2002 (11) TMI 782 - HC - Income Tax

Summary

Issues involved: Reopening of assessment u/s 147 based on undisclosed purchases and cash credit entries, treatment of cash credit entries in reassessment proceedings.

Relevant details for each issue:

1. Reopening of assessment u/s 147:
The assessment for the year 1986-87 was reopened u/s 147 based on information received regarding purchases made by the assessee outside the books of account. The Assessing Officer added back certain unaccounted purchases to the taxable income. The assessee was also asked to prove the genuineness of cash credit entries, which were treated as income from undisclosed sources. The CIT(A) partly allowed the appeal, setting aside the additions related to unaccounted purchases but accepting some cash credit entries as genuine.

2. Treatment of cash credit entries in reassessment:
The Income-tax Appellate Tribunal partly allowed the appeals of both the Department and the assessee. It remanded the case to the Assessing Officer to confront the assessee with material regarding unrecorded purchases. Regarding the cash credit entries, the Tribunal held that additions could not be made under section 147 for issues not part of the reopening grounds. The Tribunal relied on a Supreme Court judgment and concluded that the Assessing Officer cannot make fishing enquiries on concluded matters during reassessment.

In the final judgment, the High Court upheld the Tribunal's decision, stating that the issue of cash credit entries was concluded during the original assessment u/s 143(1) and could not be reopened based on new information. The Court emphasized that reassessment proceedings u/s 147 are limited to under-assessment or escaped income issues, and the Assessing Officer cannot revisit settled matters. Citing previous judgments, the Court dismissed the appeal, finding no substantial question of law to consider.

This summary captures the key issues and details of the judgment involving the reopening of assessment u/s 147 and the treatment of cash credit entries in reassessment proceedings.