TMI Blog2005 (7) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars 1960-61 and 1961-62 on nominal incomes. In a search and seizure operation conducted by the Income-tax Department at the residential premises of one Sri Ram Nath Jain, a note book, bearing No. G-6, was found and seized, which contained a record of certain transactions. The statement of Sri Ram Nath Jain was recorded and he was required to explain the transactions recorded in the said note book. It transpired that a dispute had arisen amongst the two groups of directors M/s. Kusum Industries P. Ltd., the applicant-company, Shyam Lal Dwarika Prasad group and Banarsi Das Rameshwar Prasad group over the affairs of M/s. Jagdish Rolling Mills. The matter was referred to a Board of Arbitrators comprising S/Shri Ram Nath Jain, Kishori Lal Garg, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fording the applicant an opportunity to cross-examine them, the Assessing Officer issued summons under section 131 of the Act to S/Shri Bhagirath Prasad Jakhodia, Kishori Lal Garg, two of the arbitrators, Rameshwar Prasad Jain and Banarsi Das, two of the directors of the applicant-company. The Assessing Officer pointed out that SI Shri Kishori Lal Garg and Banarsi Das, who had confirmed the fact of extra profit of Rs. 3,08,102 outside the books of account, were reported to have died and the other two persons did not appear. It was held that the cross-examination of the aforesaid persons by the applicant was not possible. In his reply, the applicant had relied on the statement of Shri Rameshwar Prasad, one of its directors to the effect that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d any infirmity in the initiation of proceedings under section 148 of the Act. On the pleas taken by the applicant that the allegation that Shri Rameshwar Prasad worked out profit of Rs. 3,08,102 was not authenticated or relevant, the statement relied upon by the Assessing Officer could not be used against the applicant, sufficient opportunity was not provided to the applicant, etc., were not found to be tenable by the Tribunal on the face of facts brought on record by the departmental authorities. After referring to the observations of the Commissioner of Income-tax (Appeals), the Tribunal, vide its order dated May 26, 1993, rendered in I.T.A. Nos. 773, 774 and 775 (All) of 1988 upheld the inference and the decision of the first appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
