1982 (10) TMI 53 - AT - Income Tax

Summary

Issues:
1. Difference of opinion between the ld. Accountant Member and the ld. Judicial Member on assessments made under the IT Act, 1961.
2. Assessments made on various concerns as benami of a firm under section 144 of the Act.
3. Appeal to the AAC against assessments and cancellation of registration.
4. Appeal to the Tribunal against AAC's orders.
5. Interpretation of legal provisions and application of principles of natural justice.
6. Refusal of registration to the firm for the assessment year 1973-74.

Analysis:
1. The assessments were made on a firm and its related concerns under section 144 of the IT Act due to non-compliance with notices issued by the ITO after a search at the premises. The ld. Accountant Member and the ld. Judicial Member disagreed on the validity of the assessments and the need for further opportunities for the assessee to respond.

2. The AAC set aside the assessments by the ITO for not providing adequate opportunity to the assessee and directed fresh assessments after issuing notices under section 143(3) of the Act. The AAC also addressed the issue of benami concerns and the need for judicious income estimates.

3. The Tribunal, comprising the ld. Accountant Member and the ld. Judicial Member, reviewed the AAC's orders. The ld. Accountant Member disagreed with the AAC's decision and directed the ITO to dispose of appeals on merits, while upholding the refusal of registration for the assessment year 1973-74. In contrast, the ld. Judicial Member supported the AAC's orders based on legal precedents and principles of natural justice.

4. The final decision by the President of the Tribunal agreed with the ld. Accountant Member, stating that the AAC was not justified in setting aside the assessments as the ITO had based the assessments on material found in the assessee's own books. The President emphasized the importance of rational basis and bona fide estimates by the assessing authority.

5. The President disagreed with the ld. Judicial Member's view on the necessity of providing further opportunities to the assessee, highlighting the potential prejudice to revenue if assessments were set aside. The President directed the matter back to the AAC for a thorough examination of the ITO's findings and a decision on merits.

6. Regarding the refusal of registration to the firm for the assessment year 1973-74, the President disagreed with the ld. Accountant Member and directed the AAC to reconsider the matter on its merits rather than setting aside the ITO's decision. The President concluded by instructing the matter to return to the Bench for further orders in line with the opinions expressed.