Kerala H.C : The assessments made for these two years initially were reopened under s. 147(b) of the IT Act on the ground that interest on the amounts diverted to sister concerns, which ought to have been disallowed, was wrongly allowed in the original assessment orders.

High Court Of Kerala

Fashion Saree House vs. CIT

Section 147(b)

Asst. Year 1976-77, 1977-78

K.S. Paripoornan & K. Sreedharan, JJ.

Original Petn. No. 2316 & 2317 of 1985

3rd July, 1987

Counsel Appeared

P.G.K. Warrier, for the Petitioner : P.K. Ravindranatha Menon & N.R.K. Nair, for the Respondents

K.S. PARIPOORNAN, J.:

The same assessee is the petitioner in both these original petitions. The Revenue is the respondent in both these cases. We are concerned with the asst. yrs. 1976-77 and 1977-78. Identical questions arise for consideration in both the cases. The petitioner (assessee) is a firm. The assessments made for these two years initially were reopened under s. 147(b) of the IT Act on the ground that interest on the amounts diverted to sister concerns, which ought to have been disallowed, was wrongly allowed in the original assessment orders. The reopening of the assessments was challenged before the CIT (A). He held that the reopening of the assessments was without jurisdiction and nullified the reassessment proceedings. The Revenue filed appeals before the Tribunal. It was contended that the ITO came into possession of vital particulars subsequent to the date of completion of the original assessments. It was revealed that the debts due from M/s Jaycee, M/s Jose Textiles and M/s Jose Brothers were not completely trade debts, but they contained some interest-free advances also. That was fresh information that came to the notice of the ITO. Relying on the decisions in CIT vs. A. Raman & Co. (1968) 67 ITR 11 (SC) and Salem Provident Fund Society Ltd. vs. CIT (1961) 42 ITR 547 (Mad), the Tribunal held that the ITO got information that there were interestfree advances to the sister concerns and there were new materials which prompted the reopening of the assessments. In these circumstances, the reopening was held to be valid. The matter was restored to the file of the ITO to reframe the assessments on the lines of the directions given by order dated May 31, 1984. The assessee filed petitions under s. 256(1) of the IT Act to refer certain questions of law for the decision of this Court. They were rejected. Thereafter, these two original petitions have been filed in this Court under s. 256(2) of the IT Act.

We heard counsel for the petitioner, Mr. P. G. K. Warrier, and also counsel for the Revenue. The Tribunal categorically found that new material came into the possession of the ITO after the completion of the original assessments which necessitated the reopening of the assessments. In this view of the matter, the assessments were held to be legal and valid and covered by s. 147(b) of the Act. We are satisfied that the decision of the Tribunal is right. We are of the view that apart from the fact that the questions formulated for being referred to this Court are pure questions of fact, there is no case for the petitioner even on the merits. Further, the petitioner formulated one question under s. 256(1) of the Act praying to the Tribunal to refer the said question to this Court. But what has been done now is to specify two questions in paragraph 11 of the original petitions for being referred to this Court. This itself is not permissible.

On the whole, there is no merit in these two original petitions. They are dismissed.

[Citation : 172 ITR 285]

Scroll to Top
Malcare WordPress Security