mills v. Commissioner of Income-tax (1986 PTD 316) a Division Bench of this Court while considering the scope of section 65 of the Income-tax Ordinance made the following observation s: -- "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 for the matter. In those cases where there are two possible factual or legal views 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 reassessm ent is justified. The principle underlying section 65 is that the income must not 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 . 0 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.
14. ' We are in respectful agreement with the above observation and hold that in the case before us the issuance of notice under section 65 of the Income-tax Ordinance was based on a mere change of opinion.
15. ' The learned counsel for the respondent, however, very vehemently argued before us that mere issuance of notice could not furnish any ground to the petitioner to approach this Court in its Constitutional jurisdiction as the Income-tax Ordinance 1979 provided adequate and efficacious remedy in this regard which should have been exhausted by the petitioner before approaching this Court. The learned counsel in this connection specifically relied on the following observations of this Court in the case of Arafat Woollen Mills which appear at page 341 of the report:- "Only notice has been issued to the petitioner and he 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.
16. ' 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 been disputed by the respondent, therefore, the present petition is not maintainable, and the same is hereby dismissed with no order as to costs."
17. ' Learned counsel for the petitioner has placed before us a copy of the short order dated 16-5-1988 passed by the Honourable Supreme Court in Civil Appeal No,5-K of 1986 against the above judgment of the High Court which is as follows:-- "For the reasons recorded separately, this appeal is allowed with the result that the impugned judgment of the High Court dated 16-1-1986 is set aside and the Constitutional Petition filed by the appellant is allowed with the result that the impugned notice dated 18-9-1984 and all subsequent notices dated 20-1-1985 and 26-1-1985 are declared as without lawful authority and of no legal effect, and the respondent is restrained from acting on the impugned notices or implementing the same or taking any further action in pursuance thereto himself or through any agency or in any manner whatsoever. The appellant shall also be entitled to costs."
18. ' Although detailed reasons are not given in the above-quoted order but it is quite clear that existence of another remedy under the relevant law was not considered as a bar for issuance of direction under Article 199 of the Constitution. It cannot be denied that interference even at the stage of issuance of notice can be made by this Court in exercise of its Constitutional jurisdiction where the proposed action lacks jurisdiction on the part of authority initiating the action or on the basis of admitted facts the action proposed by the authority is shown to be unsustainable in law.
19. We have already reached the conclusion in this case that the notice dated 11-4-1987 issued by the successor Income-tax Officer is based merely on a change of opinion which could not in law justify reopening of the case under section 65 of the Income-tax Ordinance. In these circumstances no useful purpose will be served by allowing the continuation of proceedings in pursuance of the aforesaid notice before the functionaries in the hierarchy of Income-tax Department. We accordingly accept this petition and declare the notice dated 11-4-1987 issued by the respondent as without lawful authority. There will however be no order as to costs.