Juhi Metal Works vs Commissioner of Income Tax

Inspite of service to the assessee to engage another counsel, no step has been taken nor any body entered in reference on behalf of the assessee.

We heard Sri Shambhu Chopra, learned standing counsel for the revenue.

This is a reference u/s 256(1) of the Income Tax Act, 1961 referring the following two questions :

''Reference by the Commissioner R.A. No. 431 (All) of 1981, Assessment year 1976-77 :

"Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that the reopening of the assessment u/s 147(b) was bad in law ?"

Reference by the assessee, R.A. No. 298 (Ahd) of 1981, assessment year 1977-78

"Whether on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that the reopening of the assessment u/s 147(b) of the Income Tax Act, 1961 was valid ?" ''

In view of the judgment of the Hon''ble Supreme Court in Indian and Eastern Newspaper Society, New Delhi Vs. Commissioner of Income Tax, New Delhi, , the information regarding the law by the assessing authority and not its interpretation by the audit party, (sic) if the assessing authority applies its mind on the said legal position and finds that it is a case for reopening, the reopening is valid on the ground mentioned u/s 147(b) of the Act, 1961.

Similar view has been reiterated in Tube Suppliers Ltd. Vs. Commissioner of Income Tax, and Smt. Indira Devi Vs. Commissioner of Income Tax,

In the instant case as the audit party has pointed out for the assessment year 1976-77 that the assessee was not manufacturing the goods itself rather it was getting it manufactured through some other party, he was not entitled for the benefit of the provisions of section 80J of the Act and in second question it has been pointed out by the report of the audit party that accounts had not been audited as required u/s 80J(6A), 1961. The assessee was not entitled for the benefit u/s 80J as the audit report in both the cases furnished the information regarding the law and communicated to the assessing authority.

The assessing authority had applied its mind on that law and, therefore, in view of the above, the first question in respect of assessment year 1976-77 is answered in negative, i.e., in favour of the assessee and against of the revenue and the second question, which relates to the assessment year 1977-78, is answered in affirmative against of the revenue and in favour of the assessee.