- (1.) This is an appeal filed by the Department for the assessment year 1999-2000, which was admitted at the following substantial questions of law:- "1. Whether on the facts and in the circumstances of the case, the Tribunal is justified in upholding the order of the CIT (A) in holding that the issue of commission paid having not been covered by the reasons recorded within the meaning of Section 148(2) as such the reopening u/s 147/148 of the Act is not valid under the law?
(2.) Whether on the facts and in the circumstances of the case, the Tribunal is justified in upholding the order of the CIT (A) in holding that the re-opening of assessment u/s 147/148 is bad in law?"
(3.) The facts leading to the filing of the appeal is, that the assessee had filed his return on 31.1.1999 showing a loss of Rs.15,54,275/-. The said return was processed on 31st March, 2000. Proceedings were initiated on 18.10.2001 under Section 147 of the Income Tax Act (hereinafter referred to as the "Act") and the notice under Section 148 of the Act was served on the appellant on 19.1.2001. The reasons recorded by the assessing officer for reopening the assessment is as under: "Reasons: 18.10.2001. On going through the case records, sit is seen that as per annexure-2 & 3 of the Tax Audit Report, the assessee has made valuation of closing stock of raw material at cost. The raw material of the assessee is Iron ingots & Billets on which excise duty and trade tax was paid at the time of purchase. The purchases made by the assessee have been reduced by the value of excise duty and trade tax, only net amount has been debited to purchase account. The valuation of closing stock of raw material has been made by the assessee on purchase price without including excise duty and trade tax. The assessee has shown closing stock at Rs.45,52,265/- on which excise duty @ 15 $% comes to Rs.6,84,340/- and the assessee has also paid trade at Rs.55,554/- as per annexure 3 of the Audit report. Thus the assessee has not included the amount of Rs.7,38,994/- (684340=55554) on account of excise duty and trade tax while valuing the closing stock of raw material as the provisions of section 145A of the Income Tax Act, 1961 have been introduced w.e.f. 1.4.1999. Therefore, I have reason to believe that the assessee's income of Rs.7,38,994/- has escaped from assessment. Hence action u/s 147 Explanation 2 of the Income Tax Act, 1961 is taken. Issue notice u/s 148 of the Income tax Act, 1961. Sd/- ACIT, Circle 1, M.Nagar";