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TMI Blog1989 (4) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... s of these partners whereas the assessee-firm had paid substantial interest to its creditors. On taking note of the aforesaid facts, he scrutinised the assessment records for the earlier three years and noticed that for those years also there were huge debit balances in the accounts of those partners. Although the assessment for the assessment year 1972-73 had already been completed, the Income-tax Officer issued notice under section 148 read with section 147(b) of the Income-tax Act, 1961 (hereinafter called "the Act"). The assessee challenged the jurisdiction of the Income-tax Officer to reopen the assessment on the ground that there was no material before the Income-tax Officer to do so as all facts, were already before him when the orig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1961 ?" For the assessment year 1974-75, the Income-tax Officer found that substantial interest had been paid by the assessee-firm to its creditors but no interest had been charged on the debit balances of the two partners, which was over three lakhs of rupees. The Income-tax Officer had found similar position in the assessment year 1973-74 and since on the debit balances of the partners interest at the rate of 12 per cent. per annum was disallowed for that year, for the assessment year in question also, similar deduction was disallowed with the result that Rs. 36,566 were added back to the total income of the assessee. On appeal, the Appellate Assistant Commissioner deleted the addition on the ground that the capital available with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an be reopened. This judgment was the subject matter of criticism before a larger Bench of the Supreme Court in Indian and Eastern Newspaper Society v. CIT [1979] 119 ITR 996 and the following observations were made (at p. 1004) : "Now, in the case before us, the Income-tax Officer had, when he made the original assessment, considered the provisions of sections 9 and 10. Any different view taken by him afterwards on the application of these provisions would amount to a change of opinion on material already considered by him. The Revenue contends that it is open to him to do so, and on that basis to reopen the assessment under section 147(b). Reliance is placed on Kalyanji Mavji and Co. v. CIT [1976] 102 ITR 287 (SC), where a Bench of two l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e referred question in favour of the assessee, in the affirmative. Now adverting to the other question referred for the assessment year 1974-75, we find that the Tribunal had the power to remand the case to the Income-tax Officer for fresh decision. The proceedings for this year were not reassessment but assessment proceedings. The crucial point would be to find out the nature of advance to the partners and then to frame the assessment. No definite finding was given either by the Incometax Officer or by the Appellate Assistant Commissioner, and, therefore, the Tribunal was right in remanding the case to the Income-tax Officer for fresh disposal. Accordingly, we answer the question referred for the assessment year 1974-75 in favour of the R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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