ASSISTANT COMMISSIONER OF INCOME TAX Vs. AGARWAL CEMENT AND CHEMICALS P LTD
INCOME TAX APPELLATE TRIBUNAL
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M.A.A. Khan, Judicial Member -
(1.) THIS is an appeal from CIT(A)'s order dated 7-8-1990 for A.Y. 1985-86 quashing the order of the Assessing Officer (AO) for reopening the assessment Under Section 147(b) of the I.T. Act, 1961 (the Act).
(2.) In this case the assessee-company returned a loss of Rs. 15,81,117 and the assessment was completed Under Section 143(3) on 15-1-1986 at loss of Rs. 15,41,117. Subsequently the audit pointed out that claim of the assessee for depreciation on diesel generating sets, furniture and tubewell had wrongly been allowed on high rates. Similarly extra shift allowance on electric installations and motor cars had also been wrongly allowed. Even investment allowance on the tubewell was also wrongly allowed. The AO taking note of audit objections, issued notice Under Section 148 to the assessee-company and withdrew the excess depreciation, extra shift allowance and the investment allowance wrongly allowed in the original assessment. In appeal, however, the Id. CIT(A) quashed the initiation of re-assessment proceedings on the ground that there was no failure or omission on the part of the assessee to disclose all the primary facts truly and wholly and that in his recorded reasons, the AO did not mention that he was reopening the assessment on the basis of audit objection. The Id. CIT(A) was of the opinion that the AO had initiated the re-assessment proceedings only to correct his own mistakes. In support of his views the Id. CIT(A) relied upon the Supreme Court decisions in Maharaj Kumar Kamal Singh v. CIT  35 ITR 1, CIT v. A. Raman & Co.  67 ITR 11, R.B. Bansilal Abirchand Firm v. CIT  70 ITR 74, Bankipur Club Ltd. v. CIT 82 ITR 831 and Indian & Eastern Newspaper Society v. CIT  119ITR 996.
Inviting our attention to Sub-clause (iv) of Clause (c) below Expl 2 to Section 147, the Id. D/R urged that grant of excessive loss or depreciation allowance or any other allowance makes a case where income chargeable to tax has escaped assessment and, therefore, reopening of the assessment in this case was justified. He further submitted that notice Under Section 148 issued on the basis of audit report was a valid notice. In this behalf, the Id. D/R relied upon the Madras High Court decision in Smt. Indira Devi v. CIT  210 ITR 537 and Supreme Court decision in A.L.A. Firm v. CIT  189 ITR 285. In its turn, the assessee has supported the order under appeal by filing written submissions wherein reliance has been made on the decisions mentioned in the order of Id. CIT(A).
(3.) AFTER study of the cases relied upon by the parties and on going through the material on record, we feel inclined to agree with the Id. D/R.;
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