1991 (12) TMI 23 - HC - Income Tax

Aggregation Under Estate Duty, Deductions In Estate Duty, Estate Duty, Mitakshara HUF, Provision

Summary

Issues:
Jurisdiction of Appellate Assistant Commissioner to consider the legality of reassessment proceedings under section 147.
Scope of appeal before the Appellate Assistant Commissioner under section 246(c) of the Income-tax Act, 1961.

Detailed Analysis:

The case involved an assessee who was a registered firm and had undergone reassessment proceedings under section 147 of the Income-tax Act, 1961. The Income-tax Officer initiated action under section 147(a) against the assessee based on information regarding the business of another firm. The assessee challenged the reassessment on grounds of jurisdiction and legality, arguing that the basis for reassessment had ceased to exist. The Appellate Assistant Commissioner accepted the submissions and annulled the assessment.

The Department appealed to the Income-tax Appellate Tribunal, contending that the assessee could not challenge the validity of the assessment under section 147 in the appeal before the Appellate Assistant Commissioner. The Tribunal relied on a previous court decision but rejected the assessee's argument regarding the change in law under the Income-tax Act, 1961.

The High Court analyzed the relevant statutory provisions, emphasizing the distinct nature of orders of assessment or reassessment under section 147 compared to those under sections 143 or 144. The court highlighted that appeals against orders under section 147 constitute a separate category under section 246(1)(e) and are not limited to challenging the quantum of income assessed. The court also noted the departure from the provisions of the old Act of 1922 and cited a Calcutta High Court case supporting the broad interpretation of section 246(1)(e).

The High Court further distinguished the Income-tax Act from other statutes and emphasized the wide interpretation of section 246(1) without restrictive clauses. Referring to a Supreme Court case, the court concluded that all grounds, including challenges to the validity of orders under section 147, should be available for consideration in appeals. The Tribunal's view that it could not assess the validity of the assessment in the appeal was deemed erroneous by the High Court.

In conclusion, the High Court answered both questions in favor of the assessee, holding that the Appellate Assistant Commissioner had jurisdiction to consider the legality of reassessment proceedings under section 147, and the scope of appeal under section 246(c) allowed for challenges to the validity of such assessments. The assessee was awarded costs amounting to Rs. 250.