High Court Of Rajasthan
CIT vs. Mahesh Gum & Oil Industries
Section 147, 148
Asst. Year 1989-90
Rajesh Balia & R.P. Vyas, JJ.
IT Appeal No. 113 of 2005
16th February, 2006
Counsel Appeared :
Vivek Shrimali, for the Appellant
JUDGMENT
By the court :
This appeal is directed against the order of the Tribunal, Jodhpur Bench, Jodhpur, dt. 15th Sept., 2004. The following two questions are suggested as substantial questions of law for consideration in this appeal :
“I. Whether, on the facts and in the circumstances of the case, the learned Tribunal has erred in law in holding that the reassessment proceedings were bad in law and based on the change of opinion, ignoring the fact that the proceedings under s. 147 were validly initiated on the material evidence available on record ?
II. Whether the findings recorded by the learned Tribunal are contrary to record and perverse ?”
The respondent-firm was dissolved on 4th Nov., 1983, and in response to a notice for the asst. yr. 1989-90 under s. 148 a return was filed at nil income. The assessee has objected to assumption of jurisdiction by the AO under s. 147/148 and has also asked for reasons before issuing notice under s. 148. The submission of the assessee was that assumption of jurisdiction itself was not sustainable. The assessment order was made against the respondent considering it to be an unregistered firm and a penalty proceeding under s. 271(1)(c) was also initiated.
On appeal, the CIT(A) vide his order dt. 21st Sept., 1988, upheld the objection of the assessee that the initiation of proceedings under s. 148 was without jurisdiction and the proceedings were quashed. The said order was affirmed by the Tribunal by the order under appeal.
When the matter came up for hearing on 2nd Dec., 2005, this Court directed learned counsel for the Revenue to place on record the reasons that were recorded by the AO before assuming jurisdiction under s. 147/148 of the Act of 1961. The same have been placed before us, which, inter alia, read as under : “The overall transaction in a deposit of Rs. 21,24,248 has involved purchase of raw gwar plus processing expenses to manufacture gwardal/split plus profit = Rs. 21,24,248 (sale). If net profit on sale is estimated at 8 per cent, it comes to (Rs. 21,24,248 of 8 per cent Rs. 1,69,940). Apart from the net profit, initial investment made in the purchase of gwar and further expenses incurred on processing stand as unexplained investment of the assessee-firm. However, money under rotation on account of sale consideration, will have to be taken into consideration and unexplained investment to be estimated accordingly. As per the information available on record,’ the unexplained investment may be estimated at Rs. 5 lakhs. Hence the total income escaped to investment is (5 + 1.69 lakhs) Rs. 6.69 lakhs.
Since an income chargeable to tax to Rs. 6.69 lakhs, for the asst. yr. 1989-90 has escaped assessment within the meaning of Explanation 2(a) of s. 147 of the IT Act, 1961, in the case of the firm, M/s Mahesh Gum and Oil Industries, Osiyan, this is a fit case for issue of notice under s. 148.”
A perusal of the aforesaid reasons clearly goes to show that even escapement of assessment has been held not on any existing material but by assuming certain state of things to exist for reasons best known to the AO. While referring to the fact about the current account with the Allahabad Bank and as per the information available on record, no such information has been placed on record to satisfy that the subjective satisfaction required to exist was founded on any existing material. Moreover, it was not in dispute that the assessment of the subject-matter recorded and the reasons had already been made in the hands of Mohan Lal by regular assessment order.
In these circumstances, we find that no substantial question of law arises for consideration in this case and the same is, therefore, dismissed.
[Citation : 292 ITR 397]
