1979 (6) TMI 13 - HC - Income Tax

Summary

Issues:
1. Validity of Income-tax Officer's jurisdiction under section 147(b) for assessment years 1967-68, 1968-69, and 1969-70.
2. Justification of Income-tax Officer's review of earlier decision under section 183(b) during original assessments.

Analysis:

Issue 1: Validity of Income-tax Officer's Jurisdiction under Section 147(b)
The case involved a reference under section 256(1) of the Income Tax Act concerning the jurisdiction of the Income-tax Officer (ITO) under section 147(b) for the assessment years 1967-68, 1968-69, and 1969-70. The ITO had initially assessed the firm as an unregistered firm under section 183(b) due to the absence of proper steps for registration. However, subsequent information revealed by another ITO led the ITO to reopen the assessments under section 147(b) as the income assessable to tax had been either escaped assessment or assessed at too low a rate. The Tribunal upheld the ITO's jurisdiction under section 147(b) for the mentioned assessment years, leading to the reference to the High Court.

Issue 2: Review of Earlier Decision under Section 183(b)
The second question raised whether the ITO was justified in reviewing his earlier decision under section 183(b) during the original assessments. The High Court held that the ITO had the power to reassess based on new information received after the original assessments, which indicated that the income assessable to tax had been either escaped assessment or assessed at too low a rate. The Court emphasized that this was not a mere change of opinion but a reassessment based on correct information, allowing the ITO to exercise his power under section 147(b) to reopen the assessments. The Court rejected the argument that the ITO could not revise his earlier decision once an option was exercised, stating that there was no restriction in the relevant provisions preventing the ITO from doing so.

In conclusion, the High Court affirmed the Tribunal's decision, upholding the ITO's jurisdiction under section 147(b) and his power to reassess based on new information, thereby dismissing the appeal and ruling in favor of the revenue.