COMMISSIONER OF INCOME TAX Vs. MANGALAM PUBLICATIONS

JUDGEMENT

(1.) The question raised in the connected appeals filed by the department for the assessment years 1990-91, 1991-92 and 1992-93 is whether the Tribunal was justified in cancelling the assessments completed under Section 147 of the Income Tax Act as time barred for the reason that the re-assessments were not completed within four years from the end of the relevant assessment year in terms of the proviso to Section 147 of the Act. We have heard Senior Standing Counsel Sri.P.K.R. Menon appearing for the appellants and Sri.P.Balakrishnan appearing for the respondent.

(2.) The assessee is engaged in publication of newspaper, periodicals, etc. Assessee did not maintain any books of accounts and the returns for all the assessment years were filed without being accompanied by balance sheet and statement of accounts. From the extracts pertaining to the income returned by the assessee it is seen that even advertisement receipts are returned by the assessee on estimation basis obviously showing that the assessee did not maintain proper books of accounts. The original assessments were, however, completed under Section 144 estimating the income. It is found by the Tribunal that though the assessments were completed by estimation of income which is at substantial variance with the income returned, assessee substantially accepted the addition of Rs.1,55,15,550/- for the assessment years 1989-90 to 1993-94. After completion of the assessments, the Assessing Officer got copies of balance sheet furnished by the firm to South Indian Bank which showed substantial increase in the capital and current accounts of the partners. The Assessing Officer inferred that the increase in the capital accounts and current accounts of the partners of the respondent-firm is obviously share income from the respondent-firm which escaped assessment in the original assessments of the firm completed under Section 147 of the Act. After issuing notice to the respondent-assessee, the original assessments were completed under Section 147.

(3.) The assessee challenged the assessment on ground of limitation as well as on merits before the C.I.T.(Appeal). On facts, the C.I.T.(Appeal) found that the assessee had not maintained any books of accounts and disclosed fully and truly all material facts necessary for completion of assessments and so much so, the limitation of four years provided under proviso to Section 147 does not apply. He, therefore, rejected the plea of limitation raised by the assessee. On the merits of the case, he noticed that the Assessing Officer had granted excess relief in the estimation of income and therefore, after issuing notice to the assessee, he enhanced the income by some amounts. Then the assessee filed second appeals before the Tribunal. The Tribunal has accepted the assessee's appeals on ground of limitation and set aside the order of the C.I.T.(Appeal), against which these appeals are filed before us.