1987 (7) TMI 150 - AT - Income Tax

Summary

Issues:
1. Validity of withdrawal of development rebate in reassessment order.
2. Jurisdiction of the Income-tax Officer to reopen assessment under section 147(b).
3. Compliance with requirements for initiation of reassessment proceedings.

Analysis:

Issue 1:
The appeal was against the withdrawal of development rebate in the reassessment order for the assessment year 1975-76. The original assessment allowed the rebate, but it was later found that the freezing plant was installed after the specified date for eligibility. The assessee claimed an agreement was made in November 1973, but failed to produce evidence. The CIT (A) annulled the reassessment, stating the necessary information was available during the original assessment.

Issue 2:
The revenue challenged the CIT (A) decision, arguing that the Income-tax Officer had jurisdiction to reopen the assessment under section 147(b). The departmental representative highlighted the timeline of communications between the ITO and the assessee, emphasizing the failure to produce the alleged agreement. The argument was based on the need for the ITO to have reason to believe income had escaped assessment, even if the information was available during the original assessment.

Issue 3:
The assessee contended that the information was already in the possession of the ITO during the original assessment, and section 147(b) did not apply. The counsel argued that the agreement was oral and that all relevant information was available to the ITO from existing records. The ITO's realization of the lack of agreement post-assessment did not constitute valid grounds for reassessment, as per the Kerala High Court's interpretation of 'information.'

In the final analysis, the Tribunal dismissed the appeal, upholding the CIT (A)'s decision to annul the reassessment. The Tribunal found that the ITO's awareness of the relevant information during the original assessment negated the grounds for reopening the assessment. The decision also referenced relevant case law to support the conclusion that the reassessment was not valid in this case.