KAPOOR BROTHERS Vs. UNION OF INDIA

JUDGEMENT

(1.) IN these writ applications the prayer of the petitioner is for quashing the proceeding initiated by the respondent-joint Commissioner of INcome-tax, Special Range, Ranchi (respondent No. 3) under section 147 of the INcome Tax Act, 1961 (hereinafter referred to as the "Act"), for reopening the assessment for the assessment years 1989-90 to 1995-96 including the notices dated 13-3-2000, issued under section 148 of the Act directing the petitioner to file the return for the assessment years aforesaid within the time mentioned in the notice itself for the purpose of making the reassessment for the period, in question. Further prayer of the petitioner is for restraining the respondent authority from taking any action in terms of section 147 of the Act including passing any reassessment order.

(2.) LEARNED counsel has challenged the very initiation of the proceeding on the following grounds : (i) the instant proceeding initiated against the petitioner for reopening of the assessment is not on account of any failure on the part of the petitioner to disclose the material facts but on the basis of the enquiry made under sections 133(6) and 131 of the Act wherein it was found that the transaction entered into by the petitioner with the sub-contractor, namely, Sri K. N. Kutty, is a sham transaction which is not permissible in the eye of law ; (ii) the reopening of the completed assessment is barred by the doctrine of merger as the assessment order merged with the appellate order passed by the respondent-Commissioner (Appeals) as well as the Income Tax Appellate Tribunal ; (iii) the instant proceeding is sought to be initiated at the behest of the superior authority, namely, the Commissioner (Appeals) ; (iv) once the assessee has disclosed the true and full primary and jurisdictional facts, such proceeding cannot be initiated for the reopening of the assessment which is based upon true and full disclosure of the material evidence and, lastly, the very initiation of the instant proceeding is barred by limitation. In support of his contention, learned counsel has relied upon the following decisions : (i) Sheo Narain Jaiswal v. Income Tax Officer, 1989 176 ITR 352 (ii) Peico Electronics and Electricals Ltd. v. Deputy. CIT (Assessment), 1994 210 ITR 991; (iii) Arvind Mills Ltd. v. Deputy CIT, 2000 242 ITR 173 (iv) Hemraj Munshi Ram v. Union of India, 2000 245 ITR 155 ; (v) Krishna Metal Industries v. H. M. Algotar, 1997 225 ITR 853 ; (vi) Fenner (India) Ltd. v. Deputy CIT, 2000 241 ITR 672 ;(vii) Income Tax Officer v. Lakhmani Mewal Das, 1976 103 ITR 437 (viii) Dhanaraj Singh and Co. v. CIT, 1996 218 ITR 312