1990 (9) TMI 125 - AT - Income Tax

Summary

Issues Involved:
1. Interpretation of the judgment of the Hon'ble High Court regarding the notice issued by the assessing officer to reopen the case under section 147(a) of the IT Act, 1961.
2. Jurisdiction of the ITO to assess additional items not mentioned in the original notice under section 148/147(a).
3. Binding nature of the High Court's judgment on the department and the assessee.

Issue-Wise Detailed Analysis:

1. Interpretation of the Judgment of the Hon'ble High Court:
The original assessments for the assessment years 1968-69 and 1969-70 were completed on 5-1-1973. Subsequently, notices under section 148 read with section 147(a) of the IT Act, 1961 dated 12-3-1976 were issued and served on the assessee. The assessee challenged these notices through a writ petition under Article 226 of the Constitution of India before the Hon'ble High Court of Allahabad, resulting in the judgments in Renusagar Power Co. Ltd. (No.1) v. ITO [1979] 117 ITR 719 and Renusagar Power Co. Ltd. (No.2) v. ITO [1979] 117 ITR 733. The High Court held that no material relevant to certain items had been kept back by the assessee during the original assessment proceedings, thus section 147(a) could not be invoked for those items. However, for other items, it was found that the petitioner company had not disclosed fully and truly all material facts, justifying the reopening of the assessment.

2. Jurisdiction of the ITO to Assess Additional Items:
The IAC (Assessment) proceeded with the assessments and found additional items of income that had escaped assessment but were not mentioned in the original notice under section 148/147(a). The CIT (Appeals) directed the IAC to delete additions where there was no omission or failure by the assessee to disclose fully and truly all material facts necessary for the assessment. The revenue argued that once the assessment was reopened, the ITO was free to assess any item that had escaped taxation, relying on the Supreme Court's decision in V. Jaganmohan Rao v. CIT [1970] 75 ITR 373 and other similar cases. However, the CIT (Appeals) held that the High Court's judgment was binding and only items for which there was non-disclosure could be brought to tax.

3. Binding Nature of the High Court's Judgment:
The CIT (Appeals) and the Tribunal emphasized that the High Court's judgment was binding on both the department and the assessee. The High Court had specifically restrained the revenue from assessing certain items and allowed reassessment only for items where there was non-disclosure of material facts. The Tribunal noted that allowing the revenue to assess additional items not mentioned in the original notice would undermine the finality of judicial determinations and could lead to chaos in the judicial system. The Tribunal upheld the CIT (Appeals)'s order, which was in conformity with the High Court's judgment and the Supreme Court's principles regarding the finality of judicial decisions.

Conclusion:
The Tribunal dismissed the revenue's appeals, holding that the CIT (Appeals)'s order was correct and justified. The Tribunal reiterated that the assessing officer was bound by the High Court's judgment and could not bring additional items to tax that were not mentioned in the original notice under section 147(a). The issues were decided against the revenue, emphasizing the importance of respecting the finality of judicial decisions and the binding nature of the High Court's judgment.