Dipak Kumar Sen, J. - (1.) In this consolidated reference under Section 256(1) of the Income-tax Act, 1961, the assessment years involved are 1960-61, 1961-62 and 1962-63. The relevant previous years ended on March 31, 1960, March 31, 1961, and March 31, 1962. The question referred is as follows : " Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that neither Section 154 nor Section 155(5) of the Income-tax Act, 1961, was applicable ? "
(2.) The facts found and/or admitted in these proceedings are that in the original assessments of Indian Iron & Steel Co. Ltd., Calcutta, the assessee, development rebates of various amounts were allowed. Subsequently, it was pointed out by the revenue audit that the rebate allowed was irregular and, therefore, should be withdrawn by rectification of the assessments. Thereupon, the Income-tax Officer issued a notice under Section 154/155 of the Income-tax Act, 1961, requiring the assessee to show cause why the alleged mistakes should not be rectified. It was alleged that the statutory reserve which the assessee had to maintain under Section 34(3) of the Income-tax Act, 1961, was not maintained and further that amounts out of the said statutory reserve had been utilised for prohibited purposes, being, inter alia, declaration of dividend.
(3.) The assessee contended that there was no violation of the statutory provisions as it had lawfully utilised the statutory reserve for the purposes of its business. Government of India and World Bank loans had been repaid out of the said reserve.;