SUMANBALA AGGARWAL Vs. UNION OF INDIA

JUDGEMENT

(1.) This petition is filed to challenge the validity of the notice dated 26th March, 1992 issued under Sec.148 of the Income Tax Act, 1961. The said notice was issued by the Assistant Commissioner of Income Tax, Central Circle - 31, Mumbai with a view to reopen the assessment for A. Y.1981-82 in the case of M/s. Devidayal Rolling Mills - the petitioner No.1 herein. This petition was admitted on 12th August, 1992 and further proceedings pursuant to the impugned notice dated 26th March, 1992 were stayed.

(2.) The facts relevant for the present petition are that : M/s. Devidayal Rolling Mills - first petitioner herein (hereinafter referred to as the assessee) was engaged in the business of converting copper wire bars into copper rods or coils. The process of converting copper wire bars into copper rods or coils is known as hot rolling process and involves heating of bars in a furnace to a very high temperature and thereafter feeding the red hot bars through various rolling and stretching processes, whereby the width and diameter of the bars gets reduced to the required dimensions. It is an admitted fact that the process of converting copper wire bars into copper rods or coils, involves loss of copper metal in the form of copper oxide etc. which are all collected as waste residue. Though the metal can be recovered from such waste residue, the assessee instead of resorting to such process, has been selling the waste residue from time-to-time and the amount so realised have been accounted for in the books of accounts maintained by the assessee.

(3.) During the assessment year 1981-82, the assessee had sold waste residue for Rs.4,52,874/- and the same was duly recorded in the books maintained by the assessee. On 27th August, 1981, the assessee filed its return of income for the assessment year 1981-82. In the profit and loss account, the assessee had disclosed miscellaneous income of rs.6,21,240/- which included waste residue sold at rs.4,52,874/-. During the course of assessment, the assessing Officer by his letters dated 31st October, 1983 and 30th January, 1984 called for further particulars relating to the collection of waste residue as also the particulars relating to sundry sales of waste residue. The assessee furnished the requisite particulars and on being satisfied the assessing Officer accepted the receipts on sale of waste residue and passed an assessment order under section 143 (3) of the Act on 24th March, 1984. It may be noted that the assessee had filed an appeal against the assessment order on certain other issues and even the C. I. T. had initiated action under section 263 of the Income Tax Act, 1961 for assessment year 1981-82 on certain other issues, however, those proceedings are not relevant for the purposes of the present petition.