1986 (1) TMI 49

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....stigations in respect of bogus loans shown by the assessee, the assessments were reopened under section 147(a) of the Income-tax Act, 1961. There was settlement in respect of the group of cases and in response to a notice under section 148 of the Income-tax Act, 1961 (hereinafter referred to as " the Act "), the company filed revised returns showing a total income of Rs. 1,44,498 for the assessment year 1960-61 and Rs. 84,736 in respect of the assessment year 1961-62. The company was, however, assessed to incomes of Rs. 1,54,736 and Rs. 94,819, respectively, for the assessment years 1960-61 and 1961-62. In both the years, the additional income as admitted in the returns amounted to Rs. 68,750 in each year. On the basis of these assessments....

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....ed to look into the reassessments made under the Income-tax Act, 1961. Arising out of this order, the following two questions have been referred to this court at the instance of the assessee : " 1. Whether, in view of the provisions of section 297(2)(e) of the Income-tax Act, 1961, the orders passed on September 15, 1973, under section 23A of the Indian Income-tax Act, 1922, for the assessment years 1960-61 and 1961-62 based on the incomes as assessed in the proceedings under section 147 of the Income-tax Act, 1961, for the aforesaid years are valid in law? 2. Whether, on the facts and circumstances of this case, the company should have declared a larger dividend than what had been declared for the assessment years 1960-61 and 1961-62 ? "....

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....t day of March, 1962, or any earlier year. It further provides that the provisions of the repealed Act shall apply to all matters arising out of such assessment as fully and effectually as if this Act had not been passed. Clause(e), therefore, enables the Income-tax Officer to give effect to the provisions of section 23A in respect of the assessment year ending on 31st March, 1962, or any earlier year. Now the argument is that when section 297(2)(e) refers to " the assessment of any company or its shareholders ", that assessment must be only under the 1922 Act. The word " assessment " is defined in section 2(8) of the 1961 Act and it includes reassessment. The object of making a provision like clause (e) in section 297(2) is obvious. Under....

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....e rejected. The Tribunal has found as a fact that there was no agreement between the Department and the assessee that in case he disclosed the correct income, proceedings under section 23A would not be taken. The Income-tax Officer was, therefore, clearly entitled to give effect to the provisions of section 23A on finding that there was distributable surplus and that the amount of surplus distributed as dividend was less than the prescribed percentage. The matter, in our view, stands really covered by the decision of the Supreme Court in Gobald Motor Service (P.) Ltd. v. CIT [1966] 60 ITR 417. In that decision, the Supreme Court has clearly held that if an item of receipt is deliberately omitted from the accounts, it could not be said that....