9911796707
TMI Blog1984 (12) TMI 162X X X X Extracts X X X X X X X X Extracts X X X X ..... bullion for purposes of sale. In this case, the assessment was originally completed under s. 143(1) accepting the returned income of Rs. 53,540. The assessment was reopened on the basis of an audit objection, that, the closing stock of bullion and silver ornaments was valued at a uniform rate of Rs. 500 per k.g. irrespective of the fluctuations in its cost and, therefore, there was an escapement of income on account of under valuation of closing stock. The reasons furnished in the order sheet by the entry dt. 23rd June, 1980 are as under: "Closing balances of bullion/silver ornaments appear to have been undervalued during the asst. yrs. 1975-76, 1976-77 and 1977-78. In consequence of information in my possession, I have reason to believe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... book produced by the assessee reveal that the party having purchased that much quantity of silver at the rate of Rs. 500 per kg. adopting Rs. 500 on the entire stock remaining on the valuation date relatable to the asst. yr. 1976-77 is also not unreasonable. Thus for the asst. yrs. 1975-76 to 1977-78, the stock valuation adopted by assessee is reasonable and be not disturbed. For the asst. yr. 1978-79, the same old stock continued in business, the valuation be adopted on similar line." 3. While completing the reassessment, the ITO in pursuance of the directions of the IAC under s. 144A, accepted the closing stock valuation. However, in the reopened proceedings, he disturbed the trading results for the following reasons: He noticed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, it would reopen to the ITO to bring to assessment, any other escaped income not covered by the reasons which originally necessitated the reopening. He also held, that, what has to be considered in this context was, whether the ITO had some information at the time when he reopened the proceedings under s. 147(b). He held, that even though, that reason might not have held good subsequently, it did not constitute information for reopening the proceedings under s. 147(b). [Para No. 5 is deleted as same is not related to the main issue.] 6. The assessee being aggrieved with this order, is in appeal before us. The submission of the ld. Representative for the assessee may be summarised as under. The assessee has been following a consisten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT (1977) 107 ITR 760 (Bom) in which the Bombay High Court had held, that, in a validly initiated reassessment proceedings under s. 34(1)(a) in respect of certain items of escaped income, the ITO could not add back while computing the business income of the assessee company under s. 10, certain amounts of interest which were allowed at the time of original assessment and which would be governed by limitation laid down under s. 34(1)(b). [Para No. 7 is deleted as same is not related to the main issue.] 8. the ld. Departmental Representative submitted, that (1979) 12 CTR (SC) 190 : (1979) 119 ITR 997 (SC) was only an authority for the proposition, that the audit could not pronounce on a question of law, but the method of valuation on whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessment under s. 147(b), we consider that, the audit parties opinion on the valuation of closing stock would not amount to a pronouncement on the law and, therefore, the decision of the Supreme Court in (1979) 12 CTR (SC) 190 : (1979) 119 ITR 996 (SC) would not be applicable to the facts of this case. We are, therefore, of the opinion, that the audit objection would constitute information in the ambit of s. 147(b) so as to enable the ITO to reopen the proceedings. 10. As regards the objection, that, when the original basis on which the assessment was reopened has ceased to exists, the proceedings could not be continued any further, we are of the opinion that (1982) 133 ITR 204 (Cal) is authority for the proposition that, once t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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