1985 (11) TMI 6 - HC - Income Tax

Summary

Issues:
1. Whether the assessee can challenge the inclusion of share income from a firm in his individual income during reassessment proceedings under section 147 of the Income-tax Act.

Analysis:
The judgment pertains to a reference made by the assessee regarding the inclusion of share income from a firm in his individual income during reassessment proceedings under section 147 of the Income-tax Act, 1961. The assessee, a medical practitioner, contended that the share income from the firm should have been excluded from his individual income as it belonged to the joint family. The original assessment was reopened based on information received, resulting in an increase in the total income. The Appellate Assistant Commissioner and the Tribunal rejected the assessee's claim, stating that the issue was not raised during the original assessment proceedings and, therefore, could not be raised during reassessment. The Tribunal's decision was challenged by the assessee, leading to a reference to the High Court.

The High Court analyzed the provisions of section 147 of the Income-tax Act, which deal with reassessment proceedings. The Court emphasized that the expression "such income" in section 147 refers to items of escaped income that need to be assessed or reassessed. The Court held that in reassessment proceedings, only items of escaped income are to be assessed, not the entire income afresh, including items already concluded in the original assessment. The Court highlighted the significance of section 152(2), which grants the assessee the right to claim dropping of reassessment proceedings only in cases falling under section 147(b) and not under section 147(a.

The Court referred to relevant case laws, including V. Jaganmohan Rao v. CIT and Sun Engineering Works (P) Ltd. v. CIT, to support its interpretation of the provisions. It concluded that the plain meaning of section 147 and the specific provision in section 152(2) do not allow the assessee to challenge items included in the original assessment during reassessment proceedings under section 147(a). The Court ruled in favor of the Revenue, stating that the assessee cannot contest the inclusion of share income from the firm in his individual income during reassessment proceedings.

In conclusion, the High Court answered the reference against the assessee and in favor of the Revenue, upholding that it was not permissible for the assessee to challenge the inclusion of share income from the firm in his individual income during reassessment proceedings under section 147(a) of the Income-tax Act, 1961. The Court made no order as to costs for the reference.