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TMI Blog1982 (1) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the assessee is said to be that it had not shown the appreciated amount or Rs. 61,574 in its income and in fact the same was directly credited to the contingency fund account. In these circumstances, the learned ITO initiated reopening proceedings under section 147(a) of the Act, with the prior approval of the learned Commissioner (Appeals). In reply to the notice under section 148, the assessee appears to have written a letter on 18-12-1975 stating that the return already furnished may be treated as return in compliance to the said notice. On further insistence, the assessee filed a fresh return on 4-2-1976 confirming the contents of the earlier return. In compliance with the notice under section 143(2) of the Act, Shri M.N. Joshi, the learned advocate on behalf of the assessee, appeared before the learned ITO. The validity of initiation of proceedings under section 147(a) was objected and it was further mentioned that all material facts had since been disclosed to the learned ITO in the course of the original assessment, and that in terms of the statement showing contingency fund---filed along with the original return---a clear mention was made of the said sum of Rs. 61,574 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, confirmed the learned ITO's action in the following manner : "I am afraid the contention of the appellant-company is not acceptable. Though what the appellant-company says with regard to the furnishing of the details of contingency fund account is correct, the entries made in this account throw absolutely no light on the nature of the receipt. In this account, the narration is---"amount on account of devaluation Rs. 61,574". This entry gives an impression as though it is some kind of a transfer entry. The amount of Rs. 61,574 was not credited to the P L account. From what follows in ground No. 2 below, it would be abundantly clear that the assessee-company itself does not know the nature of receipt even now, i.e., after 14 years. It cannot explain as to how and when this profit arose. Under the circumstances, I am not inclined to support the contention that there was no omission or failure on the part of the appellant while furnishing the return. The assessment is accordingly, held to be valid. No relief is due to the appellant on this account." 5. Therefore, the instant appeal by the assessee before us on the ground mentioned above. 6. On behalf of the appellant-assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee's representative, contended that the statement showing contingency fund 1966-67---mentioning the amount or Rs. 61,574 on account of devaluation---was shown therein and the said statement was an enclosure with the original return. He continued that the factum of creation or existence of the contigency fund, in fact, was very much in the knowledge of the revenue authorities and that since all primary facts had been placed before the revenue authorities at the material time, there was no justification for initiating the reopening proceedings since the learned ITO could not assume such a power in accordance with law. For assistance the learned advocate relied upon the ratios in the following cases---ITO v. Sirpur Paper Mills Ltd. [1978] 113 ITR 393 (AP), ITO v. Madnani Engg. Works Ltd. [1979] 118 ITR 1 (SC), Gemini Leather Stores v. ITO [1975] 100 ITR 1 (SC), Ahmedabad Cotton Mfg. Co. Ltd. v. Union of India [1974] 95 ITR 639 (Guj.), ITO v. Calcutta Chromotype (P.) Ltd. [1974] 97 ITR 55 (Cal.) and CIT v. Late Lt. Col. B.A. Deodhar [1981] 132 ITR 668 (MP). 9. The learned departmental representative, Shri P.D. Khandelwal, on behalf of the respondent-revenue, supported the actions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 61,574 is mentioned as "amount on account of devaluation". The statement, i.e., the enclosure, since was filed along with the original return, was naturally before the learned ITO at the time of finalising the original assessment. The assessment was then finalised in the manner considered proper by the learned ITO without taking care of the sum mentioned above. No doubt, the assessee may not be very clear as to what treatment should be given to the said sum, but, at the same time, the respondent learned ITO was also not less confused. He issued notices under section 154 on 7-6-1971 conveying the clear intention that rectification was intended as is clear from page 5 of the assessee's paper book, i.e., the copy of the notice. After having received the replies from the assessee of 5-10-1971 and 15-2-1972, (copies available at pages 6 and 7), the learned ITO appears to have done nothing in the matter excepting, subsequently, issuing another show cause notice on 7-11-1975 under section 148 to initiate reopening proceedings under section 147(a). The learned ITO, Shri P.N. Bansal, while framing the impugned assessment on 20-3-1980 under section 147 read with section 144B, clearly admits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their Lordships were under section 147(b), whereas the matter before us concerns with section 147(a). At the same time a complete answer to the learned departmental representative's contention is available in the ratio of Gemini Leather Stores' case wherein their Lordships of the Supreme Court observed that want of enquiry on the part or the learned ITO cannot warrant or justify the reopening proceedings under section 147(a). The case before their Lordships of the Supreme Court was under section 147(a) and deals with the want of diligence and over-sight on the part of the learned ITO. 14. Further, the revenue does not get any support from the ratio in the case of Malegaon Electricity Co. (P.) Ltd. since first of all their Lordships of the Supreme Court declined to answer the question, and, moreover, in the said case before their Lordships, there was no complete disclosure of the material facts. The facts being distinguishable, the revenues' case is not fortified in any manner from the said ratio. Similarly, the ratio in the case of Kasturbhai Lalbhai also cannot lead anybody anywhere since the case before their Lordships of the Supreme Court was under section 147(b) and the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X
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