9911796707
TMI Blog1989 (2) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... essee had owned certain lands which were acquired and by an Award dated25-5-1981, the U.P. Avas Evam Vikas Parishad Tribunal enhanced the compensation awarded earlier by the Collector. On the compensation, interest was also awarded to the assessee and since the interest was in respect of the period relating to various accounting periods relevant to the assessment years in question, the ITO initiated action u/s 147(a)/148 of the Income-tax Act, 1961. Notices u/s 148 for all the years were issued on2-3-1982and were served on15-3-1982. The assessee filed returns on20-5-1982and reassessments were made on1-6-1984. The assessee objected to action u/s 147/148 but the objection was overruled by the Income-tax Officer. 4. The assessee appealed to the AAC,Agra. It was contended before the learned AAC that there was no failure on the part of the assessee to furnish correct particulars of income and hence initiation of action u/s 147(a) was invalid. It was also contended that the Commissioner while granting sanction for the initiation of action u/s 147/148 had not applied his mind and, therefore, the Income-tax Officer's action was bad in law. These contentions were negatived by the learned A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment. Action for reassessments under sub-clause (b) of Sec. 147 is permissible where there has been no omission or failure as mentioned in clause (a) on the part of the assessee but the ITO has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year. In the case before us, the material fact that is said to have been suppressed by the assessee is that it had moved the U.P. Avas Evam Vikas Parishad Tribunal for enhancement of compensation. The award by the said Tribunal had been made on25-5-1981while the assessment for assessment year 1981-82 was made more than six months after, i.e., onthe 30th November, 1981. Therefore, so far as assessment year 1981-82 is concerned, the assessee had become entitled to a certain amount of interest which was taxable as its income for that year and patently till the assessment was completed the assessee did not inform the ITO of the coming into existence of income. Therefore, so far as assessment year 1981-82 is concerned, there is a clear default on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the proceedings for assessment years 1973-74 and 1977-78 to 1980-81 and consequently she cannot be accused of any failure on her part. So far as the pendency of the proceedings for enhancement of compensation are concerned, in the case of T.M. Kousali, the Hon'ble Karnataka High Court has specifically held that the pendency of the proceedings was not a material fact that was required to be disclosed during the assessment proceedings. The same is the view taken by the Hon'ble Punjab & Haryana High Court in the case of Mukhtiar Singh Sandhu in which the case of T.M. Kousali has been referred to. The learned Departmental Representative did not cite any authority to the contrary nor did he point out how the mere fact of pendency of proceedings could have changed the quantum of income assessed in the original assessments so that it could be said that it was a material fact for the assessment of income for those years. We, therefore, hold that for assessment years 1973-74 and 1977-78 to 1980-81 there was no failure on the part of the assessee to disclose all material facts necessary for her assessment for those years within the meaning of section 147(a) and consequently we hold that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessments had already been framed by the ITO and he could take proceedings for reassessment only by having recourse to section 147. We have already held that the initiation of proceedings for reassessments u/s 147(a) by the ITO was invalid. Section 149 provides a period of limitation within which action u/s 147 can be initiated. The learned D.R. contended that the legislature did not contemplate incomes remaining untaxed. This contention in our view is not wholly correct. The legislature was conscious of the difficulty that an assessee would have to face if no time limit is placed for initiation of action for reassessments u/s 147. Therefore, it had to strike a mean between the difficulty that may arise to the taxpayer as well as the interests of revenue and that is why Section 149 has been enacted which provides different periods of limitation for clauses (a) and (b) as well as different period where the income escaped is beyond a certain monetary limit. 11. The learned D.R. contended that under the aforesaid sub-clause (ii) of Section 153(3), an assessment or reassessment can be made at any time if the assessment is in consequence of or to give effect to any finding in an ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm. The AAC even observed that the ITO was free to take action to assess the excess in the hands of the co-owners. Thereafter the ITO initiated action u/s 147(a) against the individual partners and the matter ultimately reached the Hon'ble Supreme Court which observed as below: "The expressions "finding" and "direction" are limited in meaning. A finding given in an appeal, revision or reference arising out of an assessment must be a finding necessary for the disposal of the particular case, that is to say, in respect of the particular assessee and in relation to the particular assessment year. To be a necessary finding, it must be directly involved in the disposal of the case. It is possible in certain cases that in order to render a finding in respect of A, a finding in respect of B may be called for. For instance, where the facts show that the income can belong either to A or B and to no one else, a finding that it belongs to B or does not belong to B would be determinative of the issue whether it can be taxed as A's income. A finding respecting B is intimately involved as a step in the process of reaching the ultimate finding respecting A. If, however, the finding as to A's l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave been correct if the assessments had been reopened u/s 147(b) but in this case, assessments were reopened u/s 147(a) and we have already held that the initiation of reassessment proceedings was invalid. Therefore, this question does not survive for decision. 14. Lastly, it was contended that the notices issued by the Income-tax Officer u/s 148 for assessment years 1978-79 and 1979-80 were invalid because they were not signed by the ITO. Such a point was not specifically taken before the learned AAC and he has not dealt with the same. In the appeals before us, although this point has been specifically raised, however, no material has been placed before us to show that the notices in question were not signed by the ITO. In the paper book only a copy of the notice for asst. year 1977-78 has been placed which duly bears the signatures of the ITO. Therefore, it is not established that the notices were not signed by the ITO and this argument will, therefore, fail. 15. In the grounds of appeal, aground has been raised that the CIT accorded sanction u/s 151(2) mechanically without applying his mind. No argument was addressed to us on this point and nothing has been placed before us to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corded above, we hold that the initiation of action u/s 147(a) was invalid and the assessments have accordingly, to be cancelled. 20. However, the learned counsel for the assessee raised an additional contention that in this case, notice u/s 147(a) was not served on all the legal representatives of the deceased. It appears that this point was not raised before the ITO. It was raised in the grounds of appeal before the learned AAC but she has not discussed the issue probably because at the hearing such contention was not actually pressed. In the paper book filed before us, during the hearing a chart has been placed at page 18 which, inter alia, notes that S/Sh. Inder Chand Jain, Rajendra Chand Jain, Krishan Chand Jain and Rakesh Kumar Jain are the legal representatives. Apart from this, no material has been placed before us to show whether the deceased died intestate and how the four persons named above were related with the deceased. Reliance was placed on E. Alfred v. First Addl. ITO [1957] 32 ITR 401 (Mad.) in which it was held that the assessments were bad for want of service of notice on all the legal representatives. That was, however, a case in which the person who was serve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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