Raymond Woollen Mills Limited
v.
Income Tax Officer And Others
(Supreme Court Of India)
CA No. 1972 and 1973 of 1992 | 17-12-1997
SUHAS CHANDRA SEN, J.
The challenge in this case is to the reopening of the assessment of Raymond Woollen Mills Ltd. We have been shown the recorded reasons for reopening under section 147(a). The case of the Revenue was that the assessee was charging to its profit and loss account, fiscal duties paid during the year as well as labour charges, power, fuel, wages, chemicals, etc. However, while valuing its closing stock, the elements of fiscal duty and the other direct manufacturing costs were not included. This resulted in undervaluation of inventories and understatement of profits. This information was obtained by the Revenue in a subsequent years assessment proceeding Mr. Vellapally, learned senior counsel appearing on behalf of the appellant, has argued that the Department has made a grievous error in coming to this conclusion
In this case, we do not have to give a final decision as to whether there is suppression of material facts by the assessee or not. We have only to see whether there was prima facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage. We are of the view that the court cannot strike down the reopening of the case in the facts of this case. It will be open to the assessee to prove that the assumption of facts made in the notice was erroneous. The assessee may also prove that no new facts came to the knowledge of the Income-tax Officer after completion of the assessment proceeding. We are not expressing any opinion on the merits of the case. The questions of fact and law are left open to be investigated and decided by the assessing authority. The appellant will be entitled to take all the points before the assessing authority. The appeals are dismissed. There will be no order as to costs.
The challenge in this case is to the reopening of the assessment of Raymond Woollen Mills Ltd. We have been shown the recorded reasons for reopening under section 147(a). The case of the Revenue was that the assessee was charging to its profit and loss account, fiscal duties paid during the year as well as labour charges, power, fuel, wages, chemicals, etc. However, while valuing its closing stock, the elements of fiscal duty and the other direct manufacturing costs were not included. This resulted in undervaluation of inventories and understatement of profits. This information was obtained by the Revenue in a subsequent years assessment proceeding Mr. Vellapally, learned senior counsel appearing on behalf of the appellant, has argued that the Department has made a grievous error in coming to this conclusion
In this case, we do not have to give a final decision as to whether there is suppression of material facts by the assessee or not. We have only to see whether there was prima facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage. We are of the view that the court cannot strike down the reopening of the case in the facts of this case. It will be open to the assessee to prove that the assumption of facts made in the notice was erroneous. The assessee may also prove that no new facts came to the knowledge of the Income-tax Officer after completion of the assessment proceeding. We are not expressing any opinion on the merits of the case. The questions of fact and law are left open to be investigated and decided by the assessing authority. The appellant will be entitled to take all the points before the assessing authority. The appeals are dismissed. There will be no order as to costs.
Advocates List
For
For Petitioner
- Shekhar Naphade
- Mahesh Agrawal
- Tarun Dua
For Respondent
- S. Vani
- B. Sunita Rao
- Sushil Kumar Pathak
Bench List
HON'BLE JUSTICE S. C. SEN
HON'BLE JUSTICE S. S. M. QUADRI
Eq Citation
(1999) 236 CTR SC 34
(2008) 14 SCC 218
[1999] 236 ITR 34 (SC)
LQ/SC/1997/1710
HeadNote
A. Income Tax — Assessment — Reopening — Sufficiency of material — Held, court cannot strike down reopening of case in facts of this case — It will be open to assessee to prove that assumption of facts made in notice was erroneous — Assessee may also prove that no new facts came to knowledge of Income-tax Officer after completion of assessment proceeding — Questions of fact and law are left open to be investigated and decided by assessing authority — Income Tax Act, 1961, S. 147 — Income Tax Act, 1922, S. 34
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