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Issues Involved:
Challenge to notice for reopening assessment u/s 148 of the Income-tax Act, 1961 for the assessment year 1994-95. Details of the Judgment: Reopening of Assessment: The petitioners challenged a notice dated January 31, 2001, for reopening the assessment u/s 148 of the Income-tax Act, 1961 for the accounting year 1994-95. The petitioners were engaged in manufacturing various products and had filed a return of income in 1994. The Assessing Officer had passed an assessment order in 1996, determining the total income. Subsequently, a notice was issued in 1997 regarding excise duty and customs duty not included in valuing closing stocks. The Assessing Officer sought to reopen the assessment in 2001 based on the Supreme Court's decision in Wallace Flour Mills Co. Ltd. v. Collector of Central Excise [1990] 186 ITR 440, stating that taxable income had escaped assessment. Reasons for Reopening: The reasons for reopening the assessment were based on the decision in Wallace Flour Mills Co. Ltd. case, emphasizing the importance of excise duty and customs duty in valuing closing stocks. However, the petitioners argued that the method of accounting followed by them had been accepted by the Revenue for subsequent years. They also highlighted that the excise duty and customs duty had been paid before the due date of furnishing returns, making the provisions of section 43B of the Act applicable. Citing the Hindustan Lever Ltd. case, the petitioners contended that the conditions for issuing a notice u/s 148 had not been fulfilled. Court Decision: The court found that the reasons for reopening the assessment were not valid as the method of accounting by the petitioners had been accepted by the Revenue for subsequent years. Additionally, the court noted that the excise duty and customs duty had been paid before the due date, making the provisions of section 43B applicable. Referring to the Hindustan Lever Ltd. case, the court quashed and set aside the notice dated January 31, 2001, under section 148 of the Act. Conclusion: The court allowed the petition, quashing the notice for reopening the assessment. The rule was made absolute, and no costs were awarded in the case.
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