Law:

Section:

Section 147, read with section154 of the Income-tax Act, 1961 - Income escaping assessment - Position prior to 1-4-1989 - Assessment year 1962-63 - ITO initiated proceedings under section 154 and withdrew depreciation granted on lorry which had been sold in year of account itself - However, on appeal, AAC cancelled said order holding that there was no mistake on part of ITO in allowing depreciation and, therefore, there was no escapement of taxable income requiring rectification under section 154 - Thereafter, on question as whether appeal to Tribunal against order of AAC should be filed or not Commissioner sent memo to ITO to effect that no appeal was necessary against order of AAC as alternative remedy of reopening assessment under section 147(b) was available to withdraw said depreciation - Accordingly, no appeal was filed but assessment was reopened and depreciation was withdrawn - Whether acceptance by department of order of AAC made that order final with result that conclusion of Appellate Assistant Commissioner that there was no escapement of tax was also final.- Held, yes - Whether once it had become final it was not open to ITO subsequently to destroy that finality by purporting to take action under section 147(b) - Held, yes - Whether, therefore, reassessment proceedings were not valid - Held, yes FACTS The assessee was an individual and carried on business as a contractor. The assessment for the year 1962-63 was made in the first instance on 23-11-1962. While assessing the assessee, the ITO found that there were no books of account kept by the assessee except the memorandum book. Consequently, he had to make an estimate of the business income, and he did so, firstly, by estimating the net profits at 11 per cent on certain receipts and 12½ per cent on certain other receipts, adding that 'depreciation admissible will be deducted from the profits so determined'. He accordingly worked out the net profits. The details of the admissible depreciation were contained in the assessment order itself, and the Court concerned with a sum of Rs. 5,547, which was the depreciation at 25 per cent on the written down value of Rs. 22,189 of a lorry. Admittedly, the said…

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