TMI Blog2006 (1) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal preferred by the assessee against the order of the Income-tax Appellate Tribunal, Cochin Bench in I.T.A. No. 210/Coch/98, dated July 27, 2001 and I.T.A. No. 140 of 2002 is an appeal preferred by the Revenue against the same order. We may first deal with the appeal preferred by the assessee under section 260A of the Income-tax Act, 1961. The assessee has raised six questions of law, of which the first four questions are consolidated, redrafted and stated as follows: "1. Is not the notice dated October 1, 1993, issued under section 148 legal and valid in the light of the amended provision contained in section 148 as per the Finance (No. 2) Act of 1996? 2. Whether on the facts and in the circumstances of the case the Tribunal is justified in rejecting the contention of the assessee that the assessment order dated March 26, 1997, was barred by limitation in terms of section 153(2) of the Act? 3. Whether on the facts and in the circumstances of the case the additions sustained by the Appellate Tribunal in regard to inflation of cash balance and receipt on account of DDs is legal and valid and sustainable in law?" The assessee is a proprietary concern by name "Package India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... except with regard to the plea of the assessee regarding agricultural income. The appellate authority held that there is no basis for keeping the figure of agricultural income especially when no such amount is returned in the second return filed. Aggrieved by the said order the assessee filed an appeal before the Tribunal. The contention of the assessee was that there was no scope for issuing a fresh notice under section 148 since the plea of escaped income was rejected by the Tribunal. On the merits the assessee's appeal was partly allowed. The Tribunal found force in the contention of the assessee that it cannot be presumed that the sale of the entire tins had taken place in one stretch. The Tribunal felt that only peak sales can be taken as the basis for making the addition. Consequently, the Tribunal directed the Assessing Officer to give the assessee necessary relief in the light of the directions given by the Tribunal. The Revenue as well as the assessee filed appeals aggrieved by that part of the order which is adverse to them. Counsel appearing for the assessee Sri T.M. Sreedharan submitted that the Tribunal was not justified in rejecting his legal plea stating that it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lled the notice. Counsel pointed out that though the Finance (No. 2) Act of 1996 had omitted the words "not being less than thirty days" retrospectively with effect from April 1, 1989 that by itself would not revive the notice dated October 1, 1993, issued by the assessing authority since it was already cancelled applying the then existing law. In support of his contention counsel referred to the decision of the apex court in CIT v. G.M. Mittal Stainless Steel P. Ltd. [2003] 263 ITR 255. Reference was also made to the decision of the Calcutta High Court in CIT v. Assam Oil Co. Ltd. [1982] 133 ITR 204 and also in CIT v. Sun Engineering Works P. Ltd. [1992] 198 ITR 297 (SC). Reference was also made to the decision of the apex court in Bakshi Ram v. Brij Lal, AIR 1995 SC 395, the decisions of the apex court in CIT v. K. Adinarayana Murty [1967] 65 ITR 607 (SC), CIT v. Mahaliram Ramjidas [1940] 8 ITR 442 (PC); Gursahai Saigal v. CIT [1963] 48 ITR (SC) 1. Before we examine the rival contentions on the legal questions raised, we may refer to section 148 as unamended. "148. Issue of notice where income has escaped assessment.- (1) Before making the assessment, reassessment or recomp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsequently it was dropped. Fresh notice was therefore issued under section 148 in conformity with the time prescribed under section 148. When the Finance Act was passed a legally valid proceeding was in existence. Notice prescribed under section 148 of the Act for the purpose of initiating reassessment proceedings is a condition precedent to the validity of an assessment made. The assessing authority was only curing the defect of not following the time-limit when it was pointed out by the assessee and therefore notice was issued strictly on the basis of the then existing statutory provision. The mere fact that the time-limit prescribed under section 148(1) was taken away would not make an invalid notice valid so as to render the assessment order dated March 26, 1997, invalid in terms of section 153(2) of the Act. The assessee cannot be allowed to raise such a plea after having persuaded the assessing authority to withdraw notice dated October 1, 1993, pointing out that it was not in conformity with the statutory provision. The assessee cannot be allowed to take advantage of the plea of limitation in terms of section 153(2) of the Act contending that the notice dated October 1, 1993 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 131 ITR 451 (SC) and CIT v. Sun Engineering Works P. Ltd. [1992] 198 ITR 297 (SC). We are of the view the abovementioned decisions would not apply to 11 the facts of this case. The mere fact that the time-limit has been taken away with effect from April 1, 1989, would not vitiate the proceedings validly initiated applying the then existing law. The object and purpose of the amendment is only to take away the time-limit for giving time for the assessee to file a return which the Legislature thought unnecessary. If the Legislature wanted to undo all that was done by the assessing authority applying the then existing law it should have been-specifically provided in the statute. In the absence of specific provision in the Finance (No. 2) Act of 1996 invalidating those proceedings initiated by the Income-tax Officer we are not prepared to say that the action taken by the Income-tax Officer applying the then existing law was invalid. Once we uphold the notice issued under section 148 on March 28,1996, the plea of limitation raised by the assessee under section 153(2) has to be rejected. We therefore decide the legal questions in favour of the Revenue and against the assessee holding th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly entered in the assessee's and sister concerns' books of account. The assessing authority noticed that artificial inflation of cash balance in the head office accounting as receipts from the Trichur branch when in fact there was no such cash availability. Though the assessee tried to explain the cash availability of the sister concern at Kollam the same could not be established. The unexplained cash brought amounting to Rs. 1,88,000 was treated as the assessee's unexplained income and brought to tax under section 68. We find no reason to disturb the concurrent findings rendered with regard to the unexplained income of the assessee. The Revenue in I.T.A. No. 140 of 2002 raised three questions of law which are stated hereunder: "1. Whether, on the facts and in the circumstances of the case the Tribunal is justified in directing that the sale proceeds of the first day may be available for the purchase and sale of tins of the second day and is not such finding and direction to the officer based on surmises, conjectures and hence perverse? 2. Whether, on the facts and in the circumstances of the case is not the conclusion reached in paragraph 10 and the direction contained ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of Rs. 16,60,854 made on account of unaccounted sale of suppressed production of tins. Counsel appearing for the assessee however tried to sustain the said order and submitted that the Tribunal is right in finding that there was no evidence to show that the sale of the entire tins had taken place on a single day at one stretch. Counsel referred to annexure D copy of the quantitative particulars of tins sold for the period from July 25, 1991 to September 27, 1991. So the peak sale was on August 19, 1991. We have perused the order passed by the assessing authority as well as that of the Tribunal. We are of the view that cogent and acceptable reasons have been stated by the Assessing Officer in making addition towards unaccounted sale of tins. The facts would indicate that during the course of scrutiny of the assessee's books of account the Assessing Officer had noticed certain discrepancies in the cash book and impounded the books produced. Further in spite of repeated requests the assessee had failed to produce his stock register. The Assessing Officer had to prepare the month wise statement of purchase of tin sheets and tins production and sales of tins. The Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X
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