TMI Blog1993 (4) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... orrect in holding that the proceedings under section 147(b) were not validly initiated?" The relevant facts which transpire from the statement of case are that the assessee during the three assessment years in question had taken loans, which were partly used for the purpose of business' and partly for the payment of income-tax liabilities. The assessee claimed payment of interest to the extent of Rs. 41,601, Rs. 45,924 and Rs. 66,196, respectively, for the three years. During the original assessment proceedings, the assessee disclosed the aforesaid facts before the Income-tax Officer, which were duly maintained in the books of account as well. The said amounts of interest, on due verification, were allowed as revenue expenditure in the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Kalyanji Mavji and Co. v. CIT [1976] 102 ITR 287 and in the case of A. L. A. Firm v. CIT [1991] 189 ITR 285, has submitted that in the present case, the Income-tax Officer has acted within his jurisdiction in initiating the reassessment proceedings because in view of a Bench decision of this court in the case of Maharajadhiraj Sir Kameshwar Singh v. CIT [1961] 42 ITR 774, the interest paid on loans for discharging the income-tax liabilities cannot be allowed as business expenditure. According to him, this decision was not taken note of or possibly it was not within the knowledge of the Income-tax Officer while completing the original assessment and, as held in the case of A. L. A. Firm [1991] 189 ITR 285 (SC), if information either wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Singh [1961] 42 ITR 774, and, therefore, he thought it proper to initiate these proceedings. He has submitted that even if the argument of Mr. Saran be accepted that the interest in question was not an admissible deduction, still it will be a case of sheer mistake committed by the Income-tax Officer in making the original assessment, which had occurred either because of ignorance of law or inadvertence. According to him, even the pronouncement of the Supreme Court in the case of A.L.A. Firm [1991] 189 ITR 285 does not approve the initiation of proceedings like the present one merely on the ground that a certain mistake has been committed in the original assessment proceeding. On the facts as found by the Tribunal, it is quite clear that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "any observations in Kalyanji Mavji and Co.'s case [1976] 102 ITR 287 (SC) suggesting the contrary do not lay down the correct law." The said two cases have again been considered in the case of A. L. A. Firm [1991] 189 ITR 285 (SC) and after reviving the law on the subject, the apex court has quoted with approval the views taken by the High Court (A. L. A. Firm v. CIT [1976] 102 ITR 622 (Mad)) at page 298, which is to the following effect : "The result of these decisions is that the statute does not require that the information must be extraneous to the record. It is enough if the material, on the basis of which the reassessment proceedings are sought to be initiated, came to the notice of the Income-tax Officer subsequent to the origi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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