Law:

Section:

Section 147, read with sections 271(1)(c) and of the Income-tax Act, 1961 - Income escaping assessment - Illustrations - Assessment year 1957-58 - Certain credits were accepted by ITO while making original assessment of assessee - Subsequently, statements of creditors were recorded by another ITO that they were only havala transactions - Said ITO sent an intimation to ITO concerned and on that basis assessment of assessee was reopened - On reassessment credits were treated as assessee's income and penalty under section 271(1)(c) was also imposed - Statement of creditors were not brought on record, even when called for by Tribunal - Tribunal set aside reassessment as well as penalty order holding that mere intimation of some statements recorded by another ITO did not form a ground for reopening assessment - As a second ground, Tribunal also pointed out that assessee at time of original assessment placed all facts truly and fully before ITO - Whether no question of law arose from Tribunal's order - Held, yes FACTS The assessee claimed certain credits for the year 1957-58 and the ITO accepted them. Subsequently, some statements were made by some persons before the Bombay ITO that these credits were not really advanced. The Bombay Officer wrote to the ITO concerned, about this. Saying that he was prima facie satisfied that certain bogus credits were claimed by the assessee, the concerned ITO reopened the assessment. He repelled the contention of the assessee that it could not be reopened and levied tax on those amounts by treating them as bogus credits. This was upheld by the AAC. Penalty under section 271(1)(c) was also levied. On further appeals, the Tribunal found that the genuineness of the credits had been gone into and the ITO did not disbelieve the hundi loans, that the only basis for reopening the assessment was the letter received from the ITO, Bombay, where two persons who were said to have given credit to the assessee had stated that they were only 'havala' transactions; that the department could not produce the statements made by the two persons though the Tribunal wanted those statements to be produced and that there was nothing to indicate that the…

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