1985 (6) TMI 75 - AT - Income Tax

Summary

Issues:
- Reopening of assessments under sections 143(3) and 147(a)
- Treatment of sales-tax refunds in the assessments
- Validity of rejection of application under section 146

Analysis:

The judgment involves three appeals by the assessee challenging the orders of the CIT(A) regarding assessments made by the ITO for the assessment years 1974-75 and 1975-76, along with the rejection of the assessee's application under section 146 for the year 1975-76. The main contention was the reopening of assessments under section 147(a) and the treatment of sales-tax refunds received by the assessee.

The assessee, a registered firm, had originally filed returns for the years in question, disclosing all relevant facts, including sales-tax refunds received but not accounted for in the P&L account due to pending disputes with tax authorities. The ITO reopened the assessments under section 147(a) and included the sales-tax refunds in the total income, leading to the appeals.

The assessee argued that all primary facts were fully disclosed during the original assessments, citing relevant case law, and the reopening of assessments was unjustified. The Tribunal agreed, emphasizing the duty of the assessee to disclose primary facts and the assessing authority's role in drawing inferences. The Tribunal found that the assessee had indeed disclosed all necessary facts, rendering the reopening of assessments under section 147(a) as a change of opinion and hence, invalid.

Given the above findings, the Tribunal allowed all three appeals filed by the assessee, quashing the reassessments made under section 147(a) for the assessment years in question. The Tribunal did not delve into other arguments regarding the assessability of sales-tax refunds, as the primary issue of reopening assessments was resolved in favor of the assessee.