TMI Blog1995 (7) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner for the said assessment year 1978-79 was the year ending on March 31, 1978. The facts giving rise to this petition, briefly, are as follows : During the relevant previous year, the petitioner was a partner in a firm known as Kosan Gas Company. The firm was established in 1957 for carrying on the business of bottling and distribution of liquid petroleum gas. The previous year of the firm for the purpose of income-tax was June 30. Up to May 31, 1977, the firm consisted of nine partners including the petitioner and the petitioner's share in the said firm was 34.2 per cent. On May 31, 1977, it was decided by the partners of the said firm to revalue the assets. On such revaluation, the value of the assets in the books of the firm incre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stant Commissioner issued directions under section 144B. By the said order dated March 15, 1983, the Inspecting Assistant Commissioner came to the conclusion that the dissolution of the firm was genuine and bona fide and the addition on account of capital gain and profit was not called for. She, accordingly, directed the Income-tax Officer to delete the addition on account of capital gains and profits under section 41(2) of the said Act and on the basis of the said directions issued by the Inspecting Assistant Commissioner, the Income-tax Officer in fact deleted the additions on account of capital gains and profits for the subsequent assessment year 1979-80, vide order dated March 19, 1983. In the said order, the Income-tax Officer expressl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gain was on the basis of the dissolution of the firm which was not bona fide and genuine. Mr. Pardiwala pointed out that the impugned notice dated March 31, 1987, under section 148 of the Act, 1961, ignores the orders passed by the Inspecting Assistant Commissioner on March 15, 1983, under section 144B in which a categorical finding has been recorded that addition on account of capital gains and profits cannot be made particularly because the dissolution of the firm was not a sham or a subterfuge and in view of the said finding, it is not open to the Department to reopen the assessment completed on June 30, 1981. Mr. Jetley, appearing on behalf of the Department, contended that in the present case, we are concerned with reopening of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case, the Income-tax Officer issued notice on March 31, 1987 ; the grounds given in support of the impugned notice proceed on the footing that the dissolution of the firm was not bona fide and has resulted in capital gains and profits which ought to be added back in the individual assessment of the partner. This impugned notice fails to take into consideration the order passed by the Inspecting Assistant Commissioner on March 15, 1983, holding that the dissolution of the firm was genuine and the addition on account of capital gain and profit was not called for. In the above circumstances, the conditions precedent to the exercise of the power which are required to be satisfied by the Income-tax Officer for acquiring jurisdiction to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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