2002 (7) TMI 7 - HC - Income Tax

Whether the income chargeable to tax had escaped assessment inasmuch as the appellant had claimed investment allowance on the machinery which was sold within eight years from the expiry of the year of installation? Tribunal s view is that it was the duty of the assessee to disclose the fact of transfer before the Assessing Officer in the course of the original assessment proceedings - We are of the view that the decision of the Tribunal does not suffer from any error, much less any substantial error of law. The appeals are, therefore, summarily dismissed Question answered in affirmative in favour of revenue

Summary

Issues:
1. Validity of reopening of assessment under section 147 of the Income tax Act, 1961.
2. Duty of the assessee to disclose transfer of assets before the expiry of eight years from installation.
3. Interpretation of relevant provisions of section 32A regarding investment allowance.
4. Comparison with the decision of the Bombay High Court in a similar case.

Analysis:
1. The judgment dealt with the validity of reopening the assessment under section 147 of the Income tax Act, 1961. The appellant had claimed investment allowance on machineries sold within eight years from installation. The Income tax Officer issued a notice under section 147, leading to a series of appeals and orders. The Commissioner allowed carry forward of the investment allowance, but the Income tax Appellate Tribunal sided with the Revenue, setting aside the Commissioner's order and restoring the Assessing Officer's decision.

2. The court considered the duty of the assessee to disclose the transfer of assets before the expiry of eight years from installation. The appellant argued that the transfer occurred after filing the return but before the assessment order, relying on a Bombay High Court decision. However, the court noted that the relevant provision of section 32A deemed the allowance wrongly made if the asset was sold before eight years from installation. It was deemed the assessee's duty to inform the Assessing Officer about such transfer during the original assessment proceedings.

3. The interpretation of section 32A regarding investment allowance was crucial. The court highlighted that the provision clearly stated that any allowance made in respect of machinery or plant shall be deemed wrongly made if sold before eight years from installation. The court disagreed with the appellant's interpretation based on the Bombay High Court decision, emphasizing the duty of the assessee to disclose such transfers before the Assessing Officer.

4. The comparison with the Bombay High Court decision in a similar case was addressed. The court distinguished the facts of the present case from the Bombay High Court case, where the prohibition against asset transfer was introduced at a different time. The court clarified that the Bombay High Court decision did not conclusively support the appellant's argument. Ultimately, the court found that the Tribunal's decision did not contain any substantial error of law and summarily dismissed the appeals.