CIT, ROHTAK vs. M/S.NATIONIAL INDUSTRIAL CORP., PANIPATT

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ITR/154/1989HC Punjab & HaryanaPHHC01022526198901 December 2006Bench: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE ADARSH KUMAR GOEL2 pages
AI SummaryRemanded

What did the High Court hold?

The High Court addressed Question No. (ii) first. It found no material to interfere with the Tribunal's finding that there was no justification for initiating reassessment proceedings. The Tribunal had concluded that the assessee had fully and truly disclosed all material facts necessary for assessment, rendering the reopening under Section 147(a)/148 bad in law. Consequently, Question No. (ii) was answered against the revenue and in favour of the assessee. Due to this finding, the High Court held that it was not necessary to adjudicate upon Question No. (i) (merits of the addition) and Question No. (iii) (failure to decide the interest remission ground), as these questions arose on the merits of the reassessment proceedings, which were deemed invalid. The reference was disposed of on this basis. The operative direction was to dispose of the reference without deciding questions (i) and (iii).

What were the facts?

The assessee is M/s National Industrial Corporation, Panipat, and the revenue is the Commissioner of Income Tax, Haryana (Rohtak). The assessment year in question is 1961-62. The case comes before the High Court of Punjab and Haryana at Chandigarh via an Income Tax Reference (I.T.R. No.154 of 1989) arising from an order of the Income Tax Appellate Tribunal, Chandigarh Bench, dated 15.03.1980. The original assessment was completed on 31.03.1962. Subsequently, reassessment proceedings were initiated under Section 147(a)/148 of the Income Tax Act, 1961, alleging the introduction of bogus hundi loans. An addition of Rs.30,000/- was made towards the alleged loans, and Rs.2,094/- towards interest. The Appellate Assistant Commissioner (AAC) deleted these additions, finding the assessee's explanation for cash credits sufficient. The Tribunal upheld the AAC's order, adding that reassessment was unjustified as the assessee had fully and truly disclosed all material facts.

What were the issues?

The High Court was asked to decide three questions of law referred by the Income Tax Appellate Tribunal: 1. Whether on the facts and in the circumstances of the case, the Tribunal has erred in law in affirming the order of the Appellate Asstt. Commissioner deleting the addition of Rs.32,094/- made by the ITO on account of income from other sources? (This question turns on the merits of the addition). 2. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the reopening of assessment u/s 147(a)/148 was bad in law? (This question concerns the validity of the reassessment proceedings under Section 147(a)/148 of the Income Tax Act, 1961). 3. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in failing to give any finding/decision on the second ground of appeal viz remission of interest u/s 139(8) allowed by the AAC? (This question relates to the Tribunal's omission to decide a specific ground of appeal concerning remission of interest under Section 139(8)). Contentions: The revenue argued for the questions to be answered in its favour. The judgment does not explicitly record the assessee's contentions but implies they supported the Tribunal's findings. The revenue relied on the initiation of reassessment proceedings due to alleged bogus hundi loans.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 139(8)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.R. No.154 of 1989 Date of decision: 01. 12.2006 The Commissioner of Income Tax, Haryana (Rohtak). ---Applicant Vs. M/s National Industrial Corporation, Panipat. -----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON'BLE MR JUSTICE RAJESH BINDAL resent: Mr. Yogesh Putney, Advocate for the revenue. ----- ORDER: Following questions of law have been referred for opinion of this Court by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh, arising out of its order dated 15.03.1980 in I.T.A. No.288/Chandi/76-77 in respect of assessment years 1961-62:- “(i) Whether on the facts and in the circumstances of the case, the Tribunal has erred in law in affirming the order of the Appellate Asstt. Commissioner deleting the addition of Rs.32,094/- made by the ITO on account of income from other sources? (ii) Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the reopening of assessment u/s 147(a)/148 was bad in law? (iii) Whether on the facts and in the circumstances of the case, the Tribunal was right in law in failing to give any finding/devision on the second ground of appeal viz remission of interest u/s 139(8) allowed by the AAC?” Originally, the assessment in the case of the assessee for the assessment year 1961-62, was completed on 31.03.1962. Later on, proceedings for re-assessment were initiated on the ground that assessee had introduced bogus

I.T.R. No.154 of 1989 hundi loans and addition of Rs.30,000/- was made, apart from addition of Rs.2,094/- towards interest. The appellate authority deleted the addition, holding that the assessee had given sufficient explanation for the cash credits.

On appeal, the view taken by the appellate authority was upheld for the additional reason that initiation of reassessment proceedings was not called for in the absence of assessee having failed to discharge fully and truly all material facts necessary for assessment.

We have heard learned counsel for the revenue and perused the record. We do not find any material to interfere with the finding of the Tribunal that there was no justification for initiating proceedings for reassessment in view of finding that assessee had fully and truly disclosed all the material facts necessary for assessment.

The question No.(ii) is, thus, answered against the revenue and in favour of the assessee.

In view of our finding with regard to question No.(ii), we need not adjudicate upon the question No.(i) and (iii), which arise on merits in the re- assessment proceedings.

The reference is disposed of accordingly. ( ADARSH KUMAR GOEL ) JUDGE December 01, 2006 ( RAJESH BINDAL ) ashwani JUDGE Pag e

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