9911796707
TMI Blog1994 (11) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... Special Officer, Kollam, that the assessee had an excess closing stock of 502 bags of raw nuts. He sought an explanation from the assessee in relation to this matter. He wrote again on May 15, 1982, pointing out that the excess was really 506 bags of raw nuts, which had not been included in the purchases recorded in the assessee's books. He, therefore, proposed to add an amount of Rs. 3,01,222 as income from undisclosed sources. He also proposed therein to make an addition of Rs. 15,87,291 towards undervaluation of the closing stock by showing a larger quantity of African nuts in the closing stock than the actuals. This inflation in the quantity of African nuts was pointed out with reference to the statement furnished by the assessee befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidering the contentions raised by the assessee on the merits. The Revenue challenged this order in appeal before the Tribunal. The Tribunal held on an elaborate consideration of the facts and materials in the case that section 271(1)(c) squarely applied to the case and, therefore, the extended time-limit under section 153(1)(b) was available to the Income-tax Officer. The Tribunal also held that the Income-tax Officer had adequate materials before him to hold prima facie that there was concealment of income by the assessee. In arriving at this conclusion, the Tribunal noted in particular the fact that there was variation between the details of the closing stock furnished by the assessee before the Income-tax Officer and before the Cashe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by rendering such a finding beyond that date. Reliance for this is placed on the decision of the Calcutta High Court in M. B. Mercantile Co. v. CIT [1988] 169 ITR 201 and of the Allahabad High Court in CIT v. Surajpal Singh [1977] 108 ITR 746, the appeal against which was dismissed by the Supreme Court with a short judgment in CIT v. Suraj Pal Singh [1991] 188 ITR 297. Section 153(1) prescribes the period of time within which an assessment should be completed. As it stood at the relevant time it provided that an assessment had to be completed within a period of two years from the end of the assessment year in which the income first became assessable or within a period of eight years from the end of the assessment year in a case which fell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otherwise of any other factor. Clause (b), on the other hand, provides for a special situation, where the case is one falling under section 271(1)(c). What the Calcutta High Court stated in M. B. Mercantile Co.'s case [1988] 169 ITR 201 was that in a case in which the Assessing Officer seeks to invoke the longer period of time under clause (b), he should record a finding within the normal period of limitation about the applicability of section 271(1)(c). But the Calcutta High Court did not deal with the question as to what is the normal period as that question did not arise in the case. We cannot therefore read the decision as laying down that the normal period of time is the one prescribed by clause (a). So is the case with the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leted the assessment under section 143(3). He purported to treat the assessment as in time under clause (b), in the view that the case was one to which section 271(1)(c) applied. In that context, the Calcutta High Court observed that the Income-tax Officer cannot sit over the assessment with the expectation that after the expiry of the normal period of limitation, some concealment or furnishing of inaccurate particulars of income might come to light. He has no jurisdiction to enlarge the period of limitation unless during the course of the pending assessment proceedings, he has, on the materials, come to the prima facie finding that section 271(1)(c) would be applicable to the facts of the case. He has to record a finding after making neces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct on materials and those materials should be sufficient to support a prima facie finding that the ingredients of section 271(1)(c) existed. The Income-tax Officer cannot keep the Damocles sword hanging over the assessee beyond the period prescribed by clause (a) or (c) and invoke clause (b) at any time he liked in the expectation that he could fish out, or come by, some material at a future point of time that will take the case within the ambit of section 271(1)(c). Those materials must be available within the period prescribed by clauses (a) and (c) and the officer must prima facie be satisfied on those materials that the case fell within the purview of section 271(1)(b). We are satisfied on the facts of this case that the Income-tax Of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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