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TMI Blog1996 (8) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... Chowk, Katni. Investment in the said property was disclosed at Rs. 7,09,777 and the assessee owns a 1/6th share in it. The assessee's valuer valued the cost of construction at Rs. 9,12,000. The Assessing Officer referred the matter to the Departmental Valuation Officer, and the Departmental Valuation Officer (DVO) estimated the cost of construction at Rs. 12,25,000, according to which the assessee's share in the difference between the cost of construction disclosed and that estimated by the Departmental Valuation Officer, worked out to Rs. 85,830. Subsequently, the assessee filed a revised return under the amnesty scheme on March 31, 1986. In the said revised return, the additional income of Rs. 33,500 from other sources was declared and offered for assessment. The Assessing Officer completed the assessment on April 12, 1986, under section 143(1) accepting Rs. 33,500 only as against the actual difference of Rs. 85,830. The said assessment order was cancelled by the Commissioner of Income-tax by his order under section 263 of the Income-tax Act, dated March 20, 1989. Aggrieved by the order of the Commissioner of Income-tax under section 263 of the Income-tax Act, the assessee pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Chief Commissioner or Director-General or Commissioner authorised by the Board in this behalf under section 120 ; (b) ' record ' includes all records relating to any proceeding under this Act available at the time of examination by the Commissioner ; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject-matter of any appeal, the powers of the Commissioner under this sub-section shall extend to such matters as had not been considered and decided in such appeal. (2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. (3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, the High Court or the Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax ; (b) where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return ; (c) where an assessment has been made, but--- (i) income chargeable to tax has been underassessed ; or (ii) such income has been assessed at too low a rate ; or (iii) such income has been made the subject of excessive relief under this Act ; or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed." " 148. Issue of notice where income has escaped assessment. --- (1) Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, not being less than thirty days, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and sett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in V. Jaganmohan Rao's case, therefore, is only to the extent that once an assessment is validly reopened by issuance of a notice under section 22(2) of the 1922 Act (corresponding to section 148 of the Act), the previous underassessment is set aside and the Income-tax Officer has the jurisdiction and duty to levy tax on the entire income that had escaped assessment during the previous year. What is set aside is, thus, only the previous underassessment and not the original assessment proceedings. An order made in relation to the escaped turnover does not affect the operative force of the original assessment, particularly if it has acquired finality, and the original order retains both its character and identity. It is only in cases of ' underassessment ' based on clauses (a) to (d) of Explanation 1 to section 147, that the assessment of tax due has to be recomputed on the entire taxable income. The judgment in V. Jaganmohan Rao's case [1970] 75 ITR 373 (SC), therefore, cannot be read to imply as laying down that, in the reassessment proceedings validly initiated, the assessee can seek reopening of the whole assessment and claim credit in respect of items finally concluded in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the question did not even fall to be answered in that judgment.' Although section 147 is part of a taxing statute, it imposes no charge on the subject but deals merely with the machinery of assessment and in interpreting a provision of that kind, the rule is that that construction should be preferred which makes the machinery workable. Since the proceedings under section 147 of the Act are for the benefit of the Revenue and not an assessee and are aimed at garnering the ' escaped income ' of an assessee, the same cannot be allowed to be converted as ' revisional ' or ' review ' proceedings at the instance of the assessee, thereby making the machinery unworkable. " The law which has been laid down by their Lordships after reviewing the judgment of V. Jaganmohan Rao's case [1970] 75 ITR 373 (SC), is that under sections 147/148 of the Act, the order of assessment is not wiped out nor does it become non est as was observed by the Supreme Court in V. Jaganmohan Rao's case [1970] 75 ITR 373. Therefore, the order survives to a limited extent and not wholly wiped out. It will remain in suspended animation till it is finally decided by the Income-tax Officer. Now, the question is wha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er under section 263 of the Act of the Commissioner is not denuded and both the provisions can exist without there being any conflict in the matter. Hence, we answer the aforesaid question in favour of the Revenue and against the assessee. However, before parting with the case, we may mention that Shri G. N. Purohit, learned counsel for the assessee, has submitted that after the order was passed by the Commissioner of Income-tax under section 263, the Income-tax Officer had decided the matter and against that assessment, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals). Meanwhile the Tribunal cancelled the order of the Commissioner of Income-tax and the Commissioner of Income-tax (Appeals) set aside the assessment order on account of the decision given by the Tribunal on this technical ground alone. Now, that order cannot survive because of the view taken by the Tribunal in the present case, and against that order, the Revenue has already preferred an appeal before the Tribunal which is pending. Therefore, learned counsel for the assessee has submitted that his right to agitate the matter after this answer will be prejudiced. Since we have already ..... X X X X Extracts X X X X X X X X Extracts X X X X
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