1997 (7) TMI 49 - HC - Income Tax

Summary

Issues: Validity of Income-tax Officer's assumption of jurisdiction under section 147(a) of the Income-tax Act, 1961.

The High Court of Madras considered a case where the Income-tax Officer initiated action under section 147(a) of the Income-tax Act, 1961 to assess a sum of Rs. 3,423 granted to the assessee as interest under section 214 of the Act. The interest had not been returned by the assessee during the original assessment proceedings for the relevant year. Prior to this action, the Income-tax Officer had already made an assessment under section 147(b) which was later found to be without valid jurisdiction by the Tribunal. In the reassessment under section 147(b), the Income-tax Officer included the interest income of Rs. 3,423 along with modifying the treatment of remuneration received by the assessee from certain sources. The Tribunal, following a decision of the Allahabad High Court, held that the cancellation of the reassessment under section 147(b) was justified, and it was not permissible to initiate fresh proceedings under section 147(b) for the same item after it was not upheld in appeal. Consequently, the High Court answered the question referred in the affirmative, against the Department, and ruled that there would be no order as to costs.

In summary, the judgment dealt with the validity of the Income-tax Officer's assumption of jurisdiction under section 147(a) of the Income-tax Act, 1961. It highlighted the sequence of events where the Income-tax Officer first took action under section 147(b) and later under section 147(a) for the same sum of interest income. The Tribunal's decision was based on the principle that once a proceeding for an item is not upheld in appeal, it cannot be revisited under a different section. This case underscores the importance of adhering to procedural requirements and the limitations on the Income-tax Officer's jurisdiction when initiating reassessment proceedings under different sections of the Act.