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TMI Blog1977 (2) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... orth Eastern Zone. They had practically no idea about the labour rates and the cost of the materials and the transportation cost of various materials which was usually to be carried from Calcutta. The assessee had quoted the rates mainly on the basis of the market price of various materials and labour rates available at Ranchi. Immediately after the works were started there was escalation in price of all building construction materials as well as labour rates. The cost of bricks had increased by about Rs. 15 per 1000, stone chips by Rs. 20 per 100 Sft., labour rates by 25 per cent etc. The assessee could not make any idea of such increase in rates. In view of all these difficulties, the assessee could not make the usual profit and as such the profit was a little less. However, the profit disclosed is about 7 per cent of the work receipt." 4. The Income-tax Officer rejected the explanation of the assessee and applied the rate of net profit at 10 per cent on the receipt of Rs. 11,14,495 vide his order dated 21st March, 1973. 5. In the course of the appellate proceedings before the Appellate Assistant Commissioner, the assessee contended that since the revised return was filed on 9t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the office of the incumbent and the successor ITO in accordance with the principle of natural justice, heard the appellant afresh before completing the assessment. If the appellant has a statutory right under proviso to s. 129 to claim re-opening of previous proceedings or any part thereof or re-hearing before order of assessment is passed, the principle of natural justice also requires the ITO to hear the appellent before passing the assessment order. Therefore, the time taken by the successor ITO to reopen whole or any part of the proceedings or to give an opportunity to the appellant to be re-heard shall be excluded according to Explanation I under s. 153 (3). Thus, the assessment is not barred by limitation of time nor it is illegal or ab initio void." 6. On merits, the Appellate Assistant Commissioner confirmed the estimate of the Income-tax Officer. 7. Aggrieved by the order of the Appellate Assistant Commissioner the assessee has filed the present appeal. 8. We have gone through the record and heard the representative of the party. In our opinion, the preliminary objection, of the assessee that the assessment is time-barred is well founded and must prevail. 9. s. 153 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the same basis in determining the income of the assessee. Since the case involved a mere estimate and since the estimate of one person is bound to differ from that of another, it could not be presumed that the assessee concealed its income. In these circumstances, we are of the opinions that this was not given a Prima facie case of concealment of income as contended by the departmental Representative. 11. It is worthy of note the it was, in fact, the Appellate Assistant Commissioner, who for the first time, made out a case for the department under s. 153(1)(b) of the Income tax Act, 1961. At no point of time, did the Income-tax Officer consider this case to be a case falling within the purview of s. 153(1)(b). The assessment became time-barred on 8th Feb, 1973 and the Income-tax Officer never gave a finding before the date to the effect that the assessee had, Prima facie concealed its income within the meaning of s.271(1)(c). Even after this date, he never gave such a finding. It was only on 21st March, 1973 that the Income-tax Officer initiated the penalty proceedings in a routine, under s. 271(1)(c), but, by then, it was too late as the period for passing the assessment orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment year 1947-48 was barred by time. Similarly, in the case of S. Kanwal Tej Singh (2), the High Court observed that "if at the time of making his order, the Income-tax Officer found that the assessee had concealed the particulars of his income or deliberately furnished inaccurate particulars of his income, then he would be entitled to make the assessment order without any bar of limitation under s. 34(3) read with s. 28(1) (c) of the Income-Tax Act, 1922". Now, in the present case, the Income-tax Officer did not give a specific finding to the effect that the assessee had concealed its income. Nor did he refer to any material on the basis of which he considered the assessee to be guilty of concealment of income. The mere fact that the Income-tax Officer issued a notice under s. 271(1) (c) on 21st March, 1973 in a routine manner and that too after the expiry of the limitation for making the assessment order would not, in our opinion, attract the provisions of s. 153(1)(b), specially when the penalty proceedings were eventually dropped by the Department. In this connection, we may refer to the following observations appearing in the case of The Commissioner of Income-Tax U ..... X X X X Extracts X X X X X X X X Extracts X X X X
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