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TMI Blog1996 (7) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... ve heard learned senior tax counsel as well as learned counsel for the assessee rather much more in extenso. This was because a situation of oscillation as regards the law declared by the Constitution Bench of the apex court in CIT (Addl.) v. Surat Art Silk Cloth Mfrs. Association [1980] 121 ITR 1, on the one hand and the other decision of the apex court in CIT v. Sun Engineering Works P. Ltd. [1992] 198 ITR 297, categorically bringing out the statutory limits of the provisions of section 147 of the Income-tax Act, 1961. Factually also all reported cases were at the stage of assessment proceedings claiming benefit of section 11 of the Income-tax Act, 1961. In the context of a very limited factual matrix, the proceedings display an interaction of the principle of mutuality in the matter of a company known as section 25 company, at the first and, the principle of the statutory limits of the proceedings under section 147 of the Act at the other end and along with it the position that in the matter of income-tax proceedings, each assessment year is a separate unit of consideration with regard to the assessment and determination of taxability in regard thereto. As stated at the outset ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h regard to the assessment year 1975-76, the position is not otherwise. In other words, as far as the original assessment proceedings are concerned with regard to the years in question, a situation of finality had reached by reason of orders in regard thereto. It is thereafter proceedings under section 147(b) of the Income-tax Act, 1961, with regard to two items relating to the assessee's income for the above years, relating to subscription and entrance fees having been found escaped assessment, the assessment was reopened in regard thereto obviously by issuance of notices under section 148 of the Act. The Income-tax Officer has emphasised the element of finality in the following words : "The assessee's claim of exemption has been negatived by all the authorities up to the Supreme Court." It is further observed that these items---subscription and entrance fees---are assessable to tax. Although reliance was placed on one decision of the Madras High Court in CIT v. Madras Stock Exchange Ltd. [1976] 105 ITR 546 and two decisions of the Gujarat High Court in CIT v. Shree Jari Merchants Association [1977] 106 ITR 542 and Addl. CIT v. Ahmedabad Millowners' Association [1977] 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Act. The Constitution Bench appreciated the great importance of the question involved and the serious repercussions as a result of adverse decisions on a large number of public trusts in the country. In the process of reasoning the apex court also considered the objects of section 25 companies and after considering a number of decided cases, the language of section 2(15) of the Income-tax Act, 1961, and the intended advantages of section 25 companies, ruled that for a purpose to fall under the head of charitable purpose, it must constitute the advancement of an object of general public utility in which the activity of advancement must not involve a profit-making activity. An activity is involved in the advancement of an object when it is enwrapped or involved in the activities of advancement, so that the resulting activity has a dual nature or is twin-faced; it is observed that when applying section 11, it is open to the tax authorities in an appropriate case to pierce the veil of what is proclaimed on the surface by the document constituting the trust or establishing the institution by a memorandum of association and enter into an ascertainment of the true purpose of the trust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the fourfold statutory deeming situations relate to an underassessment, assessment at too low a rate, grant of excessive relief and excessive loss are illustrative in the process of understanding the statutory spirit of an action under section 147 of the Income-tax Act, 1961. Learned counsel submitted in the first instance that the statutory provision under consideration (section 147) is the power of the Income-tax Officer and as a necessary corollary in regard thereto, learned counsel submitted that the statutory provision gives no legal right to the assessee in regard thereto. In other words, submits learned counsel, that the assessee will have to be understood in terms of a situation of finality as far as the assessment proceedings are concerned. Directly with regard to the aspect under consideration, learned counsel submitted that the assessment proceedings were completed and a situation of finality is established in regard thereto. He submitted that in regard to the assessment years in question, his contention is that with regard to the claim for protection of section 11, it also achieved finality because it was on the basis of a conclusion finalised that the assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the context and equally well gets confined and circumscribed in regard thereto. Learned counsel submitted that just as the Income-tax Officer does not get power of reconsideration of situation generally concluded by the assessment proceedings, the statutory provision being the legislative provision to be used by the Revenue alone, the assessee could not be understood to contend anything which is closed by the situation of finality as far as the assessment proceedings are concerned. Relying on the decision learned counsel also contended that a matter not agitated in the concluded original assessment proceedings also cannot be permitted to be agitated in the reassessment proceedings unless there is a relatable situation to the amount or income that has escaped assessment and only to that extent. Learned counsel submitted that just as the decision of the apex court, restricts the Income-tax Officer's jurisdiction, as a situation of corollary it puts an iron curtain with regard to the situation of finality as regards the assessment proceedings. Relying on the said decision of the apex court learned senior tax counsel contended that section 147 proceedings, being a weapon of the R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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