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TMI Blog1987 (8) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 11,04,484 for the assessment year 1967-68 and ₹ 57,530 for the assessment year 1968-69 in the reassessment proceedings under section 147 especially when in the assessments relating to the subsequent assessment years the said claims were allowed ? So far as the first question is concerned, it is common ground that it is covered against the assessee by the decision of this court in State Bank of Hyderabad v. CIT [1985] 151 ITR 703 (AP). We accordingly answer the question in the affirmative, that is to say, in favour of the Revenue and against the assessee. The facts concerning question No. 2 may be noticed. The assessments were initially made under section 143(3) of the Income-tax Act for the years 1963-64 to 1971-72 (both the years inclusive). These assessments were reopened under section 148 as it was found that certain income escaped assessment in the original proceedings. Pursuant to the notices under section 148, the Income-tax Officer completed the assessments for all the years. During the course of the reassessment proceedings, the assessee claimed deduction on account of liability towards gratuity as per actuarial valuation; the assessee also claimed deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He eventually held that the amounts are not liable to be deducted in the reassessments. So far as the surplus arising on account of the devaluation of the rupee for the assessment years 1967-68 and 1968-69 was concerned, the Commissioner of Income-tax held that inasmuch as this claim was considered and rejected in the original assessment proceedings, it cannot be considered once again in the reassessment proceedings. The assessee carried the matter in further appeal to the Tribunal. The Tribunal upheld the orders of the Commissioner of Income-tax (Appeals). It does not appear that the Tribunal has gone into the question of the merits of the assessee's claims but held that the assessee's claims are not liable to be considered as they were not made in connection with the original assessments. The assessee applied for and obtained this reference under section 256(1) of the Income-tax Act for considering the two questions we have already referred. Sri K. Srinivasa Murthy, learned counsel for the assessee, contended basically that there can be no objection to an assessee making claims for deductions which were not made in the original assessment. It is claimed that once ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t thereof by the assessee is reopened as a result of the reassessment proceedings. The High Court observed that the assessee cannot be estopped from claiming rebate in the course of the reassessment proceedings or in the appeal against the reassessment order, merely on the ground that no such objection was raised by the assessee in the original assessment proceedings or in the appeal filed therefrom. It was further observed by the High Court that if the question was not raised in the original assessment proceedings or in the appeal against the original assessment order, there could be no prohibition against the assessee raising a question relating to the computation of income and tax payable by him at the time of reassessment or in the appeals. Learned counsel invited our attention to the decision of the Calcutta High Court in CIT v. .Assam Oil Co. Ltd. [1982] 133 ITR 204. The Calcutta High Court had examined in detail the scope of reassessments under section 148 and held (at page 220) that in view of the scheme of the Income-tax Act, once a reopening, is made, the entire assessment is set aside and the income which had escaped assessment, even though there is nothing to show th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laims once again in the course of the reassessment proceedings. It is also pointed out that in the assessment orders, the Income-tax Officer considered on merits the assessee's claims for deduction of gratuity and pension fund without prejudice to his contention that it is not open to the assessee to claim in the reassessment proceedings, deductions which were considered and rejected in the original assessment proceedings. Learned counsel for the Revenue pointed out that a claim for deduction of labour welfare expenses was made in connection with the original assessments and it was allowed and consequently a further claim for much larger sum cannot be allowed in the reassessment enquiry. On this ground, learned counsel submits that the assessee's claims for deduction are not liable to be considered. So far as the assessment years 1967-68 and 1968-69 are concerned, it was pointed out by learned standing counsel that in the original assessment proceedings, the claim that the surplus arising on account of devaluation of the rupee was not liable to be taxed was duly considered and rejected. Hence, it is not open to the assessee to raise this plea in the reassessment proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inal assessment proceedings cannot be put forward in the reassessment proceedings. It is, therefore, necessary that the correctness or otherwise of the findings of the Income-tax Officer and the Commissioner of Income-tax (Appeals) that the gratuity and pension fund claims were put forward by the assessee in the original assessment proceedings and were considered and rejected, should be verified by the Income-tax Appellate Tribunal. As regards the labour welfare expenses, it is common ground that in the original assessments, the Income-tax Officer allowed the claim to the extent to which it was preferred. It was not stated that there was any disallowance of any portion of the claim made by the assessee. It would appear that in connection with the reassessments, the assessee put forward a claim for deduction of a much larger sum when compared with the deduction claimed and allowed in the original assessments. In that event, the assessee will be entitled to claim the deduction subject to the Tribunal satisfying itself of the genuineness of the expenditure and the deductibility of this expenditure under law. As regards the assessment of devaluation profits, there is no dispute that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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