1997 (3) TMI 132 - AT - Income Tax

Assessing Officer, Assessment Proceedings, Assessment Year, Interest On Sticky Loans, Original Assessment, Reassessment Proceedings, Supreme Court

Summary

Issues Involved:
1. Validity of re-assessment proceedings under section 147(a) and 147(b) for assessment years 1982-83, 1983-84, and 1984-85.
2. Jurisdiction of the Assessing Officer to reopen assessments under section 147(a) for assessment year 1982-83.
3. Consideration of re-assessment orders as rectification orders under section 154.
4. Adjudication of additional grounds for assessment year 1984-85.

Issue-wise Detailed Analysis:

1. Validity of Re-assessment Proceedings under Section 147(a) and 147(b) for Assessment Years 1982-83, 1983-84, and 1984-85:
The Assessing Officer initially issued notices under section 154 to rectify assessments by including interest amounts credited to the suspense account. However, he later issued notices under section 148 to reopen assessments under section 147. The CIT(Appeals) upheld the re-assessments, considering the Supreme Court's judgment in State Bank of Travancore v. CIT as valid information for action under section 147(a). The assessee admitted that for assessment years 1983-84 and 1984-85, reopening under section 147(b) was valid, and thus, the re-assessment orders for these years were upheld.

2. Jurisdiction of the Assessing Officer to Reopen Assessments under Section 147(a) for Assessment Year 1982-83:
For assessment year 1982-83, the notice under section 148 was issued on 19-11-1987, after the time-limit for section 147(b) had elapsed on 31-3-1987. The assessee argued that there was no concealment or lack of disclosure of material facts at the original assessment stage, thus invalidating the reopening under section 147(a). The Department contended that non-disclosure of interest credited to the suspense account constituted non-disclosure of material information. However, it was found that the Assessing Officer was aware of the interest suspense account operation, and the primary facts were disclosed. Therefore, the reopening under section 147(a) was deemed invalid, and the re-assessment order for 1982-83 was annulled.

3. Consideration of Re-assessment Orders as Rectification Orders under Section 154:
The Department argued that the re-assessment order under section 147(a) should be considered as a rectification order under section 154, citing various judgments. However, it was held that powers under sections 154 and 147(a) are of different nature, and an order passed under one section cannot be considered under another unless explicitly done so. The Assessing Officer had dropped the section 154 proceedings and initiated section 147(a) proceedings. Thus, the re-assessment order under section 147(a) could not be validated as a section 154 order.

4. Adjudication of Additional Grounds for Assessment Year 1984-85:
The assessee raised additional grounds regarding disallowances under sections 40A(5) and 43B and excess depreciation, which were not adjudicated by the CIT(Appeals). These grounds were remitted back to the CIT(Appeals) for decision after providing the assessee with a reasonable opportunity of being heard.

Conclusion:
The re-assessment order for assessment year 1982-83 was annulled, and the appeal was allowed. For assessment year 1983-84, the appeal was dismissed, upholding the re-assessment. For assessment year 1984-85, the appeal was partially allowed, with certain grounds remitted back to the CIT(Appeals).