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TMI Blog2015 (2) TMI 719X X X X Extracts X X X X X X X X Extracts X X X X ..... f ₹ 58,59,913/- in his Trading and Profit and Loss Account and the same was available on the record. Consequently, in the absence of any information having been received by the assessing officer regarding escapement of commission income during the course of proceedings under Section 147 of the Act, he could not have formed an opinion on this issue that it has escaped assessment. Further, the reasons to believe does not record the factum of escapement of commission. See CIT vs. M/s Sun Engineering Works (P.) Ltd.[1992 (9) TMI 1 - SUPREME Court] and Vipin Khanna vs. Commissioner of Income-Tax [2000 (7) TMI 2 - PUNJAB AND HARYANA High Court]. Ist Appellate Authority was justified in deleting the addition of commission, on the ground, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case records, sit is seen that as per annexure-2 3 of the Tax Audit Report, the assessee has made valuation of closing stock of raw material at cost. The raw material of the assessee is Iron ingots Billets on which excise duty and trade tax was paid at the time of purchase. The purchases made by the assessee have been reduced by the value of excise duty and trade tax, only net amount has been debited to purchase account. The valuation of closing stock of raw material has been made by the assessee on purchase price without including excise duty and trade tax. The assessee has shown closing stock at ₹ 45,52,265/- on which excise duty @ 15 $% comes to ₹ 6,84,340/- and the assessee has also paid trade at ₹ 55,554/- as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, the assessing officer had valid reason to believe that income had escaped assessment and, therefore, reassessment proceedings were validly reopened under Section 148 of the Act in respect of the amount of ₹ 7,38,994/-. The appellate authority, however, held that the assessing officer was not justified in making the addition in respect of the commission paid to Pashupati Casting Pvt. Ltd. amounting to ₹ 54,07,792/-. The appellate authority found that the assessee had claimed as expenditure on the commission of ₹ 58,51,913/- in his Trading and Profit and Loss Account and the same was available on the record and, therefore, in the absence of any reason being recorded on this issue coupled with the fact that the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Income Tax Act, 1989, the provisions for re-assessment further underwent a change. The Supreme Court in the aforesaid decision held, that once proceedings under Section 34 of the Act are validly initiated, the jurisdiction of the Income Tax Officer is not restricted to the portion of the income that escapes assessment. The Supreme Court held, that once a valid notice is served and assessment is reopened, the previous under assessment is set aside and the whole proceedings starts afresh. The same view was reiterated following the aforesaid decisions in the case of K.L.Srihari (supra). The aforesaid situation has changed in reassessment proceedings under the Income Tax Act, 1961. The Supreme Court in Commissioner of Income Tax vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission income during the course of proceedings under Section 147 of the Act, he could not have formed an opinion on this issue that it has escaped assessment. Further, the reasons to believe does not record the factum of escapement of commission. The aforesaid decision of the Supreme Court in Sun Engineering (supra) was followed in Vipin Khanna vs. Commissioner of Income-Tax and others, 255 ITR 220 which is fully applicable in the instant case. In the light of the aforesaid, we are of the opinion, that the Ist Appellate Authority was justified in deleting the addition of commission, on the ground, that it was not covered by the reasons recorded under Section 148(2) of the Act. The Tribunal was justified in upholding the order of the Ist ..... X X X X Extracts X X X X X X X X Extracts X X X X
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