2013 (3) TMI 32

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....der section 148 of the Act was valid? (2) Whether the Tribunal was justified in law in holding that payment of rent of rs. 4,000/- was within the purview of section 37(4) of the Income-tax Act, 1961 and could, therefore, be disallowed under it?" Briefly stated the facts giving rise to the present reference are as follows: The reference relates to the Assessment Year 1987-88. The assessee is a company and the assessment was completed under section 143(1) on 6.1.1987. Subsequently, notice under section 148 was issued on 25.3.1989 and a return was filed disclosing a sum of Rs.. 14,870/-. In the course of assessment proceedings, an enquiry was made regarding a sum of Rs. 79,670/- claimed as deduction on account of guest house ma....

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....by the assessing officer that the guest house maintenance expenses amount to Rs. 79,670/- had been claimed and they were wrongly allowed in the assessment order dated 6.11.1987. There was no application of mind while completing the assessment under section 143(1) of the Act. The assessee's objection was rejected by saying that income liable to tax had clearly escaped assessment and, therefore, the assessing officer was fully justified in invoking the provisions of section 147 of the Act. The validity of proceedings under section 148 were again challenged before the Tribunal but were rejected on the ground that the assessment order framed under section 143(1) did not require any application of mind and, therefore, the assessing officer was j....

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....es amounting to Rs. 79,670/- which have been claimed in the return and have been wrongly allowed in the assessment order dated 6.11.1987 constituted reasonable belief to reopen the assessment. He has relied upon a decision of the Andhra Pradesh High Court in the case of A. Pusa Lal vs. Commissioner of Income Tax [(1988) 169 ITR 215 wherein it has been held that where assessment has been completed under section 143(1) of the Act even if the ingredients of section 147 are satisfied it does not exclude the power of the assessing officer to reopen the assessment under section 147 of the Act. He also relied upon a case of the Hon'ble Supreme Court in the case of Britannia Industries Ltd. vs. Commissioner of Income Tax and another [(2005) 278 ITR....