1986 (8) TMI 138 - AT - Income Tax

Summary

Issues:
Reopening of assessment validity under section 147(a) or section 147(b)

Analysis:
The appeal before the Appellate Tribunal ITAT Hyderabad-B revolved around the justification of reopening the assessment by the Income Tax Officer (ITO). The initial assessment by the ITO was based on the figure of Rs. 5,61,452 provided by the assessee, resulting in a net profit of Rs. 32,929. However, an audit later revealed that the correct amount received was Rs. 6,14,404, indicating underassessment.

The ITO subsequently reopened the assessment, adopting the revised receipt amount for assessment purposes. The assessee challenged this reassessment, arguing that all necessary materials, including certificates from the executive engineer, were provided during the original assessment. The counsel contended that the difference in amounts was due to earnest money deposits, a fact known to the ITO from the certificates submitted.

The department's representative asserted that income had escaped assessment as the profit was calculated based on the lower figure. It was argued that even if section 147(a) did not apply, reopening could be considered under section 147(b) based on factual information from the audit note.

The Tribunal acknowledged that the assessee had fully disclosed all materials, including certificates detailing deductions. It was noted that the reopening could be considered under section 147(b) if the reasons for section 147(a) also constituted information under section 147(b. The Tribunal cited various court decisions supporting this interpretation.

The audit note was deemed as providing factual information constituting 'information' under section 147(b). The Tribunal rejected the argument that reopening an assessment under section 143(1) could only be under section 143(2), emphasizing that section 147 could also apply within the specified time limits. Since the reopening was beyond the period stipulated under section 153, the Tribunal dismissed the appeal, concluding that there was no question of simultaneous application of special and general provisions.

In conclusion, the Tribunal upheld the validity of the reassessment under section 147(b) and dismissed the appeal challenging the reopening of the assessment.