Decided on July 02,2008

N.K.C NAIR Respondents


- (1.) THIS petition challenges notice dated 17-03-1999 issued by the respondent under Section 148 of the Income Tax Act, 1961 ('the Act') for Assessment Year 1992-93. The challenge is primarily on the ground that as the impugned notice has been issued beyond a period of 4 years from the end of the relevant Assessment Year, the burden is on the Revenue to establish that any one of the conditions stipulated by the proviso to Section 147 of the Act stands fulfilled so as to vest the respondent-authority with jurisdiction, but the respondent-authority has failed to establish the jurisdictional facts.
(2.) THE facts which are not in dispute are that on 23-10-1992, a return of income declaring loss of Rs. 9,17,411/- was filed by the petitioner in relation to the proprietary business carried on in the name of Shyam Traders. The assessment came to be framed under Section 143 (3) of the Act on 31-01-1995 assessing the loss at Rs. 8,41,205/ -. The impugned notice dated 17-03-1999 has been issued after recording reasons which read as under: 'regarding : Shri Prahladbhai Naranbhai Patel status : Individual assessment Year : 1992-93 reason for reopening assessment u/s. 148 in this case the assessee has filed the return of income showing total loss of Rs. 9,17,410/ -. The total loss was assessed at Rs. 8,41,205/- u/s. 143 (3 ). In the return of income, the assessee has reduced the stock of cotton by 325 quintals by claiming that it has burnt due to fire. On verification of the records, it appears that the assessee did not shown the income of Rs. 3,22,160/- being the Insurance claim accepted by the Insurance Corporation. Since the assessee has maintained books of account on mercantile basis during the year, the fire claim of Rs. 3,22,160/- accepted by the Insurance Co. should be shown as income by the assessee. However, the assessee failed to do so. I, therefore, reason to believe that income of Rs. 3,22,160/- has escaped assessment. Ahmedabad, Dt. 23. 2. 1999 (N. K. C. NAIR)Income-tax Officer, Ward-3 (6)Ahmedabad. '
(3.) THE learned Advocate for the petitioner has assailed impugned notice by stating that there was no failure on the part of the petitioner to disclose truly and fully all material facts necessary for the assessment of the relevant Assessment Year. That the remaining two conditions regarding non filing of return and not responding to statutory notice are not applicable in the facts of the case. It was submitted that along with the return of income, the petitioner had placed a note which reads as under: 'notes:- There was a fire in the business premises of Ambica Vijay Cotton Ginning and Pressing Factory on 25-4-91. At that time, 200 bales of cotton belonging to me were burnt away. I had insurance policies to the extent of Rs. 8 lacs with New India Insurance Company. I had put up a claim along with other dealers. As the claim was not settled with the Company, a complaint was made under the Consumers Protection Act. Thereafter, a regular complaint has been filed at No. 66/92. The Company has replied on 17-7-92. The company has not made any settlement so far. As nothing is received so far, the value of burnt bales of cotton has been claimed as loss. When the compensation is settled, and received form the Insurance Company, the same shall be offered as income of the year of receipt. ' The return of income was accompanied by Tax Audit Report in Form No. 3 (CB) as required by the provisions of Section 44 AB of the Act. Note No. 10 of the Tax Audit Report dated 10-10-1992 gave complete details as to the destruction of 200 bales by virtue of fire which took place on 25-04-1991. The said note reads as under: 'no. 10 As per explanation given by assessee, 200 cotton bales i. e. 325 quintal were burnt due to fire took place on 25. 4. 91 in the premises of Ambica Vijay Cotton Ginning and Pressing Factorly, Dholka were the goods of assessee were lying. The Insurance claim has been made with Insurance Co. The said claim is not settled even after lapsed of more than fifteen months. It is further explained by the assessee that when the compensation i. e. fire claim will be received from the Insurance Co. The same will be credited in the books of accounts and will be offered to tax in that year. ' It was, therefore, submitted that in absence of any omission on part of the petitioner, the impugned notice was bad in law and be declared to be so.;

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