1984 (10) TMI 76 - AT - Income Tax

Summary

Issues:
Reopening of assessments under section 147(a) based on the set off and carry forward of deficiency on account of 80J.

Analysis:
The appellant filed appeals for the assessment years 1970-71, 1972-73, 1973-74, and 1976-77, challenging the reopening of assessments under section 147(a) concerning the set off and carry forward of deficiency on account of 80J. The main contention was that the industrial undertaking must be a separate unit with separate books of accounts maintained for claiming benefits under section 80J. The appellant argued that the assessments were reopened based on incorrect grounds as the conditions for claiming under section 80J were not fulfilled due to the absence of separate books of accounts. Original assessment orders were submitted, highlighting the ITO's observations regarding the lack of separate balance sheets and the inability of the assessee to maintain separate books of accounts for the unit.

The appellant contended that the reopening of assessments under section 147(a) was unjustified as the ITO was already aware that the assessee did not maintain separate books of accounts for the solvent extraction unit. It was argued that the conditions for invoking section 147(a) were not met as there was no failure on the part of the assessee to disclose material facts necessary for assessment. The Tribunal emphasized the two conditions for applying section 147(a): the ITO must have a reason to believe that income has escaped assessment, and the escapement is due to the assessee's failure to disclose material facts. Since the assessee's lack of separate books of accounts was known to the ITO and recorded in the assessment order, there was no concealment of income. Therefore, the Tribunal annulled the assessments made by the ITO under section 143(3) read with section 148 for the relevant years.

In conclusion, the Tribunal allowed the appeals of the assessee, ruling in favor of the appellant and rejecting the reopening of assessments under section 147(a) based on the deficiency on account of 80J. The Tribunal held that the ITO's actions were unjustified as the conditions for invoking section 147(a) were not satisfied, and there was no concealment of income on the part of the assessee.