1980 (6) TMI 14 - HC - Income Tax

Summary

Issues:
Validity of reopening assessment under section 147(b) of the Income-tax Act, 1961 based on new information regarding deduction claimed by the assessee.

Analysis:
The High Court of Kerala was tasked with determining the validity of the reopening of the assessment for the assessment year 1968-69 under section 147(b) of the Income-tax Act, 1961. The assessee, a public limited company, had initially filed a return disclosing an income of Rs. 9,20,800 for the said assessment year, claiming a deduction of Rs. 32,978 as the share of grant given to the Labour and Industrial Bureau. The Income Tax Officer (ITO) allowed the deduction and completed the assessment. However, subsequent information came to light when the Appellate Authority Commissioner (AAC) held that the grant made to the Bureau was not an allowable deduction in a different assessment year. This prompted the ITO to reopen the assessment for the year in question. The assessee objected, arguing that there was no omission or failure to disclose all information and that the reopening was invalid. The ITO disregarded the objection and proceeded with the reassessment, adding back the amount of the grant to the Bureau. The AAC and the Tribunal upheld the revised assessment. The Tribunal, however, questioned whether the AAC's decision in a different assessment year could be considered valid information for initiating proceedings under section 147(b).

In a related case concerning the same assessee for the assessment year 1967-68, the High Court had previously held that the AAC's decision regarding the grant to the Bureau constituted valid information for reopening the assessment under section 147. Relying on this precedent, the High Court in the present case concluded that the Tribunal's view was incorrect and unsustainable. The Court held that the reopening of the assessment for the year 1968-69 under section 147(b) was indeed valid based on the new information regarding the deduction claimed by the assessee. Consequently, the question was answered in the affirmative, against the assessee and in favor of the department. No costs were awarded in this judgment. The Court directed the forwarding of a copy of the judgment to the Tribunal as required by law.