1990 (11) TMI 12 - HC - Income Tax

Summary

Issues Involved:
The issues involved in this case are:
1. Validity of initiating proceedings u/s 147(a) of the Income-tax Act, 1961 for the assessment year 1963-64.
2. Justification of sustaining the addition of Rs. 77,786 as income of the assessee u/r 'Other sources' for the assessment year 1963-64.

Validity of Initiating Proceedings u/s 147(a):
The assessee-company commenced construction of a building in 1960-61, completed in 1966. Discrepancy in disclosed vs. actual construction cost led to an addition of Rs. 6,03,962 in the assessment year 1966-67. Tribunal directed a proportionate addition for other years. Income-tax Officer, following this, initiated proceedings u/s 147(a) for 1963-64. Assessee argued lack of full disclosure, but Tribunal upheld the addition of Rs. 77,786 as income from other sources, based on findings from 1966-67 assessment. Commissioner of Income-tax (Appeals) affirmed this decision.

Justification of Addition of Rs. 77,786:
The Tribunal maintained the addition under section 147(a) for non-disclosure of correct construction cost. Assessee contended the addition was unjustified and should not be entirely made in 1966-67. Tribunal accepted the latter argument, reducing the addition proportionately. The Tribunal's direction for proportionate additions during construction years was based on assessee's submissions. The Tribunal found that the assessee did not fully disclose all material facts regarding construction costs, leading to the upheld addition. The Tribunal's decision was deemed necessary for the appeal's disposal based on the assessee's submissions. The Tribunal's direction was supported by the Explanation to section 153, allowing assessments in consequence of findings or directions by higher authorities. The Tribunal's findings were not disputed by the assessee, who benefited from the decision but later challenged its validity.

In conclusion, the High Court upheld the Tribunal's decision, affirming the validity of initiating proceedings u/s 147(a) and justifying the addition of Rs. 77,786 as income from other sources for the assessment year 1963-64.