Delhi High Court
Chawla & Co. vs Deputy Commissioner Of Income Tax on 29 January, 1991
Bench: B Kirpal, S Duggal
ORDER
By The Court
1. Rule D.B.
The challenge in this writ petition is to the notice issued under s. 147(a) of the IT Act, 1961, seeking to reopen the assessment for the year 1978-79.
2. In respect of that year, the assessment was completed under s. 143(3) of the Act or 23rd March, 1981. Thereafter the impugned notice dt. 17th March, 1989, was issued under s. 147(a) of the Act. According to the respondent, this notice was issued because the petitioner had wrongly valued the closing stock. Notwithstanding the protest of petitioner, proceedings were initiated and thereafter the present writ petition has been filed.
3. It is contended before us and it is also stated in the affidavit of the respondent that in the balance sheet it had been mentioned by the petitioner that the closing stock was being valued at cost price. In fact, the closing stock was valued as per the invoice price and did not include customs duty. It is, however, admitted that during the pendency of the original assessment proceedings, the petitioner had written a letter to the ITO wherein it had been stated that the closing stock was being valued regularly every year and the petitioner was valuing the same at cost price i.e. invoice value excluding customs duty paid. The ITO did not investigate the matter any further. He was now chosen to initiate the reassessment proceedings. It is now stated in the affidavit in reply that the portion of the assessed's letter regarding the valuation of closing stock "escaped the attention of the ITO". It is thereafter that the present notice under s. 147(a) of the Act was issued.
4. It is now well settled that recourse cannot be had to proceedings under s. 147(a) merely on the change of opinion of the ITO. It is the duty of the assessed to disclose truly and fully all material facts which would enable the ITO to complete the assessment. In the present case, a query was raised by the ITO as to what was the basis of valuing the closing stock. This query was answered by the assessed writing a letter indicating therein that he was valuing the closing stock on the basis of the invoice price and without including the customs duty. The petitioner, therefore, disclosed fully and truly all the material facts. If the ITO was so advised, he could have rejected this method of valuation but he chose not to do so. The petitioner cannot now he be said to have hidden the material or primary facts and the issuance of notice under s. 147(a) of the Act is clearly without jurisdiction.
5. There was no error or omission on the part of the assessed to disclose any material facts and, therefore, no notice under s. 147(a) could have been issued.
6. We, therefore, allow the writ petition and issue a writ of mandamus quashing the impugned notice under s. 147(a) of the Act.
7. The petition stands disposed of accordingly. No order as to costs.
