1985 (1) TMI 3 - HC - Income Tax

Summary

Issues:
1. Competency of the Income-tax Officer to issue notice under section 147(a) before the expiry of the prescribed period under section 139(4)(b)(iii) of the Income-tax Act, 1961.
2. Justification of the Income-tax Officer's notice under section 147(a) instead of section 147(b) and the time-barred assessment.
3. Interpretation of the provisions of section 147(a) and section 147(b) for reassessment purposes.

Analysis:

Issue 1: The petition filed by the assessee under section 256(2) of the Income-tax Act, 1961, sought direction for the Income-tax Tribunal to refer a question regarding the competency of the Income-tax Officer to issue a notice under section 147(a) before the expiry of the prescribed period under section 139(4)(b)(iii). The Tribunal had already referred a question related to the applicability of section 153(2)(a) and section 153(1)(c) in the case.

Issue 2: The Tribunal held that since no return of income was filed by the assessee before the notice under section 148 was issued by the Income-tax Officer, there was an omission and failure on the part of the assessee, allowing the Income-tax Officer to invoke jurisdiction under section 147(a). The Tribunal further clarified the distinction between section 147(a) and section 147(b), emphasizing that section 147(b) is applicable for reassessment purposes only, while section 147(a) covers cases where income chargeable to tax has escaped assessment due to the assessee's omission or failure to file a return.

Issue 3: The Tribunal's decision was based on the fact that no assessment had been made earlier by the Income-tax Officer as the assessee had not filed a return of total income. The court agreed that the case fell under section 147(a) as there was no return filed by the assessee before the notice was issued by the Income-tax Officer. The court dismissed the reference application, stating that the provisions of section 147(a) were correctly applied, and there was no error in the Tribunal's decision.

In conclusion, the court upheld the Tribunal's decision regarding the competency of the Income-tax Officer to issue a notice under section 147(a) in the given circumstances, emphasizing the importance of distinguishing between section 147(a) and section 147(b) for assessing cases of escaped income chargeable to tax.