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Issues: (i) Whether reopening of the assessment for the assessment year 1970-71 under section 147(a) of the Income-tax Act was justified; (ii) Whether income accrued to the assessee under section 41(2) of the Income-tax Act in the assessment year 1970-71.
Issue (i): Whether reopening of the assessment for the assessment year 1970-71 under section 147(a) of the Income-tax Act was justified.
Analysis: The parameters for action under section 147(a) were found to be satisfied on the facts and circumstances of the case, warranting reopening of the completed assessment for the relevant year.
Conclusion: The reopening of the assessment was held to be valid and in favour of the Revenue.
Issue (ii): Whether income accrued to the assessee under section 41(2) of the Income-tax Act in the assessment year 1970-71.
Analysis: The amount in dispute before the District Judge, the High Court and the Court in relation to the umpire's award was confined to Rs. 60,000 and interest, and the balance of the award became due when the award was made a rule of the court within the previous year relevant to the assessment year 1970-71. On that basis, income was treated as having accrued in that year.
Conclusion: Income under section 41(2) was held to have accrued to the assessee in the assessment year 1970-71, in favour of the Revenue.
Final Conclusion: The High Court's answers to both referred questions were affirmed, and the appeal failed.
Ratio Decidendi: Where the statutory conditions for reopening are met and the relevant amount becomes due within the previous year, assessment reopening and accrual of income for that year are both sustainable.
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