Berger Paints India Ltd. & Ors. v. Joint CIT & Ors.

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The Tax Publishers2000 TaxPub(DT) 1389 (Cal-Trib) : (2000) 245 ITR 0645 : (2000) 164 CTR 0587 : (2001) 115 TAXMAN 0003 Berger Paints India Ltd. & Ors. v. Joint Commissioner of Income Tax & Ors. () INCOME TAX --Reassessment----NOTICE UNDER SECTION 148Validity--All primary facts disclosed-- Catch Note: Petitioner paid custom duty in advance during the financial year 1992-93 on account of bonding of imported raw materials shown under the head 'loan and advances' in the account--Petitioner claimed the same as deduction under section 43 B--Assessing officer allowed the same--Later on reassessment was done on the ground that closing stock of imported raw material in Bond did not include in clament payment of custom duty involved, without increasing the profit to the extent which was not in order--Not justified--Petitioner had disclosed primary facts as to closing stock of imported raw material bonded and once all the primary facts were before the assessing authority, it was for him to decide as to what inferences of facts could be reasonably drawn. Held: From the decision of the Supreme Court (Calcutta Discount Co. Ltd. v. Income Tax Officer, Companies District 1, Calcutta) (1961) 41 ITR 191 (SC) and majority view is that there are certain prima facie facts which are relevant for the purpose of consideration. Such primary facts are that it was the assessee's duty to disclose to them including particular entries in account books, particular portions of documents and other evidence which could have been discovered by the assessing authorrty, from the documents and other evidence disclosed. The duty, however, did not extend beyond the full disclosure of all primary facts. Once all the primary facts were before the assessing authority, it was for him to decide that what inferences of facts could be reasonably drawn and what legal inferences had ultimately to be drawn. It was not for anybody else far less the assessee to tell the assessing authority what inference whether of facts of law, should be drawn. Hence, it cannot be construed now from the fact or law that the petitioner did not disclose such facts or closing stock of imported raw materials bonded as on 31-3-1993. Under such circumstances the notice under section 148 of the income-tax is violative of law. Therefore, the notice of reassessment as issued by 28-3-2000 in respect of assessment year 1993-94 being Annexure 1 to the writ petition stands quashed. However, no order is passed as to costs. Case Law Analysis: Calcutta Discount Co. Ltd. v. Income Tax Officer (1961) 41 ITR 191 (SC), followed. Application: Also to current assessment year. Decision: In favour of assessee Date of Judgment: 16 May 2000 Assessment Year: 1993-94 Cases Referred: Union Carbide (India) Ltd. v. Income Tax Officer (1973) 87 ITR 529 (Cal), Income Tax Officer v. Calcutta Chromotype (P) Ltd. (1974) 97 ITR 55 (Cal), East India Hotels Ltd. v. Deputy CIT (1993) 204 ITR 435 (Cal), Orient Beverages Ltd. v. Income Tax Officer (1994) 208 ITR 509 (Cal) and Modi Spinning & Weaving Mills Company Ltd. v. Income Tax Officer (1970) 75 ITR 367 (SC). SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2000 TaxPub(DT) 1389 (Cal-Trib) : (2000) 245 ITR 0645 : (2000) 164 CTR 0587 : (2001) 115 TAXMAN 0003

Berger Paints India Ltd. & Ors. v. Joint Commissioner of Income Tax & Ors. ()

INCOME TAX

--Reassessment----NOTICE UNDER SECTION 148Validity--All primary facts disclosed--

Catch Note:

Petitioner paid custom duty in advance during the financial year 1992-93 on account of bonding of imported raw materials shown under the head 'loan and advances' in the account--Petitioner claimed the same as deduction under section 43 B--Assessing officer allowed the same--Later on reassessment was done on the ground that closing stock of imported raw material in Bond did not include in clament payment of custom duty involved, without increasing the profit to the extent which was not in order--Not justified--Petitioner had disclosed primary facts as to closing stock of imported raw material bonded and once all the primary facts were before the assessing authority, it was for him to decide as to what inferences of facts could be reasonably drawn.

Held:

From the decision of the Supreme Court (Calcutta Discount Co. Ltd. v. Income Tax Officer, Companies District 1, Calcutta) (1961) 41 ITR 191 (SC) and majority view is that there are certain prima facie facts which are relevant for the purpose of consideration. Such primary facts are that it was the assessee's duty to disclose to them including particular entries in account books, particular portions of documents and other evidence which could have been discovered by the assessing authorrty, from the documents and other evidence disclosed. The duty, however, did not extend beyond the full disclosure of all primary facts. Once all the primary facts were before the assessing authority, it was for him to decide that what inferences of facts could be reasonably drawn and what legal inferences had ultimately to be drawn. It was not for anybody else far less the assessee to tell the assessing authority what inference whether of facts of law, should be drawn. Hence, it cannot be construed now from the fact or law that the petitioner did not disclose such facts or closing stock of imported raw materials bonded as on 31-3-1993. Under such circumstances the notice under section 148 of the income-tax is violative of law. Therefore, the notice of reassessment as issued by 28-3-2000 in respect of assessment year 1993-94 being Annexure 1 to the writ petition stands quashed. However, no order is passed as to costs.

Case Law Analysis:

Calcutta Discount Co. Ltd. v. Income Tax Officer (1961) 41 ITR 191 (SC), followed.

Application:

Also to current assessment year.

Decision:

In favour of assessee

Date of Judgment:

16 May 2000

Assessment Year:

1993-94

Cases Referred:

Union Carbide (India) Ltd. v. Income Tax Officer (1973) 87 ITR 529 (Cal), Income Tax Officer v. Calcutta Chromotype (P) Ltd. (1974) 97 ITR 55 (Cal), East India Hotels Ltd. v. Deputy CIT (1993) 204 ITR 435 (Cal), Orient Beverages Ltd. v. Income Tax Officer (1994) 208 ITR 509 (Cal) and Modi Spinning & Weaving Mills Company Ltd. v. Income Tax Officer (1970) 75 ITR 367 (SC).