1992 (11) TMI 128 - AT - Income Tax

Summary

Issues Involved:
1. Jurisdiction of the Income-tax Officer (ITO) to reopen the assessment under section 146.
2. Validity of the petition filed by the assessee's Advocate under section 146.
3. Legality of the reassessment proceedings and the resulting additions and disallowances.

Detailed Analysis:

1. Jurisdiction of the Income-tax Officer (ITO) to Reopen the Assessment under Section 146:

The primary issue revolves around whether the ITO had the jurisdiction to reopen the assessment under section 146 based on a petition filed by the assessee's Advocate. The Tribunal observed that the original assessment was completed ex parte under section 144 on 12-9-1984, and a petition under section 146 was filed by the Advocate on 15-9-1984. The Tribunal noted that the provisions of section 146 confer jurisdiction on the ITO to reopen a completed assessment, and hence, the clutching of jurisdiction must be based on sound principles. The Tribunal held that the reopening of the assessment under section 146 was void ab initio because the ITO acted on a petition from a stranger (the Advocate) who was not duly authorized to file such a petition on behalf of the assessee.

2. Validity of the Petition Filed by the Assessee's Advocate under Section 146:

The Tribunal scrutinized the Vakalath executed by the assessee, which authorized the Advocate to "appear for the assessee" in appeal/assessment proceedings and "to conduct" the same. It did not authorize the Advocate to initiate proceedings. The Tribunal concluded that the Advocate was not empowered to sign the petition praying for reopening the assessment under section 146. Therefore, the application signed by the Advocate was invalid and non est in the eye of law. The Tribunal emphasized that the basic requirement for clutching at the jurisdiction under section 146 was conspicuous by its absence, rendering the reopening of the assessment void ab initio.

3. Legality of the Reassessment Proceedings and the Resulting Additions and Disallowances:

Given the Tribunal's finding that the reopening of the assessment under section 146 was void ab initio, it held that the resulting reassessment proceedings and the additions and disallowances made therein could not be sustained. The Tribunal noted that the assessee participated in the reopened assessment proceedings, but this participation did not cure the fundamental jurisdictional defect. The Tribunal cited several judicial pronouncements supporting the principle that an assessee is at liberty to challenge the vires of the jurisdiction at any stage of the proceedings and that a pure question of law can be raised for the first time before the Tribunal.

Conclusion:

The Tribunal allowed the assessee's appeal, holding that the reassessment proceedings initiated under section 146 were void ab initio due to the lack of a valid petition from the assessee. Consequently, the additions and disallowances made in the reassessment were set aside. The revenue's appeal against the reliefs granted by the CIT (Appeals) did not survive for consideration, and the cross objection filed by the assessee was dismissed as infructuous.