Decided on May 27,1994



Per Shri Satish Chandra, A.M. - The assessees appeal bearing Appeal No. 521/Ind. /1987 is directed against the learned CIT (A)s order dated 5-5-1987 and the revenues appeal bearing Appeal No. 720/Ind. /1988 is directed against the order of the ld. CIT (A) dated 17-5-1988. Both these appeals relate to the assessment year 1975-76. As the issues are interrelated, for the sake of convenience, these are being disposed of by this common order. - (1.)
(2.) The assessee is an individual. He derives income from property, truck plying business and liquor contract at Sehore (MP). It appears that there was change of jurisdiction in respect of the assessee from ITO, B Ward to ITO F Ward and then to ITO A Ward, Bhopal. For the assessment year 1975-76, the ITO, A Ward, Bhopal, completed the assessment on total income of Rs. 1,01,700 on 20-3-1984 under section 144 of the Income-tax Act, 1961 (hereinafter referred to as the Act). He initiated penalty proceedings and vide his order dated 21-11-1987 imposed a penalty of Rs. 1,10,000 under section 271(1) (a). The assessee challenged the quantum assessment as also the penalty so imposed before the ld. CIT (A). The assessee did not succeed against the quantum appeal. However, he succeeded in his appeal against imposition of penalty before the ld. CIT (A). Thus, both the assessee and the revenue are before us by way of second appeal. The assessee challenged the order dated 5-5-1987 of the ld. CIT (A) on the following ground : 1. That on the facts and circumstances of the case the ld. CIT (A) have erred in confirming the order of the ITO and holding that provisions of section 153(1) (b) are applicable in this case for the purpose of limitation. 2. That the appellant furnished voluntary return of income and produced the photo copy of the acknowledgment before the ITO and also before the CIT (A) and therefore for the purpose of limitation provisions of section 153(1) (a) (iii) of the Income-tax Act, 1961, are applicable as the notice was issued under section 148/147(a) of the Income-tax Act, 1961. This fact can also be verified from the registers maintained by the Income-tax Department.
(3.) THE ld. CIT (A) has disposed of the appeal ex parte qua the assessee. THE ld. CIT (A) disposed of the assessees ground relating to the assessment order dated 20-3-1984 under section 144, as being barred by limitation under section 153(1) (a) (iii) of the Act, in the following manner. He found from the statement of the facts filed before him that the assessee had mentioned that a voluntary return was filed by him on 29-8-1975, for the assessment year 1975-76, the assessment of which should have been completed upto 31-3-1978. As this was not done, it became time barred under section 153(1) (a) (iii) of the Act. It was also stated in the statement of facts that on 1-8-1978, a notice under section 148/147(a) was issued, but the ITO was asked to droop the proceedings, as the proceedings had become time barred. On perusal of the amount assessment order dated 20-3-1984, the ld. CIT (A) found that as per the ITO, the assessee had filed a photocopy of the book maintained by the counsel for acknowledgment of the receipt of the return filed on 29-8-1975. However, original books was not produced before him. THE ITO, therefore, could not verify the genuineness of the receipt, in the absence of production of the original receipt. THE ld. CIT (A) further noted from the impugned assessment order that the ITO invoked the provisions of section 153(1) (b) read with Explanation 1 and proceeded to complete the assessment rejecting the assessees plea that the assessment had become time barred and completed the assessment as stated earlier. THE ld. CIT (A) upheld the impugned assessment order of quantum as also accepted the view of the ld. Assessing Officer that in the case of the assessee, the provision of section 153(1) (b) was applicable. In arriving at his decision on the issue of limitation having expired for completion of assessment, the ld. CIT (A) relied on the observations of the ld. ITO that the assessees wealth as on 31-3-1974, was Rs. 1,43,410 which increased to Rs. 2,25,781. THEre was, thus, an increase of Rs. 82,371 (rounded off to Rs. 83,000) as against which, even assuming that the assessee had filed its return, the income returned therein was Rs. 18,700 only. No explanation in respect of accretion in wealth by Rs. 83,000 was given nor such an accretion in wealth was denied. It was on these reasonings that the ld. CIT (A) upheld the applicability of the provisions of section 153(1) (b) and thereby impliedly held that the ITO got the extended time limit of eight year for completing the assessment and as the assessment was completed within such time limit, the same was valid in the eyes of law. It is against this finding of the ld. CIT (A) that the assessee is before us by way of second appeal.;

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