Case Law Details
Mangalam Publications Vs CIT (Supreme Court of India)
The case of Mangalam Publications Vs CIT, heard by the Supreme Court of India, revolves around the legality of issuing reassessment notices based on evidence deemed unreliable. Additionally, the distinction between a defective and invalid return is explored. This analysis sheds light on the court’s interpretation of these critical aspects in income tax jurisprudence.
Sub: Whether reassessment notice can be issued simply on the basis of an evidence which itself was held to be not reliable and what is the difference between a defective and invalid return?
The Supreme Court in this case was dealing with a situation where reassessment proceedings were initiated for AY 1990-91, 1991-92 and 1992-93 on the basis of a balance sheet which was given to South Indian Bank ltd and the AO on comparison of capital accounts of the partners as appearing in the said balance sheet and the last balance sheet which was found with the department found abnormal increase in the capital of the partners. The partners explained that the balance sheet could not be prepared for these years as the books had been seized by the department, though for each of these years the assessment was completed u/s 143(3) after verification of books of accounts and profit& loss account. Moreover, the balance sheet found with South Indian Bank ltd which was relied was itself found unreliable by CIT(A) in relation to appeal for a different year.
On these facts, the Supreme Court relying on the decision of Calcutta Discount Co Ltd as well as Lakhmani Mewal Das , Kelvinator etc held that it could not be said that there was any omission or failure to disclose on part of the assessee and thus the decision of the high court was reversed in favour of the assessee.
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