TaxTMI 
TaxTMI 
2005 (8) TMI 79
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....petitioners are engaged in the business of manufacture of ball pens and refills. The petitioners' manufacturing process involves, inter alia, the machining of brass wire/rods so as to produce tips, nozzles and rings for ballpoint pens and refills. The petitioners had filed their returns of income for the assessment years 1975-76, 1976-77 and 1977-78 giving particulars required for assessment. The returns of income were assessed by the Income-tax Officer on June 30, 1974 (?), March 24, 1979 and July 23, 1979, under section 143(3) read with section 144B for the assessment years 1975-76, 1976-77 and 1977-78, respectively. After the aforesaid assessment orders were passed, the Assistant Commissioner of Income-tax, Central Circle-II, is....
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....quantity and value. On the basis of the observations made from the statements of the directors/partners who were examined under section 132(4) and from the manufacturing process carried out before the search party, it is noticed that the brass scrap is about 5 per cent, of the total consumption of brass items-wire rod and strips-and plastic scrap can be as much as 12 per cent, of the consumption of plastic powder. In the accounts for the previous year relevant to the assessment year 1975-76, the assessee had not shown any value of scrap either by way of sale or in stock. The suppression of profits by non-disclosure of scrap in the accounts is worked out as under: ------------------------------------------------------ Item&nb....
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....e the income from sale of scrap and also the income from sale of excess production, income to the extent of Rs. 13,32,833 has escaped assessment within the meaning of section 147(a) of the Income-tax Act, 1961. It is, therefore, requested that approval under section 151(1) of the Income-tax Act, 1961, may kindly be accorded to issue the notice under section 148 read with section 147(a) of the Income-tax Act, 1961, for the assessment year 1975-76 in this case. (Sd.)........... Smt. Arti Handa, A.C., Central Circle, 19, Bom. Notices issued under section 148 of the Income-tax Act are the subject-matter of challenge in this petition filed under article 226 of the Constitution of India. On being noticed, the respondents appeared a....
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....n given by the petitioner is accepted by the Assessing Officer, it is not open to the succeeding officer to reopen the assessment merely because he disagrees with the views expressed in the original assessment order. Learned counsel for the petitioner further submitted that the dispute regarding the consumption of stainless steel balls is also without any substance because there is no dispute regarding the quantity shown in the opening balance and the closing balance recorded in the books maintained by the petitioner. There is no dispute regarding the quantity of ball pens manufactured and cleared by the petitioner. Therefore, on hypothetical basis it is not open to the Assessing Officer to allege that the petitioner has failed to disclo....
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....anding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Assessing Officer has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance, as the case may be, for the assessment year concerned (hereafter in sections 148 to 153 referred to as the relevant assessment year)." Section 149 (as it stood prior to April 1, 1989): "(1) No notice under section 148 shall be issued,- (a) in cases falling under clause (a) of section 147- (i) for the relevant assess....
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....ng of the assessment on the ground that the assessee has failed to disclose the scrap arising during the manufacturing process cannot be sustained. Similarly, the reopening of the assessment on the ground that the assessee has suppressed the production of ball pens is also baseless because the quantity of stainless steel balls in the opening stock and the closing stock shown in the books of account maintained by the assessee have been found to be correct. Therefore, merely because the number of stainless steel balls utilised during the manufacturing process is more than the number of ball pens manufactured, it cannot be presumed that the assessee has misdeclared the number of ball pens manufactured by it. Moreover, for the assessment yea....