1989 (7) TMI 12

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.... Income-tax Officer allowed a deduction for "liability due to excise duty" in the sum of Rs. 70,44,000. The deduction in this behalf had been claimed thus: Rs. "Additional excise duty in terms of show cause-cum-demand notice from Excise Department dated February 7, 1976, for the period March 16, 1972 to September 15, 1975 51,20,018 Excise duty liability calculated by the 1st petitioner itself on the basis of notice for the earlier period for period September 16, 1975 to June 30, 1976 19,23,995 ------------------ 70,44,013 " ------------------ The notice under section 148 of the Income-tax Act was issued on March 30, 1982. It stated that the Inspecting Assistant Commissioner of Income-tax had reason to believe that the p....

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....grounds upon which the Inspecting Assistant Commissioner sought to reopen the assessment proceedings. There is no affidavit-in-reply. The court is, therefore, totally in the dark as to the grounds that moved the Inspecting Assistant Commissioner. A learned single judge of this court has, in identical circumstances, very rightly held that if the Revenue failed to disclose the reasons for seeking to reopen an assessment and failed to file an affidavit-in-reply, the petitioner was entitled to succeed. [Siesta Steel Construction Pvt. Ltd. v. K. K. Shikare [1985] 154 ITR 547 (Bom) Dr. Balasubramanian, learned counsel for the Revenue, submitted, however, that an Income-tax Officer would not be in error if he accepted what the assessee claimed ....

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....asons and upon what materials the Income-tax Officer had formed the belief that the assessee's income had escaped assessment and it was, therefore, unable to decide whether the Income-tax Officer could have reasonably entertained such belief. The court said that the Tribunal ought to have addressed itself first to the question-what was the material upon which the Income-tax Officer came to form the belief that the assessee's income had escaped assessment. Only after having ascertained what that material was could the Tribunal have gone on to consider whether, upon that material, the Income-tax Officer could reasonably have entertained such belief. The letter upon which Dr. Balasubramanian has relied is written almost eleven months after ....