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TMI Blog1983 (9) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... interested' had been accepted. Apparently, there was also no enquiry as regards the claim of the assessee. At any rate, the records do not indicate any such enquiry. The assessee was, in consequence of its treatment as such public company, subjected to the concessional rate of tax applicable to such companies. The Commissioner later noticed that out of 19,500 shares issued by the assessee-company, 7,400 shares were held by Sundaram Charities. According to him, the fact, that it was a public charitable trust cannot alter the fact that it was one person. By assuming that two other shareholders, Southern Roadways Ltd. and C. Rambhoopal Reddy did not come under any of the exceptions under Explanation to clause (18) of section 2 of the Act, he came to the conclusion that 12,400 shares representing more than 60 per cent of the total shareholdings was held by three persons and, hence, forfeiting its right to be treated as a company in which public are substantially interested by virtue of sub-item (c) of section 2(18)(b)(B). The assessee objected both to the jurisdiction and the merits of the notice. Its stand was that section 263 of the Act cannot apply to a reassessment 'made under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equent order merely repeated the original order. Hence, he claimed that the Commissioner was only interfering with the finding in the first order and that it is only fair under the circumstances that the time limit should be reckoned with reference to the first order. He also claimed that the status directly prohibited such a course inasmuch as clause (b) of sub-section (2) of section 263 specifically bars revision of an order 'after the expiry of two years from the date of the order sought to be revised'. He drew our attention to the decision of the Gujarat High Court in Ahmedabad Sarangpur Mills Co. Ltd. v. A. S. Manohar, ITO [1976] 102 ITR 712 where an attempt at justification of a time barred second rectification with reference to date of first rectification was held invalid. The Calcutta High Court in ITO v. Ryam Sugar Co. Ltd. [1976] 105 ITR 819 and Bengal Assam Steamship Co. Ltd. v. CIT [1978] 114 ITR 327, the Gujarat High Court in Poonjabhai Vanmalidas v. WTO [1978] 114 ITR 38, the Bombay High Court in CIT v. Sakseria Cotton Mills Ltd. [1980] 124 ITR 570 and the Rajasthan High Court in Kanhaiyalal v. CIT [1982] 136 ITR 243, according to him, in similar circumstances nullifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of section 143(3)(b) meant that the original assessment was set aside and had become non est. It was for this reason he claimed that 'rectification' decisions setting out the time limit with reference to original assessment could not help the assessee. Even a reassessment, he pointed out, was treated as a fresh assessment by the Supreme Court in CST v. H. M. Esufali H. M. Abdulali [1973] 90 ITR 271 under the M. P. General Sales Tax Act, 1958. A Full Bench of the Andhra Pradesh High Court itself in CWT v. Subakaran Gangabhishan [1980] 121 ITR 69 held that time limit need not be reckoned for each addition as long as reassessment has been initiated in time in respect of some of the additions. The Calcutta High Court in CIT v. Assam Oil Co. Ltd. [1982] 133 ITR 204, he pointed out, had held that the entire original assessment stands set aside when reassessment proceedings are already commenced. He strongly relied upon this decision for the view that if the original assessment gets washed out even on reassessment, the first assessment under section 143(1) cannot stand after issue of notice under section 143(2). Even otherwise, he claimed that assessment under section 143(1) should b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), it is not possible to say that the original assessment survives in the same sense that an original assessment would survive after reassessment under section 147 or after an appeal where the jurisdiction ab initio is not in dispute. Though the statute does not say that the original assessment will stand cancelled, it is clear that such assessment gets 'washed out' (if we may adopt the learned departmental representative's language) once the ITO wishes to verify the correctness or the completeness of the return by invoking section 143(2)(b). The only assessment that stands is the 'fresh' assessment made in pursuance of such notice under section 143(3)(b). As pointed out by the learned departmental representative, the sum payable or refundable has to be determined under section 143(3)(b) and these words are conspicuously absent in connection with a reassessment under section 147 where apparently only additional tax has to be determined in what can be described as 'supplementary assessment'. The first assessment might well become a regular assessment if it had not been displaced by a fresh one. Once it has been so displaced, we find it difficult to accept the plea that the original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation was sought. It is because we have found that an assessment under section 143(2)(b) read with section 143(3) is a fresh one and the earlier assessment under section 143(1) does not survive unlike the situation where the original assessment is only subject to rectification revision or appeal. Under the scheme introduced by the Taxation Laws (Amendment) Act, 1970, the first assessment made under section 143(1), in effect, is nothing more than a provisional assessment which becomes final at the option of the revenue, the option being given up as and when section 143(2)(b) is invoked. Even if the same assessment is repeated after such notice under section 143(2)(b), it is the second assessment which exists and not the first one which, in law, is equivalent to an assessment which has been statutorily set aside. It is under these circumstances that we must hold that the order under section 263 passed on 29-1-1981 with reference to the assessment made on 30-1-1978 is within time and valid in law in regards jurisdiction. 6. As for merits, we must confess that the order of the Commissioner is devoid of any reasoning or particulars. The question could not be decided merely with refere ..... X X X X Extracts X X X X X X X X Extracts X X X X
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