1987 (4) TMI 66 - HC - Income Tax

Issues Involved:
1. Whether the notice under section 147(b) of the Income-tax Act, 1961, is barred by time.
2. Whether there was "information" within the scope of section 147(b) for initiating action to reopen the assessment for the assessment year 1977-78.
3. Whether the Tribunal's finding in the appeals for the assessment years 1974-75 and 1975-76 constitutes "information" for invoking section 147(b) of the Act.
4. Whether the action initiated falls under section 150(1) of the Act, thereby validating the notice.

Detailed Analysis:

1. Whether the notice under section 147(b) of the Income-tax Act, 1961, is barred by time:
The petitioner's counsel argued that the notice under section 147(b) is barred by time as per section 149 of the Act. The Department contended that the notice is saved by section 150(1) of the Act. The court examined whether the conditions necessary for reopening the assessment under section 147(b) existed on the day the Income-tax Officer initiated action. The court noted that the assessment sought to be reopened is beyond 4 years but within 8 years from the end of 1977-78, and the permission of the Commissioner of Income-tax was sought as required under section 151.

2. Whether there was "information" within the scope of section 147(b) for initiating action to reopen the assessment for the assessment year 1977-78:
The court analyzed the reasons recorded by the Income-tax Officer, which indicated that the Tribunal's decision in the appeals for 1974-75 and 1975-76, treating the expenditure on ropeways as revenue expenditure, constituted "information" leading to the belief that the allowance of depreciation for 1977-78 was excessive. The court referred to the Supreme Court's decisions in Murlidhar Bhagwan Das, N.K.T. Sivalingam Chettiar, and Rajinder Nath, which clarified that "information" must be directly involved in the disposal of the case.

3. Whether the Tribunal's finding in the appeals for the assessment years 1974-75 and 1975-76 constitutes "information" for invoking section 147(b) of the Act:
The court examined whether the Tribunal's finding could be construed as "information" for reopening the assessment. The Tribunal had allowed the expenditure on ropeways as revenue expenditure, which implied that no depreciation could be allowed on this item for subsequent years. The court held that the Tribunal's finding constituted "information" within the meaning of section 147(b), justifying the reopening of the assessment.

4. Whether the action initiated falls under section 150(1) of the Act, thereby validating the notice:
The court considered whether the Tribunal's finding could be construed as a "finding" for purposes of section 150(1) of the Act, allowing reassessment without the bar of limitation. The court concluded that the Tribunal's finding was necessary for giving relief in respect of the assessment years 1974-75 and 1975-76 and that the Income-tax Officer's action to withdraw the depreciation for 1977-78 was a direct consequence of this finding. Therefore, the notice was valid under section 150(1) of the Act.

Conclusion:
The court dismissed the writ petition, holding that the notice issued under section 148 of the Act was valid and did not suffer from any illegality. The petitioner was permitted to file a return within 8 weeks from the date of the judgment.

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