1997 (2) TMI 93

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....he Income-tax Officer had assessed the petitioner by his order dated March 16, 1990, made under section 143(3) of the Act and allowed deduction of Rs. 1,31,800 under section 32AB of the Act, stating in the order that it was being allowed as per the audit report in Part III. The impugned notices at annexure "A" were issued on March 15, 1996, and April 18, 1996, for the assessment years 1988-89 and 1989-90, respectively, under section 148 of the said Act. No reasons were however communicated in the notice or along with it. Therefore, one of the grievances made by the petitioner was about the reasons on the basis of which the notices were issued. The respondent in his affidavit-in-reply filed in this petition has placed on record the reasons w....

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....under section 32AB of the Act, since the purchase was made out of the reserve fund. There is no dispute about the fact that in the assessment order the deduction in respect of Rs. 1,31,800 was allowed by the Income-tax Officer under section 32AB as per the audit report in Part III. Therefore, the particulars of audit report filed by the assessee were before the Income-tax Officer when he made the assessment order under section 143(3) of the Act. Both the sides have referred to a copy of the audit report which was the subject-matter of the said assessment. In the balance-sheet, there is a reference to investment allowance having been utilised to the tune of Rs. 1,10,931. The amount of Rs. 31,800 said to have been utilised for purchase of ....

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....esorted to inferences that the balance amount of Rs. 79,131 from the total amount of Rs. 1,10,931 was not utilised for the purpose for which it was withdrawn and further that the machinery worth Rs. 31,800 was purchased out of the amount of Rs. 1,10,931. According to us, this enquiry could have been made on the basis of the material already disclosed before the Income-tax Officer while making the assessment under section 143(3) of the Act. It is a settled legal position as held by the Supreme Court in Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191, that from the primary facts in his possession, whether on disclosure by the assessee or discovered by him on the basis of the facts disclosed, or otherwise, the assessing authority had to dr....