COMMISSIONER OF INCOME TAX UDAIPUR vs. SHRI PRAMESHWAR BOHRA

ITA/7/2003HC RajasthanRJHC01027030200204 January 2007Author: RAJESH BALIA,CHATRA RAM JAT6 pages
AI SummaryDismissed

What did the High Court hold?

The High Court noted that the first question framed did not accurately reflect the controversy. The real issue regarding the notice was not about limitation but the validity of issuing a second notice when a prior one was pending. However, the Court found it unnecessary to decide the validity of the reassessment proceedings because the appeal could be decided on merits. On the second issue, the Court upheld the ITAT's finding that the amount of Rs. 1,55,316 was not taxable as income for AY 1993-94. The ITAT had categorically found that this amount represented capital invested in the business and was shown as closing capital as of March 31, 1992, thus being an opening balance on April 1, 1992. Therefore, it was a carried forward amount from the previous year and not a cash credit or investment generated during the relevant year 1993-94. The Court reasoned that a carried forward amount from a previous year does not become a new investment or cash credit generated during the current year. This finding was sufficient to sustain the ITAT's deletion of the amount. Consequently, the validity of the notice dated June 17, 1997, did not need to be examined. The appeal was dismissed.

What were the facts?

This appeal by the Commissioner of Income Tax (Revenue) challenges the order of the Income Tax Appellate Tribunal (ITAT), Jodhpur Bench, dated December 6, 2001. The ITAT had quashed a notice issued under Section 148 of the Income Tax Act, 1961, on June 17, 1997, for Assessment Year (AY) 1993-94. The notice was for reassessment of an amount of Rs. 1,55,316, which appeared as an unexplained investment/cash credit in the assessee's books on the first day of the previous year relevant to AY 1993-94. A previous notice for reassessment for the same AY was issued on July 11, 1996, but was not pursued by the Assessing Officer due to lack of prior approval from the Additional CIT. A fresh notice was then issued after obtaining the necessary approval.

What were the issues?

1. Whether on the facts and in the circumstances of the case, the ITAT was justified in quashing the notice issued on June 17, 1997, under Section 148 of the IT Act for AY 1993-94, by resorting to the proviso to Section 147, even after holding that there was no failure on the part of the assessee in disclosing fully and truly all material facts necessary for the assessment? (Question of law and fact, concerning Section 147 and 148). 2. Whether on the facts and in the circumstances of the case, and on a correct interpretation of Sections 68 and 69 of the Income Tax Act, 1961, the ITAT was right in holding that the unexplained investment/cash credit amounting to Rs. 1,55,316 appearing in the books of accounts on the first day of the previous year relevant to AY 1993-94 was not taxable as income of the assessee for the said previous year? (Question of law, concerning Sections 68 and 69). Assessee's contentions regarding Issue 1 (though not explicitly framed as such by the High Court): Since the first notice dated July 11, 1996, was pending, a second notice could not have been issued. There is no provision to vacate an issued notice, and therefore, a fresh notice could not be issued by ignoring the vacation order of the first notice. Revenue's contentions regarding Issue 1: Not recorded in the judgment. Assessee's contentions regarding Issue 2: Not explicitly recorded, but implied by the ITAT's finding that the amount was a carried forward closing capital from the previous year and not a new investment or cash credit generated during AY 1993-94. Revenue's contentions regarding Issue 2: Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 148,Section 147,Section 68,Section 69,Section 149

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1 D.B. INCOME TAX APPEAL NO.7/2003 : 04th January, 2007 PRESENT HON'BLE MR. JUSTICE RAJESH BALIA HON'BLE MR. JUSTICE CHATRA RAM JAT Mr. K.K. Bissa for the appellant. Mr. Anjay Kothari for the respondents ________ This appeal is directed against the order of the Income Tax Appellate Tribunal, Jodhpur Bench Jodhpur dated 6th Dec., 2001. While admitting the appeal on 17.2.2003, the following question of law have been framed as substantial questions of law for consideration in this appeal:-

1.

Whether on the facts and in the circumstances of the case, the I.T.A.T. Was justified in quashing the notice issued on 17.6.1997 under Section 148 of I.T. Act for the Assessment Year 1993-94 by resorting to provide to Section 147 even by holding that there is no failure on the part of assessee in disclosing fully and truly all material

2 facts necessary for the assessment in question?

2.

Whether on the facts and in the circumstances of the case, and on a correct interpretation of Sections 68 and 69 of the Income Tax Act, 1961, the Tribunal was right in holding that the unexplained investment/cash credit amountin

The order continues below.

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