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1990 (7) TMI 159

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..... at in this case there were credits to the tune of Rs. 25,000 in the name of Shri Bansal on 26-12-1975. These Cash credits have been made the basis for reopening the assessment. However, he pointed out, with the help of the paper book filed by him, that the assessee had filed a copy of account of Shri Barisal alongwith the original return (page 1 of the paper book). This showed that the assessee had received Rs. 25,000 on 26-12-1975 and on 31-3-1976 it had credited Rs. 990 as interest in that account. Page 2 of the paper book showed that the entire amount was repaid by 11-3-1977 in different sums. As per page 3, form No. 19A was a certificate issued for deduction of tax at source from the interest paid to Shri Bansal. Page 4 of the paper book showed that on 29-10-1976, the Income-tax Officer had issued a letter to the assessee enquiring about this credit of Rs. 25,000 in the original proceedings. As per page 17 of the paper book, the assessee replied regarding the enquiries and pointed out that a confirmation from Shri Bansal who is a regular assessee, on copy of his personal account, had already been filed alongwith the original return. A copy of Shri Bansal's account (page 9 of th .....

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..... tion work at Nabha. On this basis, the Income-tax Officer inferred that the explanation offered by Shri Bansal regarding the source of his deposit was false and that it was failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment. He submitted that this action of the Income-tax Officer was not at all justified because even the Appellate Assistant Commissioner has not held that the assessee had failed to prove the source of cash credits ; he has only held that the Income-tax Officer failed to make enquiries at the original stage. Secondly, the Appellate Assistant Commissioner has upheld the action not because Shri Bansal did not have the capacity but because he has doubted the time gap between the withdrawal of Rs. 25,000 from M/s. Gupta Iron Steel Rolling Mills on 31-7-1975 and deposit of it with the assessee after about five months on 26-12-1975. 3. With this background Shri Gupta submitted that there were three infirmities in the order of the Income-tax Officer and on each ground it deserved to be cancelled. In the first instance, he submitted that the assumption of jurisdiction by the Income-tax Officer was bad in law. H .....

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..... and in view of the decision of the Hon'ble Punjab and Haryana High Court, which is the jurisdictional High Court for Chandigarh Bench, in the case of CIT v. Sham Lal [1981] 127 ITR 816, the only course open to the Tribunal is to annul the assessment and not even to set aside the assessment. Shri Gupta clarified that those persons, although close relatives of Shri Bansal, had not denied that Bansal had done tuition work ; they had only stated that they were not aware of Shri Bansal having done any tuition work at Nabha and hence this would not mean what Bansal had stated was false. 6. The learned Departmental Representative relied on the orders of the authorities below. 7. We have carefully considered the arguments of Shri Gupta and have also perused the orders of the lower authorities so also material on record. We are in full agreement with the contentions canvassed before us by the learned counsel for the assessee. Even though it may be common knowledge by now, we may reproduce from the observations of the Hon'ble Supreme Court in the case of Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191 where at page 201 their Lordships observed as under :---- " Once all primary f .....

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..... e assessment was reopened on the basis of vague information and was not valid, We find that the facts and circumstances of the assessee's case are very much similar to the case decided by the Hon'ble, Punjab Haryana High Court. The view in the case of Jai Singh was reiterated by their Lordships of the Punjab Haryana High Court in the case of Shiv Lai Kanhaya Lal where also there was no statement from the creditors, who were allegedly indulging in hawala business and were merely name lenders, that they had not advanced any loans to the assessee. Their Lordships held that there was no failure to disclose fully and truly material facts and the reassessment was merely a change of opinion and was invalid. In this view of the matter, on the basis of first argument of Shri Gupta alone, the reassessment order has to be cancelled. 8. We further agree that in view of the decision in the case of Mewalal Dwarka Prasad also in the facts and circumstances of the case action under section 147(a) cannot be upheld and since time limit for taking action under section 147(a) had already expired, no action for reopening the assessment could be taken in the case of the assessee and on that groun .....

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