- (1.) THIS is a case of reopening of assessment under S. 147 of the IT Act, 1961 ('the Act'), Shree Bajrang Commercial Co. (P) Ltd. Furnished returns of its income for the asst. yrs. 1972-73 and 1973-74. Along with the returns it furnished copies of the balance sheets and P&L A/c's of the relevant accounting years. In the two returns, the assessee claimed to have obtained loans from various parties. The amounts of interest payable on these loans were allowed as deductions in course of the assessment for the aforesaid two asst. yrs. 1972-73 and 1973-74. The case of the ITO now is that the loan transactions were not genuine. The assessee had not only obtained relief by way of deduction of interest paid on the aforesaid bogus loans but also introduced his own money in business in the guise of loans obtained from the said money-lenders.
(2.) THE case of the assessee is that he had made full and true disclosures in the assessment proceedings. The ITO after being satisfied with all materials placed before him and after examining the balance sheet and the P&L A/c of the assessee for the relevant two accounting years came to the conclusion that the loan transactions were genuine and the interests were allowable. The ITO now cannot turn round and reopen the two assessments on the allegation that the loan transactions were not genuine. It was also suggested in the course of the argument that the ITO is really harassing the assessee. There was an earlier attempt to reopen the assessment on account of certain transactions in case of purchase of ordinary equity shares of Century Metals Ltd. That attempt, however, ultimately failed. The ITO has now decided to reopen the assessment of the assessee for the aforesaid two years on a non-existing ground. It is to be noted that the petitioner alleged that he had made full and true disclosures of his income in the course of the assessment proceedings. It was stated that there was no suppression of material facts and no concealment of the income on the part of assessee. It has also been alleged that the ITO did not have any material in his possession on the basis of which he could form the requisite opinion that the income of the assessee had escaped assessment due to omission or failure on the part of the assessee to disclose fully and truly all primary facts.
(3.) CURIOUSLY enough the affidavit in opposition carefully conceals all the grounds and/or materials on the basis of which the reopening has been done. There is no suggestion in the affidavit in opposition that reopening was done on the ground of false representation and/or suppression of material facts in respect of any loan transaction. The material on the basis of which reopening was sone was not even mentioned in the affidavit in opposition. 4.a. However, in course of hearing of the case the reasons for reopening of the assessment for the asst. yr. 1973-74 have been handed up in Court. It has been stated that the reopening for the asst. yr. 1972-73 had been done on identical grounds. The recorded reasons are as under : Reasons for reopening assessment under S. 147(a)-Assessment year : 1973-74 Shree Bajrang Commercial Co. (P) Ltd. Information has been received that Shri Manick Chand Jain alias Manick Chand Baid, son of Chotilal Baid, has made a deposition under S. 131 of the Act before the IAC Range-XIII on 30th July, 1976 that he was a name lender and that he was carrying on business in the name of Gulab Chand Jainarayan, Mahindra Steel Corpn and Aruna Engg. Stores. It is noticed from the examination of the assessment record that during the previous year ended 30th June, 1972 relevant to the asst. yr. 1973-74 the assessee had account with Aruna Engg. Stores and Gulab Chand Jainarayan which showed total credit of Rs. 45,000 and Rs. 47,000, respectively. I have, therefore, reason to believe that by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. It is, therefore, proposed to reopen the assessment under S. 147(a) for the asst. yr. 1973-74.;