TaxTMI 
TaxTMI 
2006 (3) TMI 102
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....of assessment was on the basis of mere change of opinion of the successor officer? (c) Whether the Assessing Officer was justified in issuing notice under section 148 after the expiry of four years from the end of the assessment year?" The assessee is a State Government undertaking. Original assessment for the assessment year 1984-85 was completed under section 143(3) on February 10,1988, fixing the total income at Rs. 2,56,62,398. The assessee at that stage claimed deduction of penal interest levied by the Sales Tax Department for the belated payment of purchase tax amounting to Rs. 63,18,000. The claim was initially allowed by the Assessing Officer. Subsequently the Assessing Officer reopened the assessment by issuing notice dated January 13, 1994, under section 148 on the ground that the assessee was allowed deduction of Rs. 63,18,000 being interest for belated payment of tax even though the expenditure related to earlier years. Reassessment was completed on February 19, 1996, disallowing-the claim of interest on belated payment of purchase-tax amounting to Rs. 63,18,000. The assessee took up the matter in appeal before the Commissioner of Income-tax (Appeals). The appeal was ....
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....lso liable to be charged for income-tax. The assessability of these profits which are thus credited in the books of account arises not because they are received but because they have accrued or arisen. Counsel also submitted that the endeavour made by the assessee to get out of the liability by preferring appeals to the statutory authorities cannot in any way detract from or retract the efficacy of the liability imposed upon him by the competent authority and in such a situation the assessee is bound to debit the amount as accrued liability. Counsel submitted liability to pay the amount so far as this case is concerned was not crystallized during the previous year relevant to the assessment year 1984-85. Counsel in support of his contention placed reliance on the decision in Keshav Mills Ltd. v. CIT [1953] 23 ITR 230 (SC) and explained the features, of the mercantile system of accounting. Reference was also made to the decisions of the Supreme Court in Calcutta Co. Ltd. v. CIT [1959] 37 ITR 1 and Kedarnath Jute Mfg. Co. Ltd. v. CIT [1971] 82 ITR 363 (SC). Reference was also made to the decision of the Madras High Court in Pope the King Match Factory v. CIT [1963] 50 ITR 495. Senio....
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....was also made to the annual report and accounts for the year 1983-84. Counsel submitted, all these materials would show that the assessee had disclosed all the relevant facts. Resultantly counsel submitted, the assessing authority was not justified in reopening the assessment and that no question of law has been raised by the Revenue so as to unsettle the order passed by the Tribunal. Counsel placed reliance on the decision of a Division Bench of this court in CIT v. A M. Zainalabdeen Musaliar [2001] 250 ITR 534 and also the decision of the Delhi High Court in Bhagat Construction Co. P. Ltd. v. CIT [2001] 250 ITR 291. Counsel also made reference to the decision of this court in Deputy CIT (Assessment) v. Pala Marketing Co-operative Society Ltd. [2000] 243 ITR 499 and contended that the principle laid down by this court would squarely apply to the facts of this case and there was no failure on the part of the assessee in disclosing material facts necessary for assessment. The assessee admittedly was following the mercantile system of accounting and hence the expenditure should have been claimed in the relevant previous year The Supreme Court in Keshav Mills' case [1953] 23 ITR 230,....
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....ssessee arose out of the levy of the duty and the demand made against him for payment of such duty. Any dissatisfaction on his part regarding the quantum or propriety of the assessment and levy of the duty cannot minimise the liability or impair its effectiveness. He may raise a dispute over it and strain every nerve to avoid that liability. He may file appeals to the proper authorities questioning the imposition of the liability and praying for relief by way of cancellation of the duty. These are only constitutional modes in which a subject reacts to the levy of taxes and, indeed, there is nothing improper in them. A protest or opposition by a subject to the levy of tax or other duties payable to the Government cannot carry with it the implication that there is no proper levy legally recoverable till such protest or opposition ceases or is silenced .... There was nothing uncertain, tentative, provisional, or contingent, in the matter of the assessee's liability to pay the excise duty. It was a clear-cut unqualified liability which was imposed upon the assessee who became bound in law to discharge it whatever hopes he might have entertained of escaping from that liability by prefer....
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....ed if such a plea is accepted. We may in this connection refer to section 147(a) which is extracted below for easy reference: "147. Income escaping assessment.- It- (a) If the Assessing Officer has reason to believe that, by reason of the omission or failure on the part of an assessee to make a return under section 139 for any assessment year to the Assessing Officer or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year, or." Section 147 deals with income escaping assessment. Section 147 would indicate that the assessee is bound to disclose fully and truly all material facts necessary for the assessment. The assessee who is getting a benefit to which he is otherwise not entitled, is not disclosing fully and truly all material facts. If the assessee is not entitled to get that benefit the assessee should not have claimed it and if the assessee claims and gets it, it will be based on untrue materials which the assessee should not have placed before the assessing authority since those materials are unnecessary for the assessment of that year. Further, in our view, the information ....
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....s any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under subsection (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year. Explanation 1.- Production before the Assessing Officer of account books or other evidence from which material evidence could, with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso. Explanation 2.-For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely:- (a) where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax; (b) where a return of income has been furnished by the assessee but, no assessment has been made and it is noticed by the As....