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Issues involved:
The issues involved in this case are related to the legality of reassessment u/s 147(a) of the Income-tax Act, 1961 and the cancellation of the order u/s 154 for the assessment year 1950-51. Reassessment u/s 147(a): The Tribunal found that the reassessment made on March 28, 1970, for the assessment year 1950-51 was a mistake apparent from the record and could be rectified u/s 154 of the Income-tax Act, 1961. However, the assessee contended that the notice issued under s. 148 of the Act was bad in law as it was beyond the permissible period for reopening the assessment. The ITO rejected the application under s. 154 stating that the concealments for the assessment years 1950-51 to 1960-61 exceeded one lakh rupees. The High Court held that the notice to reopen the assessment was issued beyond the permissible period, rendering it bad in law. Cancellation of Order u/s 154: The ITO completed the assessment based on the assessee's surrender of additional income. The department contended that the concealed income exceeded one lakh rupees, justifying the reassessment. The Tribunal found no indication of additional concealed income for the relevant year, 1950-51, and rejected the department's request to produce confidential records. The High Court ruled in favor of the assessee, stating that there was no disputed fact involved to prevent the application of s. 154 of the Act. Consequently, both questions were answered in favor of the assessee, and costs were awarded. This judgment highlights the importance of adhering to legal procedures and timelines in reassessment cases under the Income-tax Act, ensuring that assessments are conducted within the statutory limits and based on accurate information.
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