Law:

Section:

Section 147 of the Income-tax Act, 1961 [Corresponding to section 34 of the Indian Income-tax Act, 1922] - Income escaping assessment - Position prior to 1-4-1989 - Assessment year 1943-44 - Whether section 34 of 1922 Act comes into operation only when ITO has reasonable grounds to believe that certain income, profits or gains have escaped assessment - Held, yes - Whether, therefore, power under this section cannot be exercised on mere remours or suspicions - Held, yes FACTS The petitioner-firm was carrying on business as contractors for construction of Government building, etc. The firm during the assessment year 1943-44 executed the contract work of the survey of India Buildings. For the purposes of execution of this work the firm had received materials from the Government at controlled or confessional rates. While completing the assessment the ITO added certain amount as profits on the ground that stores or quite a large portion of them had found their way to black-market where they were disposed of at fabulously high profits. The commodities, which according to the ITO had been sold in black-market, were not mentioned in the assessment order except nuts and bolts of comparatively low value. In 1952, the ITO initiated proceedings under section 34 of 1922 Act and reopened the assessment. The ITO added a further amount as profits obtained by selling in black market part of the iron and cement received from Government. On appeal the Tribunal held that section 34(1)(a) of 1922 Act applied to the case, but the quantum of addition was reduced. The application under section 66(1) of 1922 Act was rejected. On application under section 66(2) of 1922 Act : HELD There can be no doubt that section 43 of 1922 Act comes into operation only when the ITO has reason to believe that certain income, profits or gains have escaped assessment. The words 'reason to believe' suggests something more than the satisfaction of the ITO. The expression suggests reasonable grounds on which the ITO may take action. Power under this section cannot be exercised on mere rumours or suspicions. In the instant case, whether there was material evidence on the file to justify the sustaining to the…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492