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TMI Blog2010 (10) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... ove named against the judgment and order of the learned Income Tax Appellate Tribunal (hereinafter referred to as the said Tribunal), Kolkata on the following substantial question of law: "Whether the Tribunal was justified in law in not considering and deciding whether the proceeding under Section 147 read with Section 148 of the Act are legally sustainable in law before deciding the case on the merits of the contention of the assessee? "Whether on the facts and in the circumstances of the case when the assessee had disclosed its return and its claim for allowable expenses for a sum of Rs. 3,50,000/- at the time of assessment of proceeding can be reopened under Section 147 on a mere change of opinion?" "Whether on the facts and in the circumstances of the case, the learned Appellate Tribunal committed a jurisdictional error in reversing the order of the CIT (Appeals) and restoring the order of the Assessing Officer who reassessed the entire income, even though the recorded reasons under Section 148(2) were limited to alleged escapement of income of Rs.3,50,000/- on account of commission and brokerage?" 2. The fact of the case as it appears from the records and also submitted in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned Tribunal. The learned Tribunal allowed appeal preferred by the Revenue restored the order of Assessing Officer so far the amount of Rs. 3,50,000/- as brokerage and commission expenses is concerned. 6. Dr. Debi Prasad Pal learned Senior Counsel appearing for the appellant/ assessee submits that intimation under Section 143 (1) is not an assessment as decided by the Supreme Court in the case reported in 291 ITR 500(SC). Actually the return filed by the appellant was not assessed under Section 143(3) of the Act, but only an intimation was made under Section 143(1) of the Act on the basis of which total tax liability had been paid by the assessee. Therefore, there cannot be any sort of escapement of any income. In view of the Supreme Court decision as above he contends that the proceeding under Section 147 read with Section 148 is patently illegal, invalid and without jurisdiction. It is settled law unless the income escaped assessment reassessment by notice under Section 148 of the Act is clearly invalid illegal and without jurisdiction. He submits before the learned Tribunal question of jurisdiction could not be raised since no appeal could be preferred because appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the proceedings under Section 147 was invalid. Only adjustments were made under Section 143 (1)(a) of the Income Tax Act which did not require formation of opinion and question of change of opinion did not arise. 10. He citing decision of Patna High Court in case of Ranchi Club Ltd. -vs.- CIT (1995) reported in 214 ITR (643), submits that in view of the provisions contained in Explanation 2(b) to Section 147 of the Act to the effect that, where no assessment has been made and it is noticed by the Assessing Officer that the assessee has under stated his income or has claimed excessive deduction, it would be deemed to be a case where income chargeable to tax has escaped assessment. In a case where only an intimation has been sent, notice can be issued under Section 148 of the Act. He referring to Supreme Court decision in case of Asst CIT v. Rajesh Jharveri Stock Brokers P Ltd reported in (2007) 291 ITR 500 (SC) contends that intimation under Section 143(1)(a) cannot be treated as an order of assessment; when there being no assessment under Section 143(1)(a), question of change of opinion did not arise. The scope and effect of Section 147 as substituted with effect from April 1, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant/assessee itself invited Assessing Officer, CIT (Appeals) to decide the matter on merit waiving their right to question the validity and legality of the notice and action of reassessment. In real sense there was no order of assessment earlier. There is yet another decision of this Court reported in case of B.K. Gooyee v. Commissioner of Income Tax (West Bengal) reported in 62 ITR 109 wherein illegality and invalidity of a notice under Section 34 of the earlier Act which is corresponding provisions of Section 147 of the present Act was not raised before all the fora below and the same was allowed to be raised in the High Court for the first time. We have examined carefully and read those decisions and we find that the factual aspect of the matter in those cases went to root of the matter. Unless it was allowed to be raised there would have been wrong application of law which could result in injustice. The aforesaid principle in our view cannot be allowed to be made applicable wherever and whenever any illegality is to be noted. On considering the case if it is found that the question is waivable in nature and it does not touch the root of the matter so as to render entire proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfaction." In paragraphs 17 and 18 it is observed as follows: " The scope and effect of section 147 as substituted with effect from April 1, 1989, as also sections 148 to 152 are substantially different from the provisions as they stood prior to such substitution. Under the old provisions of section 147, separate clauses (a) and (b) laid down the circumstances under which income escaping assessment for the past assessment years could be assessed or reassessed. To confer jurisdiction under section 147(a) two conditions were required to be satisfied : firstly the Assessing Officer must have reason to believe that income, profits or gains chargeable to income tax have escaped assessment, and secondly he must also have reason to believe that such escapement has occurred by reason of either omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for his assessment of that year. Both these conditions were conditions precedent to be satisf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is to be found from Articles of Association annexed with this paper book and also from the audit report. Under such circumstances approach of the learned Tribunal is patently erroneous. According to us deduction under Section 24 of the Act is applicable when the income is exclusively derived from house property as mentioned in Section 22. The language of Section 24 of the said Act clearly suggests so as the same is relatable to the head of income from house property. The said Section is set out hereunder: "24. Income chargeable under the head "Income from house property" shall be computed after making the following deductions, namely:- (a) a sum equal to thirty per cent of the annual value; (b) where the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital:" 18. Section 14 provides for several heads of income. Income from house property is one of such heads whereas gains from business and profession is another head. In this case we find that in this case there has been mixed income arising out of profit and gains of business and real estate as well as income from house property ..... X X X X Extracts X X X X X X X X Extracts X X X X
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