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Issues involved: Assessment of taxable perquisites, Validity of reassessment u/s 147 of the Income-tax Act, 1961.
Assessment of Taxable Perquisites: The case involved the reassessment of certain items as taxable perquisites that had allegedly escaped assessment in the hands of the assessee. These items included mess expenses, travelling expenses related to a trip to Russia, car expenses, and proportionate interest on debit balance in the assessee's accounts. The Income-tax Officer held that all these items were taxable perquisites which had escaped assessment and accordingly assessed them to tax in the reassessment order. The Appellate Assistant Commissioner upheld the legality of the assessment proceedings and the assessment of these items as taxable perquisites. However, the Tribunal, while agreeing that the reassessment proceedings were legally taken, held that the addition of certain items was not justified on merits. Validity of Reassessment u/s 147: The main contention raised was regarding the validity of the reassessment u/s 147 of the Income-tax Act, 1961. The assessee argued that the Income-tax Officer did not have any new information subsequent to the original assessment that would justify reopening the assessment. The assessee contended that section 147(b) was not applicable as there was no evidence to show that the Income-tax Officer had obtained material from an external source. The assessee relied on various decisions to support this argument, emphasizing the requirement for information to come from an external source for reassessment under section 147(b). Court's Decision: The High Court held that the Income-tax Officer was within his jurisdiction to invoke powers under section 147(b) for reassessment. The Court noted that the Income-tax Officer did not need information from an external source if he had not considered the question of chargeability of income during the original assessment. The Court referred to previous decisions and highlighted that the jurisdiction to reopen assessment is not affected if the information could have been obtained during the previous assessment but was not. The Court also observed that the Tribunal did not specifically address whether the Income-tax Officer had applied his mind during the original assessment, but since the assessee did not raise this issue before the Tribunal, it was assumed that the officer had not considered the items in question. Consequently, the reference was answered in favor of the Revenue, and the assessee was directed to pay costs.
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