Tube Suppliers Ltd. vs Commissioner of Income Tax

Thanikkachalam J.

In pursuance of the direction of this court, u/s 256(2) of the Income Tax Act, 1961, the Income Tax Appellate Tribunal referred the following question for our opinion :

"Whether, on the facts and in the circumstances of the case, the Tribunal was night in holding that the reopening of the assessment is valid ?"

The assessee carried on a business in refractory works to manufacture fire bricks and also business in lamp factory and collapsible tubes. The Income Tax Officer allowed long-term capital loss of Rs. 331 arising from the sale of land relating to lamp works and loss of Rs. 42,513 u/s 32(1)(iii) arising on the sale of building used for the business of collapsible tubes while computing the total income for the assessment year 1973-74. On an information obtained from the Revenue audit that the business in respect of which losses were allowed had been closed long back and, therefore, the set off of business was not proper, the Income tax Officer reopened the assessment u/s 147(b) of the Act and had withdrawn the set off originally allowed. According to the assessee, the reopening was based upon the information furnished by the audit party and, therefore, the reopening is bad in view of the decision of the Supreme Court in the case of Indian and Eastern Newspaper Society, New Delhi Vs. Commissioner of Income Tax, New Delhi, . However, on appeal, the Tribunal found that the Income Tax Officer had independently applied his mind and found that the abovesaid two businesses were discontinued by the assessee long back and, therefore, he reopened the assessment u/s 147(b). Therefore, the Appellate Tribunal upheld the reopening of the assessment made by the Income Tax Officer u/s 147(b) of the Act. A similar question came up for consideration in the case of the same assessee in Tube Suppliers Ltd. Vs. Commissioner of Income Tax, , wherein this court has held that set-off of business loss is not available to the assessee since the businesses were closed long back. In view of the fact that the Tribunal came to the conclusion that the Income Tax Officer on his own accord found out that the business of the assessee was closed long back and, therefore, set off was not possible, in the present assessment year for consideration, the reopening of the assessment u/s 147(b) of the Act is in order. The order passed by the Appellate Tribunal is in accordance with the earlier decision of this court in Tube Suppliers Ltd. Vs. Commissioner of Income Tax, . Therefore, we answer the question referred to us in the affirmative and against the assessee. There will be no order as to costs.