1974 (1) TMI 22 - HC - Income Tax

Summary

Issues Involved:
1. Applicability of Section 147(b) of the Income-tax Act, 1961.
2. Basis for treating the issue of the notice under Section 147(b).
3. Limitation period for the issue of the notice and reassessment under Section 147(b).

Issue-wise Detailed Analysis:

1. Applicability of Section 147(b) of the Income-tax Act, 1961:

The Tribunal held that only the provisions of Section 147(b) applied to the facts of the case. The assessee was initially assessed for the accounting period ending December 31, 1957, with a cash credit of Rs. 30,000 claimed as a loan from Janhabi Charan Roy. The Income-tax Officer added this amount as income from a concealed source, which was upheld by the Appellate Assistant Commissioner but deleted by the Appellate Tribunal, stating the assessee had discharged the initial onus by producing the creditor who supported the loan transaction. The Tribunal found no justification for treating the amount as concealed income. The Tribunal's appellate order dated November 30, 1963, concluded that the amount was a loan, not an unexplained cash credit.

2. Basis for Treating the Issue of the Notice under Section 147(b):

The Tribunal found no basis for treating the issue of the notice under Section 147(b). The Income-tax Officer reopened the assessment for the year 1957-58, citing the unexplained cash credit of Rs. 30,000 dated February 2, 1957. The Tribunal concluded that the Income-tax Officer's action lacked justification as the amount was already determined to be a loan. The Tribunal emphasized that the reopening was based on the appellate decision of the Tribunal for the assessment year 1958-59, which had conclusively found the amount to be a loan. The Tribunal's decision did not constitute new information warranting reopening under Section 147(b).

3. Limitation Period for the Issue of the Notice and Reassessment under Section 147(b):

The Tribunal held that even if there was any basis for the issue of the notice under Section 147(b), the reassessment was barred by limitation. The notice was issued beyond the four-year limitation period specified under Section 149(1)(b). The Tribunal found that the reopening could not be justified under Section 147(a) as there was no omission or failure by the assessee to disclose material facts. The Tribunal concluded that the primary fact of the Rs. 30,000 cash credit escaping assessment was non-existent, as it had been conclusively treated as a loan in the previous assessment year 1958-59.

Conclusion:

1. Section 147(a) was not applicable; if at all, it could be a case under Section 147(b), not Section 147(a).
2. There was no basis for treating the issue of the notice under Section 147(b).
3. Even if there was any basis for the issue of the notice under Section 147(b), the notice was barred by limitation.

The assessee was awarded costs of the reference, with a hearing fee assessed at Rs. 300.