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TMI Blog2013 (12) TMI 1423X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts and circumstances of the case, the confirmation of the re-opening of assessment is legally sustainable despite nonconfirmity with the mandatory requirement of valid issuance and service of a statutory notice under Section 148 of the Income Tax Act, 1961? iii) Whether in the facts and circumstances of the case, the confirmation of the addition on account of reserves in the Sundry World Bank Account is legally sustainable when the same have been duly accounted for under the head 'liabilities' in the regular books of account of the assessee firm in view of 197 ITR 688? iv) Whether in the facts and circumstances of the case, the respondents were legally justified in making an addition of Rs.5,000/- on account of undisclosed income on octroi estamates on mere presumption and surmises without there being any independent evidence on record to corroborate the same? v) Whether in the facts and circumstances of the case, the confirmation of reassessment made is legally sustainable in the absence of a show cause notice as mandated under law? 4. Substantial questions of law as framed by the assessee are not happily worded. In this backdrop, without going to the language of questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied that adjustment on account of refunds was to be made in the year in which the deposits were actually received. 9. At the outset, it has been claimed by the assessee that neither the proceedings started under Sections 147 and 148 of the Act were valid nor any notice had actually been received in terms of Section 148 of the Act. Addition on account of octroi expenses of Rs.5,000/- and of Rs.1,33,417/- on account of Sundry World Bank Account has also been challenged as erroneous. 10. The appellant making challenge to the impugned orders (Annexures P1, P2 and P3) has claimed that additions affirmed by the appellate authorities were neither factually correct nor were tenable. Qua Sundry World Bank Account, it is claimed that excess amount was to be refunded and hence was not shown in the profit and loss account but was shown on the liability side of the balance sheet. 11. We have heard counsel for the parties while going through the paper books. 12. Appellant-assessee was dealing in the business of sale of imported tractors which then were in great demand. Sequelly, there was a long waiting list. Farmers desirous of purchasing such tractors were required to make advance booking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es shown as paid whereas, in fact, had not paid such charges and thus had not incurred any expenditure on that account, and after getting approval from the competent authorities, the assessment proceedings were reopened after giving notice in terms of Section 148(1) of the Act. On furnishing of its returns of income for the assessment years 1975-76, 1976-77 and 1977-78, the reassessment proceedings were completed. Merely because the notice under Section 148(1) of the Act issued to the assessee had been taken by the authorised representative of the assessee i.e. its accountant, service of notice cannot be said to be legally wanting. By no means it can be construed to be a case of absence of service of notice under Section 148(1) of the Act. The AO has dealt with this issue at a sufficient length. Relevant discussion made on this count in the order of the AO, is reproduced as below: "It may be mentioned that this objection was also raised in its application u/s 144-A before the ld. DCIT, Bathinda and the service of notices have been discussed in the directions issued by ld. DCIT, Bathinda. The ld. DCIT has made it clear that the assessee did file the returns in response to notices u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the prospective vendees, was not only a token amount but, in fact, entire sale consideration used to be paid and even balance due to the vendees on adjustment of the fluctuation of the rates of foreign exchange at the time of booking and at the time of actual delivery of the tractor many a times was not even returned to the vendees. 20. It remains a fact that delivery of tractors used to be made to the vendees after importing tractors from overseas. The amount of sale consideration received in advance used to be adjusted on the date of delivery against the sale price of the tractor. Rest of the amount, if any, remaining with the assessee firm used to be refunded on production of the original receipts issued to the customer at the time of booking of the tractor. In absence of receipts, such payment used to be withheld. 21. When this procedure is evaluated on its functional pedestal, there does not remain any dispute that the AO had fallen in error in treating the amount of such advance deposit as merely trading receipt. Findings of the CIT(A) on this count rather are more apt and realistic and thus are reproduced as below: "In fact, it was entire sale price charged in advance a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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