9911796707
TMI Blog1988 (3) TMI 150X X X X Extracts X X X X X X X X Extracts X X X X ..... 1980-81 27th February, 1981 1981-82 2nd January, 1982 1982-83 19th March, 1983 In making the original assessments, the ITO did not disallow any portion of the provision which was made by the assessee towards the damages payable to the Electricity Boards. It is not in dispute that the figures of provision for the asst., yrs. 1978-79, 1979-80 and 1980-81 were respectively, Rs. 3,72,788, Rs. 11,72,211 and Rs. 16,76,608. For the asst. yr. 1981-82, according to the assessee, the figure of provision was only Rs. 4,68,018. According to the Revenue, it was Rs. 15,18,619. In due course, the ITO took the view that the provisions of s. 147(a) were attracted. He, therefore, initiated action for the respective assessment years by issue of notices under s. 148 on 23rd Feb., 1984. This action was taken to bring to tax the amounts for which provision had been made to which we have referred earlier. The assessee filed returns on 28th April, 1984. 3. In the meanwhile, the jurisdiction of assessment appears to have been transferred to the IAC. The IAC posted the case for hearing, heard the Chartered Accountant of the assessee, examined all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les. It is further seen that as and when the exact amount of penalty is quantified by the various Electricity Boards, the assessee reduces the compensation payable account for the subsequent year for the excess provided for the earlier years. The assessee has also filed the copy of the statement for contracts. I am convinced about the explanation submitted by the assessee company. The proceedings initiated under s. 148 are therefore closed as N.P. Sd/- (A. Ali Sayed) I.A.C., Range II, Madras." It would be seen that the IAC stated finally "The proceedings initiated under s. 148 are therefore closed as "N.P." 4. For the asst. yrs. 1979-80, 1980-81 and 1981-82 also the IAC closed the proceedings recording in identical terms the reasons as in the year 1978-79 except that for the letters "N.P." at the end, which was scored out, the letters "N.A." were substituted. In these three assessment years, where the letters "N.P. had been changed to "N.A.", i.e., for the asst. yrs. 1979-80, 1980-81 and 1981-82, a demand notice showing "N.A." was also issued to the assessee. There was no such demand notice issued for the asst. yrs. 1978-79 when the letters stood as "N.P." 5. The Admi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 200/Mds/85 dt. 9th Dec., 1987 (to which one of us, i.e., the Judicial Member, was a party) had held that the provision for payment of liquidated damages was an accrued liability and hence was an admissible deduction. The Tribunal had found that the assessee had followed a consistent method of making such a provision and setting off whatever amount was waived in respect of the provision made for the earlier years in subsequent years. On merits, therefore, the submission of the learned counsel was that there was no error prejudicial to the Revenue which could be rectified. 9. It was also submitted that for the asst. yr. 1979-80, full particulars had been furnished and in any view of the matter, proceedings under s. 147( a) could never have been taken because the ITO could not have assumed the necessary jurisdiction as there was no omission or failure on the part of the assessee to disclose fully and trully all material facts. 10. On behalf of the Revenue, the learned Departmental Representative submitted that the Commissioner's powers under s. 263 were very wide and any mistake prejudicial to the Revenue could be rectified by the exercise of such power and in support of this prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uded the Commissioner from revising an order of reassessment made under the provisions of s. 34. In the aforesaid decision, their Lordships had stated that in every case it had to be determined, on the facts and circumstances, thereof, as to what the expression used by the ITO, i.e., 'proceedings filed' or 'proceedings disposed of or filed' connotes or means. Their Lordships observed that in one set of circumstances it may not amount to an order of assessment or reassessment whereas in another set of circumstances it may so amount. In the case of Esthuri Aswathiah vs. ITO (1961) 41 ITR 539 (SC) where a nil return was filed and the ITO wrote "no proceedings , the Supreme Court held that it had to be construed that the assessed income was nil. In the case of CIT vs. Bidhu Bhusan Sarkar (1967) 63 ITR 278 (SC), where the expression used was 'filed', the Supreme Court observed that it meant that the case was disposed of and nothing remained and their Lordships further observed: "In effect, therefore, what he did was to terminate the proceedings before him without making any order of assessment, on the ground that the order of assessment in respect of the income in question would be ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment was nil. This was, therefore, not a case of dropping of the proceedings initiated under s. 147 but of making an assessment under s. 147 without bringing to tax any income over and above that originally assessed. 12. As far as the asst. yrs. 1979-80 to 1981-82 are concerned, the letters "N.P" were scored out and substituted by the letters "N.A.". Not only that, demand notices were also issued for each of the years. Nothing could be more positive proof that assessment was made than the issue of demand notices showing a 'nil assessment'. For the years 1979-80 to 1981-82, therefore, proceedings initiated under s. 147 were not dropped but the proceedings were terminated by making of valid assessments under s. 147 (a) for each of the years but without raising any additional demand. 13. In the above background, the conclusion arrived at by the Commissioner under s. 263 that the proceedings had been dropped without giving reasons is, in our view, incorrect. Proceedings were never dropped. Assessments had been made and reasons have been recorded by the IAC. These reasons should have been examined by the Commissioner and the Commissioner should have come to a conclusion therea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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