9911796707
|
Home
Issues: Reopening of assessments under section 147(b) of the Income-tax Act based on new information, validity of reassessment proceedings, relevance of information to initiate reassessment, escapement of income due to high wastage and interest-free loans, common question of law in appeals by sister concerns.
Analysis: The judgment pertains to two references concerning the assessment years 1973-74 and 1974-75, involving a common legal question. The reassessment was initiated by the Income-tax Officer under section 147(b) of the Income-tax Act based on new information obtained during a survey at a sister concern's premises. The information revealed discrepancies in the wastage of newsprint and excessive interest payments, leading to the belief that income had escaped assessment. The Commissioner of Income-tax (Appeals) canceled the reassessment orders citing jurisdictional issues. The Revenue appealed to the Appellate Tribunal, arguing that the information justified the reassessment, while the assessee contended the information was irrelevant. The Tribunal found the information relevant as it pertained to the business's modus operandi, which remained consistent across assessment years. The core question raised was whether the Income-tax Officer's belief that income had escaped assessment was based on relevant materials. The judgment highlighted that the sister concerns had completed original assessments for the relevant years, and reassessment was triggered by new evidence discovered during the 1975-76 assessment. This evidence included discrepancies in newsprint wastage and interest-free loans to connected parties, indicating potential income escapement. The appeals by both concerns were heard together, and a common question of law was referred for opinion. The Court, after considering related judgments, upheld the validity of the reassessment proceedings, emphasizing the consistency in reasoning across appeals. The judgment in a related case involving the sister concern was deemed applicable to the present case. Consequently, the Court answered the question in the affirmative, ruling against the assessee. No costs were awarded in these cases based on the specific circumstances. Overall, the judgment clarifies the legal validity of reassessment proceedings under section 147(b) of the Income-tax Act based on new information indicating potential income escapement. The relevance of the information to initiate reassessment, consistency in reasoning across related appeals, and the interconnected nature of the sister concerns' assessments were crucial factors in determining the outcome of the case.
|
