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2008] 300 ITR 276 (BOM.) HIGH COURT OF BOMBAY Sanghvi Swiss Refills (P.) Ltd. v. Smt. Arti Handa Asstt. CIT F.I. REBELLO AND J.P. DEVADHAR JJ. WRIT PETITION NO. 608 OF 1990 OCTOBER 23, 2007 Section 148 of the Income-tax Act, 1961 - Income escaping assessment - Issue of notice for Where information as to consumption of raw materials was available at time of completion of assessment but Assessing Officer had failed to take into consideration waste in production of finished product, reopening of assessment on account of alleged excess production/consumption of finished products/raw materials was not justified The assessee was in the business of manufacturing ball pens and refills as also ink. Insofar as manufacture of ink was concerned the process involved mixing various chemicals and dyes, heating and otherwise processing the said mixture of ink chemicals and dyes. As far as ink refills were concerned, there was no uniform rate of consumption for any year. As a result of a search, the assessee's assessment was reopened on the ground that there was production of ink and pen refills. It was the case of the assessee that at the time of completing the assessment, the Assessing Officer was aware of the possible conclusions that could be reached in relation to the consumption of raw materials and production of finished goods for the assessment years 1975-76 and 1976-77 which were completed prior to the present assessment. The Assessing Officer, on identical material placed before him, had accepted the accounts as disclosed in the assessee's books of account. Similarly for the assessment year 1977-78, he had similarly accepted the results as disclosed but had passed an order on different ground. Although these findings were subsequently reversed by the appellate authorities, the Assessing Officer was aware and seized of the question of the shortcomings, if any, in the assessee's income as declared by reason of the alleged excess production/consumption of finished goods/raw materials. Held that nowhere in the statement recorded under section 132(4) was there any unequivocal admission by the directors of the assessees for the ratio worked out by the Assessing Officer for…

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