TaxTMI 
TaxTMI 
1996 (10) TMI 36
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....ct, this court in CIT v. Wandoor Jupiter Chits (P.) Ltd. (In liquidation) [1995] 213 ITR 73, is seen to be very much conscious and at the same time expressing a situation of helplessness of being required to call upon the Tribunal to refer the matter to this court for adjudication. This is more than apparent from the following observations at page 75 of the report : " Needless to say, this involves avoidable expenditure of time, and delay. If really this question could have been dealt with by us even at this stage, a few years of time could have been saved, and the parties could also have had the satisfaction of having a final adjudication in the matter, without being left in a state of uncertainty for long. Necessarily, the Tribunal will take its own time to make the reference and it will take a few more years for this court to deal with the matter finally. If, as the Department contends, the matter is really covered by the decision of the Supreme Court, all this will be a cruel waste of the time of this court, the Tribunal and of the parties. The delay occurs only because of the circuitous procedure prescribed by section 256 to get a decision of this court on the correctness o....
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....the above situation flowing from the decisions of the apex court both under the earlier Indian Income-tax Act of 1922 (section 66(2)) and the present Income-tax Act, 1961 (section 256(2)). Such a step is expected to be taken by the concerned party within six months from the date on which he is served with the notice of refusal from the Tribunal to refer the questions applied for. In other words, the expected notice of motion has to come on the record of this court with respect to the above statutory provision regarding limitation and cannot be allowed, if filed when the reference is about to be taken up for hearing by this court. All these proceedings relate to the assessment proceedings, in the first instance arising out of the order dated October 12, 1989, of the Income-tax Appellate Tribunal, Cochin Bench, in I. T. A. No. 1 (Coch) of 1989 and thereafter out of simultaneously initiated penalty proceedings under section 271(1)(c), ending with cancellation thereof by the order dated May 20, 1991, of the Income-tax Appellate Tribunal, Cochin Bench, in I. T. A. No. 988 (Coch) of 1990. As stated above, I. T. R. No. 55 of 1991, relating to the assessment quantum proceedings is br....
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....ax Reference No. 55 of 1991 : " 1. Whether, the provisions of section 147(a) of the Income-tax Act, 1961, would apply in a case where the Income-tax Officer finds suppression to the quantum of purchase disclosed and makes an addition on that count and later alleges that he has reason to believe that what was determined in the original assessment was less, suppression being more ? 2. Whether the Tribunal in original assessment had held that there were no unaccounted purchases of raw cashew nuts and, therefore, the addition of 3,852 bags of such nuts made by the Income-tax Officer should be deleted in toto, whether in view of the law relating to finality of the Tribunal decisions, the Tribunal was right in sustaining the addition made in the reassessment proceedings on the basis of the admissions made in sales tax proceedings ? 3. Whether, in a case where the reopening on May 30, 1983, under section 147 was without specifying section 147(a) or (b) in the notice and where there was time under section 147(b) till March 31, 1984, whether the Tribunal erred in law in not holding that the alleged exercise under section 147(a) to sustain an assessment made after March 31, 1984, is....
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.... assessment is 1979-80. The original assessment was completed on November 2, 1982, with reference to income of Rs. 18,82,700. Thereafter, under section 69A of the Income-tax Act an addition of Rs. 20,99,440 was made with reference to an unaccounted investment of 3,852 bags of raw nuts. In fact information about the existence of unaccounted possession of raw nuts was available from the State Bank of Travancore where the assessee had credit facilities. It appeared that with regard to the State Bank of Travancore, the assessee on the pledge of the stock of raw nuts enjoyed credit facilities and in regard thereto there was an excess of 3,852 bags in the records of the bank. To be precise the assessee had shown 18,507 bags of raw nuts to the bank for enjoying credit facilities whereas it had shown 14,655 bags in the return of income, to mean 3,852 bags less in the process. It is in regard to this the assessment was completed as stated above. The Commissioner of Income-tax (Appeals) and further travel of the original assessment proceedings to the Income-tax Appellate Tribunal resulted in the deletion leaving the amount of addition of Rs. 7,82,950. This was with reference to the value of ....
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.... concluded that unaccounted purchase of 5,636 bags of raw nuts had been subjected to levy of sales tax. The officer also emphasized that there is a process of compounding by payment of Rs. 5,000 in the sales tax proceedings, under section 47 of the K.G.S.T. Act, 1963, in lieu of prosecution. The Officer has described the sales tax appellate order of the Deputy Commissioner (Appeals) as based on pure technical considerations. The Officer also emphasized that the charge of unaccounted purchases made by the Sales Tax Department had never been denied by the assessee and in fact he admitted it and the offence was compounded. The assessment proceedings initiated under the above circumstances reached the first appellate authority--the Commissioner of Income-tax (Appeals), Trivandrum. The question of explanation even before the said authority was undisputedly relating to 5,636 bags valued at Rs. 30,71,620 on the basis of Rs. 545 per bag. It appears that the assessee preferred an application dated July 18, 1988, for additional evidence before the first appellate authority and contended in regard thereto that the purchase of 5,636 bags are really not unaccounted but are properly supported....
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....rate arguments by the assessee, except that it had entered a plea that the matter should be remitted back to the Income-tax Officer for fresh investigation. In the process of reasoning, the Tribunal considered the additional ground which is as follows : In reassessment under section 147(a) interest should not have been charged under sections 139(8) and 217(1A) of the Income-tax Act, 1961, particularly when in the original assessment after the Tribunal order it is a case of loss. In regard to this additional ground in paragraph 7 the Tribunal observes as follows : " After hearing the parties to the dispute, we are of the view that levy of interest under section 217(1A) is not tenable. In this connection, reliance can be placed on the decision of the Karnataka High Court in Charles D'Souza v. CIT [1984] 147 ITR 694. The provisions of section 215(a) under which levy of interest under section 217(1A) is possible are not available to the Department as they were inserted by the Finance Act, 1984, with effect from April 1, 1985. " The Tribunal has, as quoted above, observed that levy of interest under section 217(1A) of the Income-tax Act is not tenable because the said pro....
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....equires reproduction in the context and it is as follows : " Subsequently, on February 12, 1990, however, the fresh sales tax assessment made on September 30, 1987, was set aside by the Deputy Commissioner (Appeals), Agricultural Income-tax and Sales-tax, Kollam. From the said order of the said authority, it is clear that he had received in evidence the delivery notes which the assessee had not produced for nearly a decade before the sales tax authorities and which he unsuccessfully tried to introduce as additional evidence before the Commissioner of Income-tax (Appeals). We do not know what considerations weighed with him when he decided to accept the so-called delivery notes in evidence in support of the assessee's contention that there was no suppression of purchases, nor was our attention drawn to any provisions of the Sales Tax Act which, in the facts and circumstances of the case, would have entitled the said authority to accept in evidence the said delivery notes after a lapse of a decade. " We have to observe that this situation has not been considered even though the assessee persisted and it was nothing other than reading of the order and the final order passed by t....
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....79 125 " 45237 14-3-79 81 " 45238 14-3-79 105 " 45239 14-3-79 105 " 45240 14-3-79 118 " 45241 15-3-79 120 " 45242 16-3-79 124 " 45243 16-3-79 125 " 45244 17-3-79 94 " 45245 19-3-79 59 " 45246 19-3-79 108 " 45247 22-2-79 120 " Most of the quantities mentioned in the delivery notes used for the transfer of goods from the head office to Ashramam branch co-relate to the entries in the seized note book as recorded at page 377 of the assessment file. Similar is the case of Ayathil branch also. For arriving at the purchase suppression of Rs. 17,75,340, 1,815 bags of local raw cashew at Ayathil and 3,821 bags of raw nuts at Ashramam were taken into account. Hence, the case required, re-examination by the assessing authority in order to arrive at a correct finding on the suppression of purchase turnover of cashew nuts for the year 1978-79. When the very basis of assessment is vitiated by error it is premature to consider the other contentions now." The misfortune of the situation is that the assessee is kept away from the court and it is his fortune that all these proceedings especially the assessment proceedings have not received finality because Inco....
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....office to the branches. So what would be relevant is not verification with the stock register but the existence of the delivery notes supporting the arrivals in the two branches, the lack of which led to the additions initially in the sales-tax assessments and, therefore, in the income-tax assessment. As the reassessment had proceeded on the basis of the findings in the sales tax assessments and based on the materials recovered in the course of a raid by the Intelligence Wing of the Sales Tax Department, it is rather too late for the Income-tax Officer to turn round and reject the explanation of the assessee which was accepted by the sales tax appellate authority as regards the arrival of goods in the Asramom godowns and Ayathil factory. The reason is that the sales tax appellate authority has found that the delivery notes produced by the assessee before him were relevant material which satisfactorily explained in a majority of cases the arrivals in these branches. Therefore, relevancy of the delivery notes in the context of the explanation of the assessee cannot be brushed aside lightly. The arrivals in the Ashramam godowns and Ayathil factory have been accepted by the sales tax a....