9911796707
TMI Blog1987 (9) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... the total income of the assessee at Rs. 69,810. Subsequently, the ITO reopened the assessment under section 147(a) by issue of notice under section 148 which was served on the assessee on 31-3-1978. The reasons recorded for reopening the assessment as per order sheet entry dated 30-3-1978 an extract of which has been furnished by the learned Departmental Representative reads as follows : "30-3-1978, The assessee received Rs. 5,00,000(Rupees Five Lacs) for M/s. Assam Forest Products Ltd. during 1974 C. Y. towards sale of standing trees. The original assessment u/s. 143(3) was completed on 29-9-1977 without including any income from sale of such trees either under the head 'Business' or under capital gains or other sources. Similar receipts in earlier years have been treated as income the orders made on 29-12-1977. The finding in assessment for assessment years 1972-73, 1973-74 and 1974-75, dated 29-12-1977 are informations within the working of section 147(b) that income for this year has not been assessed. The necessary particulars as to whether the trees were in fact removed or not, the quantity of trees felled and removed the area of land cleared, whether new plantation were ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art of the second ITO" He further held that, the reassessment was time barred as the draft assessment order was served on the assessee on 29-3-1982 and since the assessee did not raise any objection on the merits of the draft assessment proposals sent by the ITO" the ITO should have completed the assessment within 30 days from the date of issue of the draft assessment order .... " Accordingly, the CIT [A] held that, the reassessment is ab initio void and that it was barred by limitation. 3. The Departmental Representative with reference to Explanation 2 to Section 147 argued that the assessee having not furnished the details called for by the ITO in his letter dated 14-10-1976 failed to disclose fully and truly the nature of the receipt shown in the profit and loss account to the extent of Rs. 5,00,000 and, therefore, the ITO had the necessary jurisdiction to reopen the assessment within the meaning of section 147(a) of the Act. It was pointed out that during the course of reassessment proceedings for the assessment years 1972-73, 1973-74 and 1974-75, the ITO on the basis of information gathered was satisfied that due to the assessee's failure in not furnishing necessary particul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s received during the year 1974 Rs. 5,00,000 from M/s Assam Forest Products (P.) Ltd towards sale of standing trees in its Forest Grant" The said receipt, it has been stated, has been duly shown on the credit side of the profit and loss account with the narration "sale of standing trees-Rs. 5,00,000". The assessee's learned counsel refuted the learned Departmental Representative's contention raised in support of the additional ground by reiterating the submissions that were made before the CIT [A]. 5. The ITO is not categorical in his finding whether the proceedings for reassessment were to be initiated in terms of section 147[a] or section 147[b], as would be apparent from the reasons recorded by him as per order sheet entry dated 30-3-1978. However, the Departmental Representative stated with reference to the IAC's order under section 144B [4] that the assessment was reopened under section 147[a]. The conditions required to be fulfilled for taking action in terms of section 147[a] are [i] that the ITO must have reason to believe that the income, profits or gains chargeable to tax had been under assessed or escaped assessment, and [ii] that he must have reason to believe that su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t expenses on account of re-plantation and new plantation of tea bushes. It is not known what information the ITO obtained subsequent to the completion of the original assessment on the basis of which he was satisfied that due to the failure or omission on the part of the assessee to disclose fully and truly material facts, income liable to tax had escaped assessment. There is nothing to show from the records before us what particular enquiries were made by the ITO from M/s Assam Forest Products (P.) Ltd. who were granted licence to "cut, fell and remove standing trees" in terms of the agreement dated 15-12-1973. The particulars called for by the ITO in his letter dated 14-10-1976 could only be furnished by M/s. Assam Forest Products (P.) Ltd. as they obtained the licence from the assessee to exploit the natural wealth of the assessee, namely, the standing trees. The ITO in the impugned order of reassessment has considered the particulars that were available from the balance sheets filed by the assessee subsequent to the completion of the original assessment. From the particulars available from the balance sheets pertaining to the calendar years 1971 to 1979, the ITO came to the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... saction and there was accordingly no failure on his part to disclose fully and truly all material facts necessary for its assessment. Since all the primary facts were before the ITO at the time of the original assessment, we hold that the ITO had no jurisdiction to re-open the assessment under section 147(a) of the Act. The CIT (A) was accordingly justified in cancelling the ITO's order of re-assessment under section 147(a). 7. Now coming to the additional ground raised at the time of hearing before us, we find that the ITO's draft assessment order for the assessment year 1975-76 is dated 24-3-1982 which was for warded to the assessee as per his letter dated 26-3-1982. The assessee submitted its objections to the draft assessment proposals of the ITO as per its letter to the ITO dated 3-4-1982. Thereafter, the IAC passed an order under section 144B (4) on 9-7-1982 after hearing the assessee on the points raised in its letter objecting to the draft assessment proposals of the ITO. The IAC's order was forwarding to the ITO as per his Memo dated 13-7-1982, a copy of which was forwarded to the assessee. On receipt of the IAC's order, the ITO passed the final order of assessment under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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