9911796707
|
Home
Issues Involved:
1. Whether the Tribunal was right in holding that the Income-tax Officer (ITO) was not legally justified in initiating proceedings under section 147(b) of the Income-tax Act, 1961. 2. Whether the Tribunal was legally right in cancelling the penalty imposed under section 271(1)(c) of the Income-tax Act, 1961. Detailed Analysis: Issue 1: Legality of Initiating Proceedings under Section 147(b) The respondent, a P.W.D. contractor, derived income from contracts executed in his name and share income from two firms, M/s. Makhan Singh & Co. (Hanumangarh and Sriganganagar). The ITO completed the assessment for the year 1959-60, determining the total income and share of profit from both firms. However, during the assessment for 1960-61, the ITO found that the business run in the name of Makhan Singh & Co. was actually owned by Makhan Singh individually and not a genuine partnership. Consequently, the ITO refused to grant continuation of registration to the firm and treated Makhan Singh as the sole proprietor. This decision was upheld by the Tribunal. The ITO issued a notice under section 148 read with section 147(b) for the assessment year 1959-60 to reassess the income of Makhan Singh & Co., Hanumangarh, in the hands of the assessee. The assessee contended that the notice under section 148 was illegal and that no new information had come into the ITO's possession to justify the reassessment. The ITO rejected this contention and completed the reassessment, which was upheld by the AAC. The Tribunal accepted the assessee's contention that the ITO had no new information and allowed the appeal, leading to the current reference by the Revenue. The court held that the proceedings under section 147(b) were valid as the ITO had received new information during the 1960-61 assessment, revealing that the firm was a proprietary concern and not a genuine partnership. This information constituted a sufficient basis for reopening the assessment under section 147(b). The court cited various precedents, including Maharaj Kumar Kamal Singh v. CIT and CWT v. Imperial Tobacco Co. of India Ltd., to support the view that information regarding the true state of affairs or judicial decisions can justify reopening an assessment. The court concluded that the Tribunal was not justified in holding that the ITO was not legally justified in initiating proceedings under section 147(b). Issue 2: Cancellation of Penalty under Section 271(1)(c) Given the court's decision on the first issue, the logical conclusion for the second issue is that the Tribunal was not justified in cancelling the penalty imposed under section 271(1)(c) of the Income-tax Act. The court's reasoning was based on the premise that the reassessment was valid, and therefore, the penalty for concealment of income was also justified. Conclusion: 1. The Tribunal was not justified in holding that the Income-tax Officer was not legally justified in initiating proceedings under section 147(b) of the Income-tax Act, 1961. 2. The Tribunal was legally not justified in cancelling the penalty imposed under section 271(1)(c) of the Income-tax Act, 1961.
|
