Amarlal Kishandas vs Commissioner of Income Tax

R. Jayasimha Babu, J.—The assessee constructed a house commencing some time in the year 1971 and completed it in November, 1974.

The assessee had disclosed in his books the amounts spent by him on that construction as Rs. 2,12,000. He subsequently disclosed a further sum

of Rs. 60,000 as having been invested in such construction under the voluntary disclosure scheme.

After the house was completed in the assessment year 1975-76, the Department assessed the value of that construction at Rs. 4,98,500. The

difference between the amount disclosed by the assessee and the value as found by the Department was directed to be spread over during the

assessment years 1972- 73 to 1975-76. The amount of addition to be made each year came to Rs. 53,000.

The assessee filed an appeal against that order of assessment for the assessment year 1975-76 and the appeal came to be allowed on April 26,

1982, in which the cost of construction was assessed at Rs. 4,48,000 instead of Rs. 4,98,500. The appellate authority also directed that the

addition be spread over in three assessment years and that the addition for each year be fixed at Rs. 32,500.

After that order of the Appellate Assistant Commissioner, notices u/s 148 of the Income Tax Act, proposing to reassess the income for the

assessment years 1972-73 and 1973-74 were issued on March 7, 1983, and for the assessment year 1974-75, the said notice was issued on

February 26, 1983. Thereafter on March 31, 1987, the order of assessment was made for the assessment years 1972-73, 1973-74 and 1974-75

adding a sum of Rs. 32,500 in each of those assessment years. That order is in conformity with what the Appellate Assistant Commissioner had

held earlier on April 26, 1982. It has to be noticed that the order of the Appellate Assistant Commissioner had been appealed against, and in that

appeal, the Tribunal had after setting aside that order, restored the matter to the Assessing Officer. In the fresh assessment made for the

assessment year 1975-76, the amount added was Rs. 32,500.

The assessee challenged the reassessments made for these years, viz., 1972-73, 1973-74 and 1974-75. Though the appeal was unsuccessful,

on further appeal the Tribunal upheld the assessee''s contention with regard to the assessment year 1972-73 and held that the assessee had

disclosed all the primary materials before the assessment and, therefore, the reopening of that assessment was not permissible. With regard to the

assessment years 1973-74 and 1974-75, the reassessment was upheld by the Tribunal, the Tribunal taking the view that the assessee had not

disclosed all the primary factors inasmuch as he had not stated that the money was spent on the construction of the house but had merely stated

that certain amount had been ""invested in the house"". That description, the Tribunal held was misleading, and that the assessee had withheld from

the Assessing Officer information with regard to the factum of construction being in progress and that the investment had been made on such

construction.

The Tribunal also rejected the assessee''s argument that the reopening was barred by time and found that the necessary permission had been

obtained from the Commissioner for one year and from the Board for the other, in terms of Section 151 of the Act. It also found that the

appropriate authority had recorded its opinion about the need for reopening of the assessment. The Tribunal also rejected the assessee''s argument

that the reopening was not warranted as at the time the notice was issued, the amount of proposed addition was only Rs. 32,500.

At the instance of the assessee, the following question has been referred to us.

Whether, on the facts and in the circumstances of the case, the Tribunal is correct in holding that the reopening of the assessment for the

assessment years 1973-74 and 1974-75 u/s 147(a) of the Act is correct, valid, and is not time barred ?

We are in agreement with what the Tribunal has stated and the view that it has taken with regard to the validity of the reopening of the assessment

for these two years. The necessary sanction for the reopening had been obtained. The opinion of the appropriate authority regarding the need for

the reopening had been recorded as found by the Tribunal. The reopening was clearly not barred by time.

As regards the assessee''s claim that the reopening was not warranted as the amount of addition was less than Rs. 50,000, though the addition

was less than Rs. 50,000 in a year, that was part of the spread over of the higher amount which the assessee was found to have invested in the

construction and that amount of Rs. 32,500 was part of the larger sum of Rs. 1,30,000. Having regard to that fact and the fact that an appeal had

been filed by the Revenue questioning the order of the Appellate Assistant Commissioner which had reduced the figure below Rs. 50,000 and that

appeal was pending at that time, we are unable to uphold the submission made by the assessee that the reopening of the assessment was not

permissible u/s 149(2) of the Act.

The question referred to us is, therefore, answered against the assessee and in favour of the Revenue.