9911796707
TMI Blog1992 (11) TMI 145X X X X Extracts X X X X X X X X Extracts X X X X ..... ls for assessment years 1974-75, 1976-77 and 1977-78. The essential facts are the following. The assessee Is an Individual. In all the accounting years relevant to these three assessment years, he was a partner in a partnership firm called M/s. K. B. Ahmed Alladin Co. The firm has got its own building called " Alladin Building ", at 72, S. D. Road, Secunderabad in which the firm was carrying on its business. The assessee used to manage the business of the firm during the accounting years in question. He also used to reside in a portion of the building named above without payment of any rent whatsoever to the firm. The following particulars also will be useful and hence they are noted as under : --------------------------------------------------------------------------------------------------------------------------------------------------- Asst. Date of Total Date of Date of Whether Income Date Total Year original income notice service revised revised - of income in asst. deter- u/s of return reasst. Revised order mined 148 notice filed order asst. ------------------------------------------------------------------------------------------------------------------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in support of this proposition, he had relied upon the Kerala High Court's decision in CIT v. C. L. Anand [1989] 179 ITR 4. He also contended that when the assessee himself is not aware of any escapement of income, there is no question of any omission to disclose the said amount of income arising and in such a case reassessment under section 147(a) cannot be resorted to. In support of this proposition, he had cited the Rajasthan High Court's decision in Sampat Ram Budhmal Dugar v. CWT [1987] 164 ITR 178 and in the case of Canara Sales Corpn. Ltd. v. CIT [1989] 176 ITR 340 (Kar.). Omission or failure within the meaning of section 147 should be on facts known to the assessee. Omission should be a wilful omission and it should be an item of income which the assessee is aware that it amounts to an item of income in his hands. When the assessee himself is not aware of the fact that the perquisite value of free residence in the building belonging to the firm should be returned by him he is not bound to return the same and reopening cannot be validly made under section 147(a), on his failure to disclose such perquisite value. Further it is significant to note that in none of the earlier ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction in the firm's assessment and was assessed in the hands of the firm. The amount had been assessed in the hands of the firm as also in the hands of the assessee-partner, which would result in double taxation of the same income. The amount which was assessed in the hands of the firm could not again be added to the assessee's personal income. Therefore, the value of the rent-free accommodation and electricity charges was not assessable in the hands of the assessee-partner as a perquisite since it had already been assessed in the hands of the firm. " In view of the Delhi High Court's decision, the question whether anything can be added towards perquisite value of free accommodation provided to the assessee partner in the firm of M/s. K. B. Alladin Co. would become contentious point. When the question is highly debatable section 147(a) cannot be invoked and for that reason reopening in this case is not valid in view of the Kerala High Court's decision in C. D. Anand's case. In that case before the Kerala High Court, where the assessee was a partner in a firm as karta of the joint family whether the share income of his wife in the same firm in which he was a partner was includib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pilation that the residential building was not considered to be part of the assets over which depreciation was granted to the said firm. That means it was not considered to be a commercial asset employed in the business or put to use for the purpose of business. The assessment order for 1975-76 framed against the firm was dated 9-1-1978 and it is furnished at pages 10 to 12 of the paper compilation. Under the head property income the income was shown at Rs. 1,000 while it was revised at Rs. 5,000 as in assessment year 1974-75. For assessment year 1977-78, the assessment was framed against the assessee by assessment order dated 14-3-1980. Copy of the assessment order was furnished at pages 13 14 as also 15. In this assessment order also, the income from house property was returned at Rs. 1,000 whereas it was enhanced and accepted at Rs. 5,000. It can be known from the assessment order at page 14 of the paper compilation. Thus from the evidence on record, it is clearly to be seen that the building in question was always treated as house property held by the firm and it was never treated as commercial asset which was put to use by the firm for its business. In another paper book fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmissible under law. Thus the reopening is bad and the very addition towards perquisite value under section 28(iv) is illegal and cannot be sustained under law. 6. In answer to the arguments advanced by the learned advocate, Shri Y. Ratnakar, the learned Departmental Representative Shri Suryaprakasa Rao argued that for purpose of reopening under section 147(a) it is enough if the Income-tax Officer has reason to believe that by reason of omission or failure on the part of the assessee either to make a return or to disclose fully and truly all material facts necessary for his assessment for that year by virtue of the same if the income chargeable to tax has escaped assessment in that year, reopening can be validly made and in support of his contention he cited the Supreme Court's decision in the case of IndoAden Salt Mfg. Trading Co. (P.) Ltd. v. CIT [1986] 159 ITR 624. In that case, the assessee was having assets like reservoirs, salt pans, piers and condensers. In the original assessment for 1955-56 to 1962-63, the assessee did not disclose by valuation report or statement before the Income-tax Officer as to what portion of these assets was of earth work and what portion mason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 28(iv). " Therefore, on merits, the Assessing Officer is quite within his right to include the perquisite value in the re-opened assessment, argued the learned Departmental Representative. 7. After having heard both sides on this point, we prefer to accept the argument of the learned advocate for the assessee Shri Y. Ratnakar. We may, however, state that as far as reopening is concerned, it should be upheld as valid in view of the Supreme Court's decision cited by the learned Departmental Representative. According to that decision the omission or failure may be inadvertent also. If it is only inadvertent omission, then the assessee may not be knowing the true and exact nature of the taxability of a particular item of income. That by itself does not make reopening bad. Even if such inadvertent mistake is subsequently found out by the taxing authority it gives a good and valid ground for reopening under section 147(a). However, as regards the merits of the addition, we have to hold that the perquisite value cannot be added in the hands of the assessee in view of the Delhi High Court's decision. In our view the M. P. High Court's decision cited by the learned Departmental Rep ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
