9911796707
TMI Blog1985 (10) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... rest. This was on the ground that the realisation of interest was not certain. According to the ITO, the assessee had concealed the income in the returns filed by it at the time of the original assessments by not including the interest on such sticky advances. The reassessments were completed adding interest accrued on such loans to the income originally assessed. The assessee went in appeal. It challenged the reopening of the assessments. One ground was that the case did not fall under section 147(a) of the Income-tax Act, 1961 ('the Act') as the assessee had not failed to disclose primary materials necessary for completion of its assessments. Another ground was that the concealment, if any, related to the Syndicate Bank Ltd. before it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee, section 5(1) was applicable. He stressed that all borrowings, liabilities and obligations of whatever kind of the erstwhile bank were transferred to the new bank. The obligation and liabilities also included payment of proper taxes and as such the reopening was justified. The learned counsel for the assessee, however, relied on section 5(5) which protected only existing litigation and not future proceedings. The learned departmental representative also submitted that the old Syndicate Bank Ltd. sans its banking business had been amalgamated with some other concern. It was no longer in existence. Recourse to section 170 was not necessary in this case at all as section 5(1) was wide enough to empower the ITO to collect taxes which have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e correct, we have to agree with the learned departmental representative that section 5(1) gave wide powers to the ITO to collect from the new bank the correct amount of tax which the erstwhile banking company was under an obligation to pay. There is an obligation on every assessee to pay the correct amount of tax due from it. The obligation cannot abate by virtue of succession to its business. Although the quantification of this obligation might come later, there was no cessation of its liability. Support for this proposition can be had from the decision of the Supreme Court in the case of Ahmed Ibrahim Sahigra Dhoraji v. CWT [1981] 129 ITR 314. In that case, it was held that the extra tax which became payable on a later date consequent on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars of income. In fact, in IT Appeal No. 126 (Bang.) of 1983 dated 11-12-1984, we held that the reopening of the assessment was bad. It is not for the assessee to indicate what conclusions are to be drawn from the materials disclosed by it before the ITO. If the material is there and the ITO fails to draw the correct conclusions, it is not possible to say that there was failure on the part of the assessee to disclose primary materials necessary for the completion of the assessment, e.g., the Supreme Court decision in the case of ITO v. Lakhmani Mewal Das [1976] 103 ITR 437 further reiterated in ITO v. Madnani Engg. Works Ltd. [1979] 118 ITR 1. On these grounds, we hold that the reopening under section 147(a) was not valid. 6. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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