Law:

Section:

Section 147, read with section 43B, of the Income-tax Act, 1961 - Income escaping assessment - Failure to make full or true disclosure - Assessment years 1984-85 and 1985-86 - Assessee-company imported newsprints, on which customs duty was payable - It disputed rate of custom duty before Supreme Court - Pursuant to direction of Supreme Court, assessee furnished bank guarantee for amount in dispute and claimed deduction of that customs duty liability - Assessing Officer allowed assessee's claim in original assessment and thereafter reopened assessments and disallowed assessee's claim on ground that assessee was disentitled for any deduction in absence of actual payment of customs duty as that was hit by provisions of section 43B - Whether when notice had been issued after 4 years after expiry of relevant assessment year and where assessee had disclosed fully and truly material facts for assessment, Assessing Officer was unjustified in reopening of assessment - Held, yes Section 43B of the Income-tax Act, 1961 - Business disallowance - Certain deductions to be allowed only on actual payment - Whether furnishing of bank guarantee tantamounts to actual payment of customs duty as required under section 43B - Held, no Circulars & Clarifications - Circular pertaining to monetary limit upto which reference may be made by revenue. FACTS The assessee-company imported newsprints on which customs duty was payable. It disputed the rate of customs duty before the Supreme Court and made a request for interim ex parte stay order on payment of custom duty. The Supreme Court granted stay on the condition of giving an unqualified and categorical bank guarantee for the amount of custom duty payable by it. Pursuant to the direction of the Supreme Court, the assessee furnished bank guarantee for the amount in dispute and claimed deduction of that custom duty liability. The Assessing Officer allowed the claim of the assessee in original assessment. Thereafter, the Assessing Officer reopened the assessment under section 147 for the years under consideration and disallowed the claim of the assessee holding that it was not entitled to any deduction in the absence of actual payment…

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