TMI Blog2005 (12) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer to reopen the case for the earlier year and if necessary to examine afresh this issue and to make decision in accordance with law. 2.1 The relevant portion of the order of the CIT (Appeals) is quoted here for better appraisal of facts:- "5. I have considered the argument of the Ld. Counsel and perused the fact of the case. Since there has been lapse of time and the creditors are very small in nature it is definitely difficult on the part of the appellant now to bring them before the Assessing Officer. At the same time, on perusal of the balance sheet, I find that the same was in the earlier year and has figured in this year has coming from the earlier year, thus the norm desires that the same should not be added/disallowed in this year. In view of the above legal provision the Assessing Officer is directed to delete this addition in the present year. However, the Assessing Officer is free to reopen the case for the earlier year and if necessary to examine afresh of this issue and to take a decision in accordance with law." 3. The Ld. Sr. Counsel for the assessee Mr. M.N. Banerjee while arguing on this point before the Bench, took serious exception to this restric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not possible to come to a different conclusion as suggested by learned standing counsel for the Department that the Inspecting Assistant Commissioner merely pointed out the law and not interpreted the law. In view of the foregoing reasons, we consider that the order passed by the Tribunal in the case of both the assessees appears to be in order." (iii) ITO v. Lakhmani Mewal Das [1976] 103 ITR 437 (SC) - In this case it has been held that the duty which is cast upon the assessee is to make a true and full disclosure of the primary facts at the time of the original assessment. Production before the Income-tax Officer of the account books or other evidence from which material evidence could with due diligence have been discovered by the Income-tax Officer will not necessarily amount to disclosure contemplated by law. The duty of the assessee in any case does not extend beyond making a true and full disclosure of primary facts. Once he has done that his duty ends. It is for the Income-tax Officer to draw the correct inference from the primary facts. It is no responsibility of the assessee to advise the Income-tax Officer with regard to the inference which he should draw from the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtment preferred appeals to the Supreme Court The Supreme Court saw no reason to differ and dismissed the appeals. 4. Further, the Sr. Ld. Counsel of the assessee submitted that the transaction of Rs. 1,40,000 belongs to 14 parties in the shape of supply of materials and the amount involved is either Rs. 1 lakh or Rs. 8,000 each as the assessee is engaged in spare parts dealing. The transaction being such an old one, initiation of proceedings even otherwise after a decade is totally invalid. In the meantime, the firm has been closed in 1993 and there is no contract with the said parties. 4.1 According to the Sr. Ld. Counsel, both factually and legally, the assessee's case stands on sound footing. Therefore, the order passed by the CIT (Appeals) confirming the validity of the initiation of proceeding under section 147/148 is totally invalid. 5. The Ld. D.R. Mr. S.K. Jain while defending the cause of the revenue, drew the attention of the Bench to the finding of the CIT (Appeals) and accordingly it has been deemed proper to quote the relevant portion of the order of the CIT (Appeals) which is self explanatory, as under:- "The appeal has been filed on 20-7-1999. The hearing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT(A) had no power to give such direction. The addition made by the Assessing Officer of Rs. 1,40,000 is arbitrary. Observations of the Assessing Officer and submissions of the appellant have been considered. Brief background of the case is that the Ld. CIT(A) while passing the order in the case of the appellant for assessment year 1988-89 in Appeal No. 968/AVIII/W-15(2)/94-95, dated 28-12-1995 in para 5 of the order made the following directions 'in view of the above legal' provision the Assessing Officer is directed to delete the addition in the present year. However, the Assessing Officer is free to reopen the case for the earlier year and if necessary to examine afresh this issue and to take a decision in accordance with law'. Assessing Officer in pursuance to this direction initiated proceeding under section 148 of the Income-tax Act for assessment year 1987-88 after obtaining approval of the statutory authority as already noted above. The identity and capacity of loan creditors and the genuineness of the transaction could not be proved by the appellant and Assessing Officer made addition. During the course of hearing of the appeal, remand report of the Assessing Officer wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to take approval from the Jt. CIT. 2. In other (a)Whatever (b) If the (c) If the cases amount escaped escaped, escaped, any income is income is Assessing Rs. 25,000 Rs. 50,000 Officer can or more, or more, reopen Assessing Assessing Officer Officer has to take has to take approval approval from from Jt.CIT Jt. CIT ----------------------------------------------------------- In the particular case, the assessment year relates to 1997-98 and the case was processed under section 143(1)(a) [not assessed under section 143(1)/147]. The notice had been issued on 27-3-1996 after taking the proper approval from the Jt. CIT i.e., within 8 years from the end of the relevant assessment year, and notice under section 148 was duly served on 25-4-1996 within 9 years from the end of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of notice. In this connection, he cited a number, of case laws, the gist of which are analysed hereunder:- (i) Navketan Enterprises v. CIT [2001] 250 ITR 508 (Jharkhand) - In this case it has been held that the petitioner's application challenging the initiation of proceedings under section 147 by issuance of notice under section 148 on the ground that the Assessing Officer had wrongly obtained the approval of the Joint Commissioner before issuing notices instead of obtaining the approval of the Board because that was the requirement of law as it stood in the year 1988 relating to the assessment year 1988-89, was liable to be dismissed. Whenever the Assessing Officer decides to initiate proceedings for reassessment, it is only the law as it exists at that time which is applicable for issuing notice under section 148. (ii) Varkey Jacob Co. v. CIT [2002] 257 ITR 231 (Ker.) - In this case it has been held that the petitioner admitted escaped income by filing revised returns on the basis of which assessment was initiated. Since there was no proper assessment under section 143(3), limitation available for the Department was ten years. Since tax that would have been evaded for these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued. (ii) Raymond Woollen Mills Ltd. v. ITO [1999] 236 ITR 34 (SC) - In this case it has been held that the case of the revenue was that the assessee was charging to its profit and loss account, fiscal duties paid during the year as well as labour charges, power, fuel, wages, chemicals, etc. However, while valuing its dosing stock, the elements of fiscal duty and the other direct manufacturing costs were not included. This resulted in undervaluation of inventories and understatement of profits. This information was obtained by the revenue in a subsequent year's assessment proceedings. The commencement of reassessment proceedings was valid. (iii) Ess Ess Kay Engg. Co. (P.) Ltd. v. CIT [2001] 247 ITR 818 (SC) - It has been held that the mere fact that the case of the assessee was accepted as correct in the original assessment for an assessment year, does not preclude the Income-tax Officer from reopening that assessment under section 147(a) of the Income-tax Act, on the basis of his findings of fact made on the basis of fresh materials obtained in the course of assessment for the next assessment year. (iv) Pal Jain v. ITO [2004] 267 ITR 540 (Punj. Har.) - In this case it has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities granted and the assessee could not prove it to be the opening balance in subsequent year, the case becomes weakened for the assessee in the impugned appeal. Even the same view has been held by the CIT (Appeals). (ii) The primary onus has not been discharged by the assessee at all as it appears from the facts and circumstances of the case. (iii) The relevant para 5 of the order of the CIT (Appeals) for the assessment year 1988-89 has been partly challenged by the Ld. Counsel of the assessee on the ground that it is an inference drawn by the CIT (Appeals) without any basis which he is precluded from doing so according to the Ld. Counsel of the assessee. But according to the considered opinion of the Bench, as per the rule of interpretation, the entire para 5 quoted above has to be read and interpreted wholly. One part which is favourable to the assessee cannot be accepted by the assessee and for the other part which is not favourable to the assessee, the assessee cannot refuse to accept that. With this analogy even otherwise the Bench considers that it is not an inference drawn by the CIT (Appeals) but it is a direction and that too, not a blanket direction. It is a restric ..... X X X X Extracts X X X X X X X X Extracts X X X X
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