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2005 (7) TMI 94 - ALLAHABAD HIGH COURTValidity of Reassessment proceedings taken u/s 147 - No opportunity for cross-examination to witness relied upon - Violation Of Principles of natural justice - HELD THAT:- Learned counsel for the applicant submitted that as Sri Bhagirath Prasad Jakhodia, arbitrator and Sri Rameshwar Prasad Jain, director of the appellant-company did not appear in respect of the summons issued u/s 131 of the Act and the remaining two persons, namely, Sri Kishori Lal Garg, arbitrator and Sri Banarsi Das, director had died, the facts regarding extra profit outside the books of account cannot be taken as a ground for reopening of the assessment and subjecting it to tax in the three assessment years. The submission is misconceived. It is to be noted that the applicant is a private limited company and is not a natural person. It appears that in a dispute amongst two groups of directors regarding earning of secret profits the matter was referred to arbitration and there was an award that a sum was an extra profit which was not reflected in the books of account. It is, however, not in dispute that the award had become final. As the award had become final it would be taken that the board of directors had accepted the factum of earning of secret profits not reflected in the books of account, which is also binding on the company. On the question that one of the arbitrators and one of the directors did not appear in respect of the summons issued u/s 131 of the Act we find that it would not make any difference to the assessment order. Accordingly, the reassessment made in the present case was valid. The question is answered accordingly. However, there shall be no order as to costs.
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