Law:

Section:

Section 147 of the Income-tax Act, 1961 - Income escaping assessment - Position prior to 1-4-1993 - Assessment year 1966-67 - Assessee had disclosed all primary facts in course of original assessment proceedings and on basis of those facts, Income-tax Officer, while completing assessment, arrived at certain decisions - Later, Income-tax Officer initiated reassessment proceedings thinking that certain items of expenditures were wrongly allowed - Whether since all material facts were disclosed by assessee at time of original assessment and on basis of those facts Income-tax Officer completed assessment, it could not be said that there was escapement of income on account of failure on part of assessee to fully and truly disclose material facts during course of original assessment proceedings - Held, yes - Whether, therefore, reassessment proceedings had been taken merely on change of opinion and as such liable to be set-aside - Held, yes FACTS The respondent Income-tax Officer issued notice under section 148 on the grounds: (1) that, at the relevant time, the petitioner-company manufactured strawboards of various types and that the said industry was not included in the list of 'priority industries' shown in Schedule VI and that, therefore, no allowance under section 80-1 could have been granted; (2) that the profit and loss account contained certain amount being surplus in excise duty and since excess of excise duty was not relatable to the profits earned by the company, the company was not entitled to the relief under section 80-I as if the amount of excise duty was excluded, the net result would be a loss; (3) that the petitioner had not disclosed, all material facts truly and fully at the time of original assessment proceedings inasmuch as, (a) in the profit and loss account the company had debited an amount on account of expenditure incurred for construction of an earthen dam and since that expenditure was in the nature of capital expenditure, it was not allowable as revenue expenditure, (b) that an amount was debited to the profit and loss account as expenses of earlier years and this expenditure was not allowable during the accounting year in question. (c)…

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