TMI Blog1979 (7) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... tnership firm and carries on business, inter alia, in mining and export of manganese, chrome and other kinds of mineral ores. On December 23, 1959, while the assessment for the assessment year 1956-57 was pending, the ITO made an ex parte assessment under s. 23(4) of the Indian I.T. Act, 1922, for the assessment years 1957-58 and 1958-59. The appellant preferred appeals against the ex parte assessment. While the appeals were pending before the AAC, the appellant made an application before the CBR for settlement of its tax liabilities for the assessment years 1957-58 to 1959-60. The revenue authorities made enquiries land investigations with a view to a settlement for the assessment years 1952-53 to 1959-60. In December, 1959, the customs authorities searched the appellant's business premises. In 1960, the I.T. authorities inspected the books, papers and documents which the customs authorities had seized and were lying in the custody of the Chief Presidency Magistrate. It is alleged that the I.T. authorities found certain discrepancies in various assessments. On the 18th January, 1961, the ITO wrote to the appellant stating that as many as eleven categories of discrep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ish the reasons and materials on the basis whereof the notices under s. 148 had been issued. The ITO by his reply dated the 3rd March, 1965, repeated the statements which the CIT had made on the 25th February, 1965, and requested the appellant to file returns pursuant to the said notices. On the 8th March, 1965, the appellant's solicitor wrote to the revenue authorities demanding justice. On the 12th March, 1965, a rule was issued by this court and an interim order was passed that the appellant would file returns in terms of the notices under s. 148 and thereafter all further proceedings under the said notices would remain stayed until further orders of this court. This interim order was vacated by A. N. Sen J. on the 12th July, 1975. Long arguments were advanced before us on behalf of the appellant. Numerous decisions of the Supreme Court and of our court were placed before us. The appellants counsel emphasised that before effecting the settlement the revenue authorities carried on the fullest possible enquiries and investigations and it was highly improper on their part to reopen assessments for years for which they had made settlements. And the principles analogous t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the 1961 Act. In this report the ITO says that the cases fall under s. 147(a). In giving his reasons for starting proceedings under s. 147(a) he has referred to a detailed investigation report which he had submitted on the 7th September, 1964. We have gone through the relevant portions of this investigation report. We set out below certain extracts from this report which speak for themselves. At pages 7, 8, 9 and 10 of the copy of the report which has been handed over to us we find the following statements : "........ A consolidated estimate of income escaping assessment as a result of under-invoicing in chrome and manganese ores during the assessment years 1954-55 to 1959-60, in the hands of M/s. Serajuddin Bros. and in respect of M/s. India Ferro Alloy Industries Private Limited, and M/s. Estate Minerals Development Company Private Limited is given below...... In the earlier part of this report it has been mentioned that a settlement was effected between the department and M/s. Serajuddin Bros. (including M/s. India Ferro Alloy Industries (P .)Ltd M/s. Estate Minerals Development Co. (P.) Ltd.) on 27-3-1961, when the file was in Central Circle Calcutta. Apart from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered taxed now under- as ' on money ' invoicing in settlement --------------------------------------------------------------------------------------------------------------------------------------------------- Rs. Rs. Rs. 1952-53 -- 33,000 Nil 1953-54 -- 6,34,000 Nil 1954-55 15,133 9,52,000 15,133 1955-56 4,52,947 2,25,000 2 27,947 1956-57 31,55,845 2,34,000 29,21,845 1957-58 34,13,030 6,08,000 28,05,030 1958-59 9,99,071 45,000 9,54,072 1959-60 7,33,490 Nil 7,33,490 --------------------------------------------------------------------------------------------------------------------------------------------------- From the above table it is apparent that even after making allowance for overlapping substantial income has escaped assessment and action u/s. 147 is necessary to re-open the proceedings for the assessment years 1955-56 to 1959-60.... Conclusion :-- It is regretted that this report has become unusually lengthy on account of the complicated nature of the case and the huge revenue involved in this group. The technique adopted by the cunning and ingenious devices adopted by the assessee required elaborate discussion on the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved at in 1961. It is apparent from the report of the 7th September, 1964, that after the settlement the revenue authorities have examined other books, papers and documents which had not been either discovered or examined at all before the settlement and from the examination of these other books, papers and documents, the ITO has reached the conclusion in his report that the assessee had adopted cunning and ingenious devices in its operational activities which resulted in escapement of assessment. Upon consideration of this investigation report of the 7th September, 1964, we are clearly of opinion that in the instant case all the requirements of ss. 147(a), 148 and 151 have been complied with before the issue of the notices under s. 148 dated the 4th December, 1964. Had this report been placed earlier before us, we would not have spent such a long time on this appeal. The recorded reasons, in our opinion, establish sufficiently that there was failure on the part of the assessee to disclose fully and truly all material facts relating to the relevant assessments. It is clear that many of the under-invoicings concerning transactions in chrome and manganese ores were not known to the I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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