9911796707
TMI Blog1995 (4) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... late by 12 days. Since the department has filed condonation petition explaining the day to day delay to our satisfaction, the delay is condoned after hearing ld. counsel for the assessee. Accordingly the appeal is admitted. 3. Briefly stated, the facts of this case are that the original return in this case was filed on 20-8-1976 and the assessment was completed under section 143(3) on 10-1-1977 after necessary verification of loans and after accepting the confirmation letters for the loans. In the balance-sheet, the Assessing Officer found that the assessee has taken loans of Rs. 50,000 each from S/Shri Ajay Kr. Singh, Bijay Kr. Singh and Chouthamal Agarwalla and in each case the loan was taken on 15-3-1975 from each person and loan confirmations were filed but they were signed by Chouthamal Agarwalla on behalf of him as well as other two creditors. Subsequently, on enquiry, it was found that Sri Ajay Kr. Singh advanced only Rs. 18,000 as loan during the year ended on 31-3-1975. But the confirmation of loan submitted by the assessee showed that the loan of Rs. 50,000 was taken from Shri Ajay Kr. Singh on 15-3-1975. Similarly, it was found from the assessment record of Sri Bijay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing but income of the assessee from undisclosed sources. Accordingly, he added Rs. 1,50,000 to the income of the assessee as income from undisclosed sources. 4. Being aggrieved, the assessee preferred appeal before the CIT (Appeals) contending that the original assessment was completed under section 143(3) after detailed scrutiny of all material facts necessary for the assessment submitted by it before the Assessing Officer. The assessee also relied on the Supreme Court decision in the case of ITO v. Lakhmani Mewal Das [1976] 103 ITR 437 and challenged that the reopening of the assessment is wholly illegal because the assessee has fulfilled its duty to make a true and full disclosure and that there was no failure on the part of the assessee to furnish material or failure to disclose the material. It was further contended that in view of the legal position laid down by the Supreme Court that ITO's drawing inference subsequently is erroneous and it is a case of change of opinion and recourse to provisions of section 147(a) cannot be taken. It was further argued that the necessary verification of loans were also made by the Inspector and the confirmations were accepted as it is evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for reopening the assessment under section 147(a) cannot be said to have been fulfilled. In the opinion of the CIT (Appeals), therefore, the fresh proceedings started under section 147(a) were not correct and the same were held to be null and void. He, therefore, cancelled the reassessment and restored the original assessment. In effect he also deleted the addition of Rs. 1,50,000 as income from 'other sources'. 6. Being aggrieved by the order of the CIT (A), the revenue has preferred this appeal to the Tribunal. The ld. Departmental representative, Sri D.P. Kar, submitted that the amount of loan received at Rs. 50,000 each is not shown in the balance sheet of the creditors and there was no compliance to the summons issued to them. It is further submitted that the assessee also did not produce them and that one of them appeared before the Assessing Officer and confessed that not only the loan advanced by him is bogus but also the other two loans are also bogus. According to him, therefore, the CIT (A) was not justified in cancelling the reassessment only on the ground that the Inspector has enquired and verified all the loans. Sri Kar also contended that the assessee has not at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer and the creditworthiness were duty verified and accepted by the department and, therefore, there is no question of reopening the assessment for being done afresh in order to support his contention. Sri Purohit placed reliance on ITAT, B-Bench's order in the case of Anand Prakash Goenka. According to him, as the facts are identical, the Tribunal's decision is fully applicable to this case. Sri Purohit also pointed out that the provisions of section 147(b) can legally be applied to this case but as it is barred by limitation, on the date of issue of notice, the Assessing Officer wanted to correct the mistake committed by his predecessor. 8. In reply, Sri D.P. Kar, submitted that the contentions of the assessee are not correct. The provisions of section 147(a) are applicable as the assessee has completely failed to disclose fully and truly all material facts, necessary for his assessment. In order to support his arguments and contentions as mentioned above, Sri Purohit has placed reliance on the following decisions : (a) Calcutta Discount Co. Ltd's case (b) CIT v. Orissa Corpn. (P.) Ltd. [1986] 159 ITR 78 (SC) (c) Lakhmani Mewal Das's case (d) Simon Carves Ltd's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt decision in the case of Ganga Saran Sons (P.) Ltd. In this case salary, commission and bonus paid to the director were allowed as deduction in original assessment of company. Reassessment notice to disallow the same on the ground that the director had given substantial amounts as loan to Managing Director and gifts to his near relatives and drew small amounts for himself, was held to be invalid. The Hon'ble Supreme Court held that " neither of the two conditions necessary for attracting the applicability of section 147(a) was satisfied in the present case and-the notice issued by the ITO must be held to be without jurisdiction ". On the contrary to it, we find that in the instant case, both the conditions that ITO has reason to believe that income of assessee has escaped assessment and that such escapement is by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment, are fulfilled. 10. In our opinion, therefore, the Assessing Officer acquired jurisdiction in this case of reopening the assessment under section 147(a)/148 on the basis of specific, reliable and relevant information coming to his pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loan transactions conducted by the assessee. The names of three creditors were specifically mentioned. The information contained in the said letter was definite and there was a nexus and a rational connec tion between that information and the belief entertained by the Income tax Officer before initiating reassessment proceedings. The reassessment proceedings were valid. " In the case of Midland Fruit Vegetable Products India (P.) Ltd's case also the credits shown in the accounts were accepted at the time of original assessment but subsequently information was gathered that some of the creditors were bogus and, therefore, reassessment proceedings were started and were held to be valid. Our decision also gets support from the Supreme Court decision in Phool Chand Bajrang Lal v. ITO [1993] 203 ITR 456. In this case fresh loan taken by the assessee from the company was accepted as genuine at the original assessment stage and interest was allowed. The assessment was reopened under section 147(a) on the basis of some subsequent information from the officer assessing the company that its Managing Director had confessed that the company had not advanced any loan to any person during t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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