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TMI Blog1987 (11) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... ncometax Appellate Tribunal, by its order dated February 5, 1979, reduced the assessable income to Rs. 3,48,955, the tax whereon came to Rs. 2,84,480. In pursuance of the Tribunal's order dated February 5, 1979, a modification order was passed by the Income-tax Officer on August 12, 1983. We are not concerned with the other particulars of the said order, except the item of interest charged under section 220(2) of the Act. After deducting the tax deducted at source and the tax paid under section 140A (and after including interest under section 139(8)), the tax payable came to Rs. 2,18,035. This was taken to be the tax truly payable under the original assessment order dated March 15, 1975. Interest was charged thereon under Section 220(2) from that date up to August 12, 1983, the date of modification order, which came to Rs. 2,16,945. The petitioner does not dispute the leviability of interest with effect from April 1, 1977, up to the date of the Tribunal's order, i.e., February 5, 19.79 ; but, he is challenging the levy of interest for the period March 15, 1975, to April 1, 1977. Though he contention was not raised in the writ petition, learned counsel for the Petitioner also cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d consequently no assessment has been made, as also to a case where a return has been submitted and an assessment has been made, but later it comes to light that a certain income has escaped assessment, whether on account of concealment on the part of the assessee or in consequence of information reaching the Income-tax Officer. It is true that once reassessment proceedings are validly initiated, the reassessment proceedings are not confined to the items mentioned in the notice issued under section 148. It is also true that assessment or reassessment under this section is made as if it were made for the first time in the relevant assessment year and tax is charged at the rate applicable to the relevant assessment year subject to certain restrictions, one of them being that on such reassessment, the assessable income should not fall below the income originally assessed in the course of the assessment proceedings. But it does not follow from this that once a notice under section 148 is given, the order of the original assessment becomes void ab initio or non est. The original assessment order remains good, valid and effective till it is substituted by the reassessment order. The situ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This itself shows that the original assessment is not erased or effaced. As stated above, the original assessment order is good and effective till it is substituted by the reassessment order. Once the reassessment order is passed, it is that order alone that is effective and operative. There is no hiatus. The mere issuance of a notice under section 148 does not affect the validity or efficacy of the original assessment order, or the appeals or other proceedings arising therefrom, or other proceedings, if any, taken in pursuance of such original assessment order. Sri Y. Ratnakar, learned counsel for the petitioner, however, placed strong reliance upon certain judgments of the Supreme Court and other High Courts in support of his contention to which we may now refer. The first decision relied upon is of the Supreme Court in V. Jaganmohan Rao v. CIT [1970] 75 ITR 373 (a case arising under section 34 of the Indian Income-tax Act, 1922). While dealing with the scope of the reassessment proceedings, the Supreme Court made the following observations (p. 380): " It is, therefore, manifest that once assessment is reopened by issuing a notice under sub-section (2) of section 22, the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... servations aforesaid were made in the context of the contention urged that in the reassessment proceedings it was not open to the Sales Tax Officer to make a best judgment assessment in the absence of a specific provision empowering him to do so in reassessment proceedings. In the third case, the observations quoted were made in the context of the argument that the power of revision of the Commissioner having been exercised beyond four years of the original assessment order, is barred. The said argument was rejected holding that once a reassessment order was made, it is that order alone that is revised, and that the original order does not survive so as to enable the assessee to contend that the period of limitation of four years must be computed from that date. In none of the above cases was it said by the Supreme Court that once reassessment proceedings are initiated, the initial order of assessment becomes non est or void ab initio and that it loses all efficacy. Indeed, in H. R. Sri Ramulu's case [1977] 39 STC 177, the Supreme Court specifically said that the order of reassessment substitutes the original order of assessment. We are, therefore, of the opinion that none of the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) and clause (b) thereof, that the reassessment proceeding wipes out the original assessment which results in obtaining the same position as it was prior to the completion of the original assessment and that the assessing authority would, consequently, have jurisdiction to assess the items falling under clause (a) as well as clause (b) of section 17(1) of the Act. " In our Opinion, again, the said observations must be understood in the context of the contention urged and which was being repelled. The observations in a judgment-it is well-settled-cannot and should not be read as the provisions of a statute and must be understood in the context of the contention urged and the issue raised. We do not think that it is worthwhile to refer to all the decisions cited, since none of the cases cited deal with the situation or the point arising before us. The decision of the Madras High Court in CIT v. Standard Motor Products of India Ltd. [1983] 142 ITR 877, which too contains certain observations, which prima facie appear to be very widely worded, have to be confined to the facts of that case. Indeed, in Sharda Trading Company v. CIT [1984] 149 ITR 19, the Delhi High Court correctly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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