Law: Income Tax Act, 1922

Section: 34

Indian Income-tax Act, 1922 (XI of 1922)-Section 34-Reassessment-Notice under section 34 as value of opening stock is less than value of closing stock of previous year-Assessee filing return for earlier year giving higher value for closing stack-Reassessment made accordingly-Appeal by assessee that value of opening stock of earlier year should also be raised- Contention not raised by assessee previously at assessment stage- Whether assessee entitled to that relief -Held no. In the course of the proceedings for the assessment year of the assessee for the assessment 1960-61, the Income-Tax Officer found that the assessee had valued his stock in his business neither at the cost nor at the market price nor at "cost or market price whichever was lower". The Income-Tax Officer, therefore, made additions to the value of the opening and closing stock for that year. As the opening stock for the assessment year 1960-61 was necessarily the closing stock for the assessment year 1959-60, the Income Tax Officer issued a notice to the assessee under Section 34(1)(b) of the Indian Income tax Act, 1922, in respect of the assessment year 1959-60, corresponding to the previous year S. Y. 2014. The assessee filed a return showing an addition of Rs. 11,174 to the value of the closing stock for 1959-60. The Income Tax Officer accepted that figure and made a reassessment. The assessee preferred an appeal claiming that the value of the opening stock of 1959-60 should have been correspondingly adjusted but the Appellate Assistant Commissioner dismissed the appeal. The Appellate Tribunal rejected the assessees second appeal on two grounds, namely, (1) in tracing the under-valuation to its original source, there would be difficulty of the bar of limitation prescribed by Section 34, and (2) the assessee himself, pursuant to the notice under Section 34, had filed a return revaluing only the closing stock of the assessment year 1959-60, thus indicating that he accepted that arrangement. On a reference : Held that :- (i) Having regard to the conduct of the assessee, the taxing authorities and the Tribunal rightly rejected the contention of the assessee. The contention had not been raised by…

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