1984 (8) TMI 76 - HC - Income Tax

Summary

Issues:
Reassessment proceedings under s. 36 of the Karnataka Agricultural I.T. Act, 1957 - Denial of opportunity to present case in reassessment - Claim of partition in family properties - Scope of assessment and reassessment - Right of assessee to raise contentions in reassessment proceedings.

Analysis:
The case involved three revision petitions arising from reassessment proceedings under s. 36 of the Karnataka Agricultural I.T. Act, 1957. The petitioner had initially returned income as that of a HUF, including only his share income from family properties. However, the assessing authority later discovered amounts received by the petitioner's sons from family properties were not included in taxable income. The Deputy Commissioner, in appeals against reassessment, found substance in the petitioner's claim of a partition in the family but held the petitioner estopped from raising the partition question due to not challenging the original assessment. The Tribunal rejected all contentions, noting no claim under s. 30 of the Act. The authorities below concluded there was no claim of partition in the original assessment proceedings, despite a faint reference in a letter seeking an adjournment.

The main issue revolved around the right of the assessee to claim partition in reassessment proceedings despite not doing so in the original assessment. The petitioner's counsel argued that the assessee should not be prevented from claiming partition during reassessment, emphasizing that assessment and reassessment procedures and rights of parties are similar. The High Court advocate contended that the Act did not allow raising partition claims in reassessment if not previously raised. The Court rejected this argument, citing precedents and the broad interpretation of "assessment" to include reassessment.

In various judgments, the Court highlighted that reassessment is akin to a fresh assessment, where the assessing authority reopens the original assessment entirely. The Court emphasized that the assessing authority must consider all legitimate contentions raised by the assessee in reassessment proceedings, regardless of whether they were raised in the original assessment. The Court held that the question of estoppel does not apply to reassessment proceedings, and the assessee has the right to raise all legitimate contentions during reassessment.

Consequently, the Court allowed the revision petitions, setting aside the impugned orders and remitting the matter to the assessing authority for reassessment. The assessing authority was directed to provide the assessee with an opportunity to be heard and redo the reassessment in light of the Court's observations. The parties were instructed to appear before the assessing authority on a specified date for further proceedings.