TMI Blog1996 (12) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to the assessee, the subsequent information gathered by the Assessing Officer was not sufficient to reopen the assessment under section 147(a) of the Income-tax Act, 1961. The assessee could not have made an imaginary profit of Rs. 27,87,777 on the sale of 103251 litres of arrack and therefore such addition should not have been made and confirmed. The assessee had already disclosed a sum of Rs. 7 lakhs as additional income during the course of the original assessment itself and for this reason also, according to the assessee, there was no justification for enhancement or estimation of the profit on that account. The additional income disclosed was credited in the books of account on the last day of the accounting year and shown as withdrawn by partners on the same day and it was not intended to any cash credit for book adjustment. it was disclosed in the return of income that the said amount was divided amongst the partners' account in their profit-sharing ratio. According to the assessee, this would clearly prove that the credit was intended only to cover any alleged unaccounted sales by the sales-tax authorities and that the same was accepted by the Assessing Officer in the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en fulfilled. The third condition that there must be failure on the part of the assessee to make a return disclosing fully and truly all material facts necessary for his assessment has not been fulfilled. The assessee had disclosed fully and truly all material facts necessary for his assessment in the original return of income but the same was not acted upon. 5. The further facts are that the place of business of the assessee was inspected by the Sales-tax Intelligence Squad on 6-11-1985 during the course of which complete stock was verified. The accounts of the assessee were examined subsequently and the following irregularities were noticed :--- (i) shortage of 2068.600 litres in arrack ; (ii) difference of 1223 litres in the Stock of vinegar, and (iii) unaccounted purchases of 60230 litres of arrack from 1-4-1985 to 31-10-1985, from the slips recovered. The Intelligence Officer, Alleppey, held that the assessee has committed offence regarding unaccounted purchases and sales of arrack and the same was compounded by levying penalty of Rs. 30,000. On that basis, the Sales-tax Officer, Kayamkulam in his assessment order dated 10-2-1987 for sales-tax assessment year 1985- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd remitted the matter to the Sales-tax Appellate Tribunal to restore the appeal to its file and to dispose of the same in accordance with law in the light of the observations contained in the judgment of the High Court. 8. It is apparently clear from the order of the Hon'ble Kerala High Court that it had set aside the order of the Kerala Sales-tax Appellate Tribunal with direction to dispose of the appeal in accordance with law on 19-6-1989. The original assessment to income-tax is dated 31-3-1989, in which the value of the suppressed purchases amounting to Rs. 42,71,520 was not included on the ground that the Kerala Sales-tax Appellate Tribunal had deleted the same by its order dated 22-12-1987. This would clarify the point that no concealment or suppression of purchases can be attributed to the assessee on 31-3-1989, the date of making the original assessment. The assessment under section 147(a), read with section 143(3), is dated 28-10-1992. It is quite clear that the expiry of the period of four years from the end of the relevant previous year 1986-87 came to an end on 31-3-1991. The proviso to section 147 is where an assessment under section 143(3) has been made for the rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be said that income chargeable to tax had escaped assessment by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts. He could not, therefore, take recourse to section 147(a) to remedy the error resulting from his own oversight ". Thus, the decision of the Allahabad High Court was reversed by the Supreme Court. 10. The Supreme Court in the case of ITO v. Mewalal Dwarka Prasad [1989] 176 ITR 529/43 Taxman 40 held " (i) that it was not for the High Court to examine the validity of the notice under section 148 in regard to two of the items of cash credits if it came to the conclusion that the notice was valid at least in respect of the remaining item. Whether the Income-tax Officer, while making his reassessment, would take into account the other two items should have been left to be considered by the Income-tax Officer in the fresh assessment proceedings, (ii) that, however, clause (a) of section 147 did not apply as the alleged escapement of income from assessment had not resulted from the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that year. The pri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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