1990 (8) TMI 71 - HC - Income Tax

Summary

Issues Involved:
1. Validity of reassessment proceedings u/s 147(a) for the assessment year 1962-63.
2. Legality of cancellation of penalty u/s 271(1)(c).

Summary:

Issue 1: Validity of Reassessment Proceedings u/s 147(a)
The Tribunal examined the facts and held that the assessee had disclosed all necessary material facts during the original assessment, including the cost of construction, plan, and area of the buildings. The Income-tax Officer (ITO) had initially found the disclosed investments reasonable. The reassessment was initiated based on a subsequent enquiry that suggested higher construction costs. The Tribunal found that the reassessment was based on a change of opinion rather than any omission or failure by the assessee to disclose material facts. Thus, the Tribunal held the reassessment proceedings to be invalid and cancelled the order of reassessment.

Issue 2: Legality of Cancellation of Penalty u/s 271(1)(c)
The penalty u/s 271(1)(c) was imposed based on the reassessment order, which was subsequently declared invalid by the Tribunal. Therefore, the Tribunal cancelled the penalty, and this cancellation was deemed legal in light of the invalid reassessment proceedings.

Conclusion:
Both questions were answered in the affirmative, favoring the assessee. The reassessment proceedings u/s 147(a) were invalid, and consequently, the cancellation of the penalty u/s 271(1)(c) was legal. No costs were ordered.