9911796707
TMI Blog2011 (11) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... I, J. 1. The instant appeal filed by the Revenue under Section 260A of the Income Tax Act, 1961 (for short "the Act, 1961") is against the order dated 7-10-2005 passed by the Income Tax Appellate Tribunal (for short "the Tribunal") wherein the Tribunal has dismissed the appeal filed by the Revenue and partly allowed the cross objection filed by the assessee. 2. This Court vide order dated 18-8-2011 admitted the appeal on the following substantial question of law: "Whether on facts and in the circumstances of the case the Tribunal was justified in annulling the assessment framed u/s 143 (3)/147 by the assessing officer." 3. The facts, in brief, are that the assessee was engaged in the business of poultry farming in the name style of Royal Poultry Farm. The assessee filed the income return for the AY 1997 - 98 on 22-12-1997 declaring its income of Rs.1,49,854/-. The return was processed under Section 143 (1) on the finding that the capital work in progress under the head building as per scheduled `c' shown in the balance sheet as on 31-3- 1996 for a sum of Rs.15,35,551/- was not carried forward to the balance sheet as on 1-4-1996. The total fixed assets on closing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout assigning any reason considered that the AO was right in continuing with the proceedings under Section 148 of the Act, 1961 as valid and within his jurisdiction. Under the notice issued under Section 148 the reasons supplied, which are as under: "During the A.Yr. 97-98 the assessee has filed return by Dec. 1997. This return the `a' has enclosed audit report. In this audit report particulars of fixed assets has been mentioned in the schedule `D" Dherain head of Bldg. shown is 20,37,781/- as opening. Whereas the details of fixed assets for A.Yr. 96-97 closing was Rs.2037781/- which is shown in fixed assets in schedule `c' of audit report for A.Yr.96-97. It is seen that bldg. (work-in- progress) was Rs.15,35,551/- in above schedule `c' for A.Yr. 96-97. This work-in- progress is not carried forward in schedule `D' of fixed assets for A.Yr. 97-98. The total of fixed assets closing for A.Yr. 96-97 was Rs.52,51,629/- which should be obviously carried forward for next year but in A.Yr. 97-98 the total net block assets (opening) was Rs.31,35,246/-. So there is a difference of Rs.20,16,383/-. On the above facts I have reason to believe that the above discrepancies of fixed assets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther allowance under this Act has been computed." 11. Shri Shrivastava would further submit that the Income Tax Officer may bring to charge items of income which had escaped assessment other than or in addition to that item or items which have led to the issuance of notice under Section 148. The jurisdiction of the AO is not confined to only such income, but other incomes also, which have escaped tax. Thus, reopening or reconsidering the whole assessment was just and proper. 12. In support of his contention, Shri Shrivastava placed reliance upon the decision of the Supreme Court in Commissioner of Income Tax v. Sun Engineering Works (P) Ltd.1. 13. On the other hand, Shri Shashank Dubey, learned senior counsel appearing with Shri Neelabh Dubey, learned counsel for the respondent, would submit that in the present case the department issued notice under Section 148 against the assessee for income under a particular head. The notice did not pertain to income under different heads, but which were discovered in the course of reassessment proceedings. The original ground for issuing reassessment notice was no where taken up and was in effect dropped. 14. Shri Dubey would furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in Sections 148 to 153 referred to as the relevant assessment year): Provided that where an assessment under sub-section (3) of Section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under Section 139 or in response to a notice issued under sub-section (1) of Section 142 or Section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year: Provided further that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under Section 139: Provided that in a case- (a) where a return has been furnished during the period commencing on the 1st day of October, 1991 and ending on the 30th day of September, 2005 in response to a notice served under this section, and (b) subsequently a notice has been served under sub- section (2) of Section 143 after the expiry of twelve months specified in the proviso to sub- section (2) of Section 143, as it stood immediately before the amendment of said sub-section by the Finance Act, 2002 (20 of 2002) but before the expiry of the time limit for making the assessment, reassessment or recomputation as specified in sub- section (2) of Section 153, every such notice referred to in this clause shall be deemed to be a valid notice: Provided further that in a case- (a) where a return has been furnished during the period commencing on the 1st day of October, 1991 and ending on the 30th day of September, 2005, in response to a notice served under this section, and (b) subsequently a notice has been served under clause (ii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing so. Section 152 (2) provides that the assessee may claim that the proceedings under Section 147 should be dropped on his showing that he had been assessed not lower than what he would be rightly liable for even if the income alleged to have escaped assessment had been taken into account, or the assessment or computation had been properly made. 21. Explanation 3 to Section 147, which was inserted by Finance (No.2) Act, 2009, w.e.r.f. 1-4-1989, provides that the AO may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under Section 147 of the Act, 1961, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) of Section 148. 22. From bare perusal of the entire provisions, it is clear that the AO should have reason to believe to reopen assessment under the provisions of Section 147 before making the assessment, reassessment or recomputation. 23. The assessee has a right to inform the AO that the income which has allegedly escaped assessment was shown and had been taken into account and the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere there is any obscurity or vagueness in the main enactment, to clarify the same so as to make it consistent with the dominant object which it seems to subserve, (c) to provide an additional support to the dominant object of the Act in order to make it meaningful and purposeful, (d) an Explanation cannot in any way interfere with or change the enactment or any part thereof but where some gap is left which is relevant for the purpose of the Explanation, in order to suppress the mischief and advance the object of the Act it can help or assist the Court in interpreting the true purport and intendment of the enactment, and (e) it cannot, however, take away a statutory right with which any person under a statute has been clothed or set at naught the working of an Act by becoming an hindrance in the interpretation of the same." 27. The Bombay High Court in Jet Airways (supra) observed that after issuing a notice under Section 148, the income which has initially formed a reason to believe that the income has escaped assessment, but as a matter of fact has not escaped assessment. The AO cannot proceed to assess some other income independently, however, it was observed that it is open ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part thereof but where some gap is left which is relevant for the purpose of the Explanation, in order to suppress the mischief and advance the object of the Act it can help or assist the Court in interpreting the true purport and intendment of the enactment. 35. In the case on hand, the main object and purpose of Section 147 read with Section 148 is that if there is any escaped assessment and the AO has reason to form the opinion a notice must be given to the assessee to file returns or to show that there was no escaped income and under Section 152 (2) the proceedings may be dropped. In that context, explanation provides that along with the proceedings for the escaped income which had formed reason to believe and the assessee has been properly intimated to show his case, proceedings of the other incomes may also be examined along with the said income. 36. We are in respectful agreement with the view taken by the Bombay High Court in Jet Airways (supra) and the High Court of Delhi in Ranbaxy Laboratories Limited (supra). 37. Applying the well settled principles of law to the facts of the present case and for the reasons mentioned hereinabove, the question raised herein ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
