THE COMMISSIONER OF INCOME TAQ vs. R.N.KUMAR

The brief facts are that the original assessment in this case was completed on 28th February, 1983 at a loss of Rs.87,351/-. On receipt of information from ADI, Bombay, a notice under Section 148 of the Income Tax Act (for short 'Act') was issued to the Assessee in March, 1985. The Assessee did not file any return. Accordingly, Assessing Officer issued notice under Section 142(1) of the Act and the reassessment was done by making addition of Rs.3,10,000/- on account of cash credits appearing in the books which is as follows:-

The Assessing Officer again made the same additions and the Income Tax Appellate Tribunal again by its order dated 13th August, 2003, set aside the assessment and directed the Assessing Officer that he shall complete the assessment in accordance with the order of the Tribunal dated 24th August, 1994. 5. Consequent to this, a notice under Section 142(1) of the Act was issued to the Assessee to establish the genuineness of the credits and accordingly, Assessing Officer again made the addition as unexplained loans for Rs.3,10,000/- and assessment stood completed at an income of Rs.2,22,650/-. 6. The Assessee filed appeal before Commissioner Income Tax(A) who upheld the addition for the reason that Assessing Officer could make enquiry in such an old case only if the Appellant provided information about the parties and brought material about genuineness of the credits. 7. The learned Tribunal vide impugned order did not find any justification in sustaining the addition and accordingly, decided the matter in favour of the Assessee. 8. It has been contended by the learned counsel for the Appellant that the order of Income Tax Appellant Tribunal is contrary to the facts and law since the Assessing Officer had specifically carried out the enquiry and in ITA No.1500/2006 Page 3 of 6

Under the peculiar facts and circumstances of the case, since the loans was not taken directly by the Assessee, the helplessness shown by him to produce these parties or tell their present whereabouts could not be termed as non-cooperation, particularly, when the matter was more than 20 years old. Any remissness on the part of the Assessing Officer has to be at the cost of national exchequer and must necessarily result in the loss of revenue. 11. On this point, a reference be made to the case of Parshuram Pottery Works Co.Ltd. vs. ITO, 106 ITR 1(SC); the relevant portion of which reads as under:- “It has been said that the taxes are the price that we pay for civilization. If so, it is essential that those who are entrusted with the task of calculating and realizing that price should familiarize themselves with the relevant provisions and become well-versed with the law on the subject. Any remissness on their part can only be at the cost of the national exchequer and must necessarily result in loss of revenue. At the same time, we have to bear in mind that the policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in spheres of human activities. So far as the income tax assessment orders are concerned, they cannot be reopened on the score of income escaping assessment under Section 147 of the Act of 1961 after the expiry of four years from the end of assessment year unless there be omission order failure on the part of the assessee to disclose fully and truly all material facts necessary for the ITA No.1500/2006 Page 5 of 6