TMI Blog1981 (8) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred to as " the ITO "), who accepted the return and concluded the assessment on November 30, 1977. The order of assessment is annexed to the petition as annex. " A ", the operative portion of which reads as follows: " Assessment Order Return admitting property income of Rs. 13,153 and business loss of Rs. 21,143 is filed. In response to notice under s. 143(2), assessee appeared. Loss returned is supported by necessary statements. Assessment is concluded accepting the loss returned. Declared N.D." However, the ITO issued notice under s. 148 of the Act, proposing to reopen the assessment of the petitioner for the assessment year 1976-77, inasmuch as he had reason to believe that income had escaped assessment for the relevant asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when for the subsequent assessment year, the assessee was required to furnish details of expenditure of investments for 1977-78 and the diversion of funds noted in the note was discovered. In a reply filed to the statement of objections, it is found that it has been asserted for the assessee-petitioner that the latter statement in the statement of objections would not be accurate or correct inasmuch as the assessee had in fact furnished all relevant materials including withdrawals relevant to the assessment year 1976-77 before the conclusion of the assessment on November 30, 1977. For that, the learned counsel has relied upon the trading and profit and loss account for the year ended 31st March, 1976, of Premier Plastic Industries as well a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment, it is open to him to reopen the assessment. In our opinion, an error discovered on a reconsideration of the same material (and no more) does not give him that power. That was the view taken by this court in Maharaj Kumar Kamal Singh v. CIT [1959] 35 ITR 1 (SC), CIT v. A. Raman Co. [1968] 67 ITR 11 (SC) and Bankipur Club Ltd. v. CIT [1971] 82 ITR 831 (SC) and we do not believe that the law has since taken a different course. Any observation in Kalyanji Mavji Co. v. CIT [1976] 102 ITR 287 (SC) suggesting the contrary do not, we say with respect, lay down the correct law." The above passage makes it abundantly clear that it is not enough for the concerned ITO to form a second opinion on the very same material which was before him ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rely found on suspicion that some amount borrowed for purposes of business has been diverted and used for personal purposes and, therefore, interest on such borrowed funds for purposes of business diverted to private use should not have been allowed wholly and thus allowed to escape assessment. It is clearly contrary to the law laid down by the Supreme Court. It is not his case except in the statement of objections filed that at the point of time when he recorded the reasons he had any additional information which had come to his possession on the basis of which he had reason to believe that income of the particular assessment year had escaped assessment an that information had been suppressed by the assessee which is equally an essential i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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