1990 (12) TMI 161 - AT - Income Tax

Appeal dismissed for 1972-73, upheld for 1973-74 and 1974-75 due to disclosure discrepancies

INCOME TAX OFFICER. Versus AMARLAL KISHANDAS.

The Tribunal dismissed the appeal for the assessment year 1972-73, ruling the reopening under Section 147(a) as invalid due to full disclosure of primary ... - Issues Involved:1. Validity of reopening under Section 147(a).2. Disclosure of primary and material facts by the assessee.3. Time-barred reassessments.4. Authority of the CBDT to grant reopening permissions.Detailed Analysis:1. Validity of Reopening under Section 147(a):The primary issue in this case is whether the reopening of assessments for the years 1972-73, 1973-74, and 1974-75 under Section 147(a) was valid. The Revenue contended that there was a valid reopening under Section 147(a) due to undisclosed costs of construction. The assessee argued that the reopening was invalid as all necessary facts were disclosed during the original assessments.2. Disclosure of Primary and Material Facts:The facts reveal the construction of a four-storied building by the assessee, with a declared cost of Rs. 2,12,000 and an additional Rs. 60,000 disclosed under the Voluntary Disclosure Scheme. The Departmental Valuation Officer estimated the cost at Rs. 4.98 lakhs, leading to an undisclosed cost of Rs. 2,12,000, which was spread over four assessment years. The assessee argued that the investments were reflected in the trial balances accompanying the returns, and there was no omission or failure to disclose necessary facts.3. Time-Barred Reassessments:The assessee contended that the reopening was time-barred under Section 149(1)(b), which allows reopening only within four years from the completion of the assessment year. The notices for reopening were issued in 1983, much later than the four-year period. The Revenue argued that the reassessments were justified and legal, as permissions were obtained from the CBDT and CIT.4. Authority of the CBDT to Grant Reopening Permissions:The assessee argued that the permissions obtained from the CBDT were invalid because the amount sought to be added was less than Rs. 50,000. The Revenue countered that the permissions were valid as the original intention was to add Rs. 53,000, and the reduction to Rs. 32,500 was due to the AAC's order, which was still under dispute.Judgment:For Assessment Year 1972-73:The Tribunal held that all primary and material facts necessary for making the assessment were disclosed by the assessee. The trial balance clearly mentioned the amounts spent on the purchase of the plot and construction. The ITO did not make any inquiries during the original assessment. The reopening under Section 147(a) was deemed invalid as all primary facts were disclosed. Therefore, the appeal for the assessment year 1972-73 was dismissed.For Assessment Years 1973-74 and 1974-75:The Tribunal found that the narration 'investment in house' in the trial balances for these years did not clearly indicate that the amounts were incurred towards the cost of construction. This lack of clarity did not constitute full and true disclosure of material facts. The reopening under Section 147(a) was deemed valid for these years. The appeals for the assessment years 1973-74 and 1974-75 were allowed, and the reassessments were upheld.On the Issue of Time-Barred Reassessments:The Tribunal held that the reassessments were not time-barred. The reasons for reopening were recorded, and permissions were obtained from the CBDT and CIT. The addition of Rs. 32,500 was made due to the AAC's order, but the original intention was to add Rs. 53,000. The reassessments were deemed justified and legal.Conclusion:The appeal for the assessment year 1972-73 was dismissed, confirming that the reopening under Section 147(a) was invalid. The appeals for the assessment years 1973-74 and 1974-75 were allowed, upholding the reassessments. The Tribunal set aside the impugned order of the AAC for these years.