Commissioner of Income Tax vs Bharat Printing Machine Mfg. Co.

S.S. Sodhi, J.—The matter here concerns the reopening of an assessment consequent upon a change in the law relating to provision for gratuity.

In the assessment proceedings for 1973-74, provision of Rs. 23,340 which was payable as gratuity was allowed by the Income Tax Officer by his order of September 25, 1973. Later, however, taking note of the provisions of Section 40A(7) of the Income Tax Act, 1961 (inserted by the Finance Act, 1975, with retrospective effect from April 1, 1973), the Income Tax Officer reopened these assessment proceedings u/s 147(b) of the Income Tax Act, 1961 (hereinafter referred to as "the Act"). Notice u/s 148 of the Act was consequently served upon the assessee. The reason given for the reopening of the assessment being that the provision of the said Rs. 23,340 for gratuity allowed, was not, in fact, allowable unless the conditions as set forth in Section 40A(7) of the Act were fulfilled.

The assessee, on his part, questioned the validity of the reopening of the assessment.

The Income Tax Officer, by his order of July 12, 1976, rejected the assessee''s objections and in the reassessment framed, added back the previously allowed amount for gratuity of Rs. 23,340. An appeal against this order was also later dismissed by the Appellate Assistant Commissioner on September 16, 1976. The Tribunal, however, by its order of April 19, 1978, found in favour of the assessee upholding his objection to the validity of the reassessment. The reassessment framed was consequently vacated and the original assessment restored.

The question referred for the opinion of this court is as under :

"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in upholding the objection of the assessee against the reopening of the assessment by the Income Tax Officer for the assessment year 1973-74 u/s 147(b) of the Income Tax Act and whether the Tribunal was justified in vacating the reassessment framed and in restoring the original assessment ?"

The issues raised here have been exhaustively dealt with and answered by the Supreme Court in Shree Sajjan Mills Ltd. Vs. Commissioner of Income Tax, M.P., Bhopal and Another, . This reference is consequently answered in terms of this judgment. The Tribunal shall accordingly now adjust its decision and decide the matter afresh in the light thereof. This reference is thus answered in this manner. There will be no order as to costs.