FASHION SAREE HOUSE Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) 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 assessment years 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 Section 147(b) of the Income-tax 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 Commissioner of Income-tax (Appeals). He held that the reopening of the assessments was without jurisdiction and nullified the reassessment proceedings. THE Revenue filed appeals before the Appellate Tribunal. It was contended that the Income-tax Officer 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 Income-tax Officer. Relying on the decisions in CIT v. A. Raman & Co. [1968] 67 ITR 11 (SC) and Salem Provident Fund Society Ltd. v. CIT [1961] 42 ITR 547 (Mad), the Appellate Tribunal held that the Income-tax Officer got information that there were interest-free 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 Income-tax Officer to reframe the assessments on the lines of the directions given by order dated May 31, 1984. THE assessee filed petitions under Section 256(1) of the Income-tax 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 Section 256(2) of the Income-tax Act.

(2.) WE heard counsel for the petitioner, Mr. P.G.K. Warrier, and also counsel for the Revenue. The Income-tax Appellate Tribunal categorically found that new material came into the possession of the Income-tax Officer 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 Section 147(b) of the Act. WE are satisfied that the decision of the Appellate 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 Section 256(1) of the Act praying to the Appellate 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.