TaxTMI 
TaxTMI 
2006 (1) TMI 99
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....see that the assessment order dated March 26, 1997, was barred by limitation in terms of section 153(2) of the Act? 3. Whether on the facts and in the circumstances of the case the additions sustained by the Appellate Tribunal in regard to inflation of cash balance and receipt on account of DDs is legal and valid and sustainable in law?" The assessee is a proprietary concern by name "Package India Tin Fabricators" engaged in the fabrication and sale of tins. The assessee also derives share income from two firms, M/s. Das Prakash Agencies and M/s. GPN Cashew Exporting Co. The assessee in response to notice under section 148 dated October 1, 1993, and notice under section 142(1) dated March 13, 1995, filed the return of income for the assessment year 1992-93 on March 27,1995, declaring a total income of Rs. 1,36,970 and agricultural income of Rs. 1,50,000. During the course of assessment proceedings it was pointed out by the assessee's representative that the notice under section 148 had not given more than 30 days time for filing the return, and therefore, the assessment would be treated as null and void. The assessing authority accepted the stand of the assessee and dropped the a....
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....tly, the Tribunal directed the Assessing Officer to give the assessee necessary relief in the light of the directions given by the Tribunal. The Revenue as well as the assessee filed appeals aggrieved by that part of the order which is adverse to them. Counsel appearing for the assessee Sri T.M. Sreedharan submitted that the Tribunal was not justified in rejecting his legal plea stating that it was too technical. Counsel submitted, the Tribunal should have found that the effect of the subsequent amendment with retrospective effect by the Finance (No. 2) Act of 1996, was to confer validity to the notice dated October 1, 1993, under section 148, even though such notice allowed only less than 30 days for filing the return of income. Counsel submitted that by giving retrospective effect to the amended law with effect from April 1, 1989, the notice dated October 1, 1993, issued under section 148 was legal and valid. Counsel therefore submitted that final assessment for the year 1992-93 should have been completed before March 31, 1996, by virtue of section 153(2) of the Income-tax Act, and that the assessment order passed on March 26, 1997, was invalid. The counsel further submitted tha....
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....the apex court in CIT v. K. Adinarayana Murty [1967] 65 ITR 607 (SC), CIT v. Mahaliram Ramjidas [1940] 8 ITR 442 (PC); Gursahai Saigal v. CIT [1963] 48 ITR (SC) 1. Before we examine the rival contentions on the legal questions raised, we may refer to section 148 as unamended. "148. Issue of notice where income has escaped assessment.- (1) Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, not being less than thirty days, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139. (2) The Assessing Officer shall, before issuing any notice under this section, record his reasons for doing so." It is trite law that issue of a not....
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....53(2) of the Act. The assessee cannot be allowed to raise such a plea after having persuaded the assessing authority to withdraw notice dated October 1, 1993, pointing out that it was not in conformity with the statutory provision. The assessee cannot be allowed to take advantage of the plea of limitation in terms of section 153(2) of the Act contending that the notice dated October 1, 1993, was valid due to the omission of the time-limit vide Finance (No. 2) Act of 1996 with effect from March 1, 1989. We may in this connection refer to the decision of the Calcutta High Court in CIT v. Assam Oil Co. Ltd. [1982] 133 ITR 204, which was approved by the apex court in CIT v. G. M. Mittal Stainless Steel P. Ltd. [2003] 263 ITR 255. The Calcutta High Court took the view that a subsequent reversal of the decision of the High Court by the Supreme Court would not render the reassessment proceedings void ab initio. Reference may also be made to the decision of the Gujarat High Court in CIT v. Maneklal Harilal Spg. & Mfg. Co. Ltd. [1977] 106 ITR 24, which took the view that what is relevant is whether the proceedings were validly initiated. The court took the view that it is because of the in....
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....me-tax Officer we are not prepared to say that the action taken by the Income-tax Officer applying the then existing law was invalid. Once we uphold the notice issued under section 148 on March 28,1996, the plea of limitation raised by the assessee under section 153(2) has to be rejected. We therefore decide the legal questions in favour of the Revenue and against the assessee holding that the Finance (No. 2) Act of 1996 as amended would not validate an invalid notice which was issued under section 148(1). We may now examine question Nos. 5 and 6 as to whether the Tribunal is justified in sustaining the additions with regard to inflation of cash balance and receipt on account of demand drafts. The Commissioner (Appeals) confirmed the addition of Rs. 1,88,000 being the cash transferred from the Trichur branch but not deducted from the cash balance in that branch. The assessing authority on verification of the cash books of the assessee noticed that the assessee was transferring the sale proceeds from the Trichur branch to the head office by cash. It was also noticed that the cheques received from parties or their agents were credited in the accounts with UCO Bank, Trichur and the c....
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....unal is justified in directing that the sale proceeds of the first day may be available for the purchase and sale of tins of the second day and is not such finding and direction to the officer based on surmises, conjectures and hence perverse? 2. Whether, on the facts and in the circumstances of the case is not the conclusion reached in paragraph 10 and the direction contained therein are based on surmises and conjectures and hence vitiated? 3. Whether, on the facts and in the circumstances of the case and also for the reasons given in paragraph 10 of the order, the Tribunal is right in law and fact in interfering with the addition of Rs. 16,60,854 made on account of unaccounted sale of suppressed production of tins?" Counsel for the Revenue contended that the Tribunal was not right in interfering with the addition of Rs. 16,60,854 made on account of unaccounted sale of suppressed production of tins. Senior counsel appearing for the Revenue took us through paragraph 10 of the Tribunal's order and submitted that no cogent reasons have been stated by the Tribunal to accept the findings of the Assessing Officer as well as those of the appellate authority. The findings of the Tribun....
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.... the assessee's books of account the Assessing Officer had noticed certain discrepancies in the cash book and impounded the books produced. Further in spite of repeated requests the assessee had failed to produce his stock register. The Assessing Officer had to prepare the month wise statement of purchase of tin sheets and tins production and sales of tins. The Assessing Officer had noticed that the closing stock of tins as on March 31, 1992, should have been 32,659 tins as against 3,200 tins disclosed. The Assessing Officer had also noticed that the assessee had availed of key loan facility from the Central Bank of India, Kollam and the stock position of tins of each day was obtained from the said bank by the Assessing Officer. The declared stock shown to the bank was adjusted in the original statement prepared by the Assessing Officer and a second statement was prepared, as per which the closing stock of tins as on March 31, 1992, should have been 45,786 as against 3,200 tins disclosed. The Assessing Officer had also noticed that the sales tax authorities have detected unaccounted sales of tins and that on the basis of the admitted rate of fabrication charges and consumption of t....