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Issues Involved:
1. Validity of reopening of assessment under section 147/148 of the Income-tax Act. 2. Taxability of reimbursement of medical expenses as income under section 2(24)(iv) and section 56 of the Income-tax Act. Detailed Analysis: 1. Validity of Reopening of Assessment under Section 147/148: The primary issue was whether the CIT(A) was correct in confirming the reopening of the assessment under section 147/148. The facts revealed that the assessee had filed the original return on 30-6-1986 and a revised return on 30-6-1987. The assessment was initially completed on 21-9-1988. Subsequently, the Assessing Officer noticed that the assessee, a director in M/s. Hero Cycles Ltd., had been reimbursed medical expenses of Rs. 4,89,277 for treatment abroad, which was not included in the income declared. The Assessing Officer issued a notice under section 148 on 13-2-1991, believing that income had escaped assessment due to the assessee's failure to disclose fully and truly all material facts necessary for assessment. The CIT(A) upheld the reopening, noting that the notice under section 148 was issued within the stipulated period of four years as per the proviso to section 147. The assessee contended that the reimbursement was disclosed in a note appended to the original return, but the CIT(A) found no conclusive proof that the note existed when the return was filed. The Tribunal agreed with the CIT(A), emphasizing the amended provisions of section 147, which allow reopening if the Assessing Officer has reason to believe that income has escaped assessment, irrespective of whether the assessee disclosed all material facts. The Tribunal concluded that the reopening was valid. 2. Taxability of Reimbursement of Medical Expenses: The second issue was whether the CIT(A) was justified in confirming the addition of Rs. 4,84,066 as income under section 2(24)(iv) and section 56. The CIT(A) held that the reimbursement constituted the assessee's income as he was not an employee of the company at the time of reimbursement, thus falling under section 2(24)(iv), which includes any benefit or perquisite obtained from a company by a director. The assessee argued that the reimbursement did not constitute a perquisite and relied on several judgments, including ITAT decisions, which held that such reimbursements for medical treatment abroad did not fall under taxable perquisites. The Tribunal noted that similar issues had been addressed in previous cases, including the ITAT, Chandigarh Bench's decision in the case of Hero Cycles Ltd., where it was held that reimbursement of medical expenses did not constitute a perquisite under Explanation 2(b) to section 40A(5) or section 2(24)(iv) due to commercial expediency. The Tribunal also referenced its decision in the assessee's own case for assessment year 1988-89, where a similar addition was deleted. The Tribunal concluded that the reimbursement did not constitute a perquisite under section 2(24)(iv) and directed the Assessing Officer to exclude the amount from the total income of the assessee. Conclusion: The Tribunal upheld the reopening of the assessment under section 147/148 but ruled that the reimbursement of medical expenses did not constitute taxable income under section 2(24)(iv). The addition of Rs. 4,84,066 was deleted, and the Assessing Officer was directed to exclude this amount from the assessee's total income.
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