Bhagabati Prasad Banerjee, J. - (1.) The Tribunal has referred the following questions of law to this court under Section 256(1) of the Income-tax Act, 1961 : "1. Whether, on the facts and in the circumstances of the appellant's case, the Tribunal was right in law in confirming the order of the Commissioner of Income-tax (Appeals ) in upholding the Assessing Officer's action in reopening the assessment of the appellant for the assessment year 1974-75/1973-74 ? 2. Whether, on the facts and in the circumstances of the appellant's case, the Tribunal was justified in law in confirming the reassessment proceedings inasmuch as there was no information in consequence of which the Inspecting Assistant Commissioner could have reason to believe that income chargeable to tax has escaped assessment ? 3. Whether, on the facts and in the circumstances of the appellant's case, the Tribunal was justified in law in holding that the point as to the assessability of the service charges as income from business cannot be raised in the reassessment proceedings ? 4. Whether, on the facts and in the circumstances of the appellant's case, the Tribunal was justified in holding that depreciation and insurance premium in respect of various installations cannot be allowed in computing the income from service charges under Section 57(2) of the Act ? "
(2.) The assessment years involved in this case are the assessment years 1973 74 and 1974 75 for which the relevant periods of account are the calendar years ending on December 31, 1972, and December 31, 1973, respectively.
(3.) The relevant facts of this case are as follows : "The common point involved was regarding the reopening of the assessment under Section 147(b) for both the years. The Inspecting Assistant Commissioner of Income-tax was the assessing authority who noted in the assessment order that the original assessment was completed earlier on a total income of Rs. 86,86,852 and in consequence of information that came into his possession, he had reasons to believe that income chargeable to tax had escaped assessment. He initiated proceedings under Section 147(b) and issued notice under Section 148 which was complied with by the assessee and the returns were filed on March 1, 1978. Hearing was given by the Assessing Officer who noted that the interest credited to the suspense account was in respect of certain loans and that the assessee charged interest to the party's account and credited the same to the suspense account instead of the profit and loss account. The amount was Rs. 34,95,010 for the assessment year 1973-74 and Rs. 36,25,203 for the assessment year 1974-75. The assessce objected to the proposed inclusion on the basis that the debts on which the interest was charged were irrecoverable and doubtful and as such the interest on such debts was also doubtful and as such interest should not be included in the total income. The Assessing Officer noted that this issue came up also in the year 1975-76 and that the same reasons were recorded therein, viz., the interest which accrued and charged to the debtor's account earlier was the income of the assessee during the years and was taxable. He included such amounts in the reassessment.";