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Validity of reassessment proceedings under s. 147(a) of the IT Act, 1961 initiated by the ITO. Detailed Analysis: The main contention in the appeal was regarding the validity of the reassessment proceedings initiated by the ITO under section 147(a) of the IT Act, 1961. The assessee argued that the proceedings were bad in law, and the AAC erred in rejecting the appeal on this point. The case involved the assessment year 1963-64, where the ITO had brought to tax a sum of Rs. 30,000 invested by the assessee in the purchase of shares. The Appellate Commissioner had earlier deleted this addition for the assessment year 1964-65, stating that the investment was made in the preceding accounting period relevant to 1963-64. Subsequently, the ITO issued a notice under section 148 for the assessment year 1963-64, reopening the assessment proceedings based on the alleged failure of the assessee to disclose all material facts. The reassessment order included the investment in the total income of the assessee as income from other sources. The AAC upheld the validity of the reassessment proceedings, stating that the assessee had not disclosed the investment in the original return and had not provided reasons for filing a revised return later. However, the ITAT found in favor of the assessee. The ITAT noted that the revised return filed by the assessee before the original assessment was a valid return under section 139(5) of the Act. The ITAT emphasized that there was no limitation in section 139(5) requiring a revised return only if the total income needed alteration. The revised return disclosed the omitted investment, and the ITO was aware of it before completing the original assessment. The ITAT further highlighted that the ITO's failure to act on the disclosed information in the revised return was an oversight and not due to any failure on the part of the assessee to disclose material facts. The ITAT concluded that the reassessment proceedings were invalid, as there was no failure on the part of the assessee to disclose all material facts necessary for assessment. The ITAT also criticized the CIT for mechanically permitting the reopening of the assessment. Consequently, the reassessment under section 147(a) was canceled, and the AAC's order was reversed. The ITAT, having annulled the reassessment on procedural grounds, did not delve into the merits of the addition of Rs. 30,000 treated as income from other sources. The appeal was allowed based on the invalidity of the reassessment proceedings.
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