Commissioner of Income Tax vs New India Rubber and Chemical Industries

The revenue has filed this petition u/s 256(2) of the income tax Act, 1961 (''the Act'') for issuance of a mandamus directing the Tribunal, Amritsar, to refer the following question of law arising from the order of the Tribunal passed in IT Appeal No. 949 (Asr.) of 1995 :-

"Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the reopening of the assessment is illegal as there is no sufficient material on record ?"

The abovesaid question relates to the assessment year 1981-82. Original assessment in this case was completed on 30-3-1982 at an income of Rs. 59,970. A search was conducted at the premises of one Ashok Kumar on 17-3-1983. During the course of search, a cheque book relating to Account No. 350 in the name of Raj Kumar, brother of Ashok Kumar, with Punjab and Sind Bank, New Grain Market, Jalandhar, was found. Statement of Ashok Kumar was recorded u/s 132(4) of the Act in which he deposed that his brother Raj Kumar was serving with New India Rubber and Chemical Industries and the said firm had got an account in the name of Raj Kumar; he further stated that none of the deposits in that account pertained to Raj Kumar. In that account deposits and withdrawals were by New India Rubber and Chemical Industries and Raj Kumar was only a benamidar. It was also stated that handwriting on all the cheques was that of Tilak Raj Aggarwal, partner of New India Rubber and Chemical Industries, Jalandhar. In response to summons u/s 131 of the Act issued by the Assistant Director (Investigation), Raj Kumar reiterated that Account No. 350 in fact pertained to the firm New India Rubber and Chemical Industries, Jalandhar. In view of these facts, the Assessing Officer initiated the proceedings u/s 147 of the Act and after considering the assessee''s explanation, it was held that Account No. 350 in Punjab and Sind Bank, New Grain Market, Jalandhar, in the name of Raj Kumar was actually the account of the assessee''s firm. Accordingly, the Assessing Officer made an addition of Rs. 33,616 and the assessment was completed u/s 143(3) of the Act at net taxable income of Rs. 93,586 on 24-1-1989.

Aggrieved by the order dated 24-1-1989, the assessee filed an appeal before the Commissioner (Appeals) which was accepted. It was held that reopening of the assessment u/s 147(a) was illegal and as such the order of reassessment was cancelled.

Not satisfied with the order dated 29-9-1995 passed by the Commissioner (Appeals), the department filed a second appeal before the Tribunal. Appeal was dismissed by the Tribunal on the ground that the Tribunal on the same facts and circumstances of the case relating to the assessment year 1980-81 had already accepted the assessee''s contention. Application filed u/s 256(1) of the Act by the revenue has been dismissed by the Tribunal following its earlier decision in the case of the assessee itself for the assessment year 1980-81. The counsel for the petitioner has placed on record a photostat copy of the order in IT Appeal No. 91 of 1995 relating to the assessment year 1980-81 in which the same question as claimed in his petition stands granted by this Court. No useful purpose will be served by issuing a notice in this petition at this stage because it would cause unnecessary expense to the assessee. Following the decision of this Court in income tax Case No. 91 of 1995 dated 17-2-1997, we direct the Tribunal, Amritsar, to refer the question aforesaid to this Court along with the statement of the case for its opinion.