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TMI Blog1980 (4) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... . It was pointed out that separate time-limits for the completion of an assessment were provided for under s. 147(a) and under s. 147(b) of the Act. The submission on the question of limitation was on the basis that the proceedings, which were impugned in the present case, fell under s. 147(b) of the Act. This is because, although the point was not given up by Mr. Suhas Sen, appearing for the Revenue, he did not seriously try to justify the issue of the impugned notices under s. 147(a) of the Act. In other words, Mr. Sen's main argument was an attempt to justify the issue of the notices under s. 147(b) of the Act, an argument with which I shall deal later on. On the question the following points were urged on both sides. (a)What is the period of limitation for the completion of reassessment proceedings initiated under s. 147(b)/148 of the Act ? (b) Whether the reassessment proceedings under s. 147(b) were already barred by limitation as provided in s. 153(2)(b) of the Act, on or before 17th October, 1978, the date when the ITO issued notices under s. 142(1) of the Act? (c) Where the reassessment proceedings cannot be completed because of the bar of limitation under s. 153(2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that in the trial court the Department tried to justify the reopening both under s. 147(a) as also under s. 147(b) of the Act. The notice was quashed by the trial court. On appeal, the Division bench appears to have found that the notice in that case was issued under s. 147(b) of the Act' . This is clear from an observation at p. 730 of the report, which is as follows: " For the reasons aforesaid it appears to us that the notice was issued under s. 148 on the basis of the information received at mentioned hereinbefore under s. 147(1)(b) of the Act." At pp. 730-31 the following passage occurs: "In the instant case a notice was served on or about 25th January, 1967, under section' 148 of the Act. Thereafter, the Income-tax Officer served another notice bearing G.I. No. IV(1)/719-B/E dated February 1, 1971, under section 139 of the Act requiring the respondent to produce or cause to be produced at his office at No. 40, Strand Road, Calcutta 1, on 9th February, 197l, at 11.30 A.M. accounts and documents mentioned on the reverse of the notice, viz., books of account, bank pass book and other related papers. This notice was served about 4 yrs after the service of the notice under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I.T. Act, 1922 (which corresponds to s. 153 of the Act), can and ought to be raised by the assessee before the ITO, That is not a point which can be legitimately agitated in writ proceedings. My attention was also drawn to another decision of the Supreme Court in the case of Lalji Haridas v. R. H. Bhatt [1965] 55 ITR 415. At p. 418 the following passage occurs. "Mr. Pathak for the appellant attempted to argue that the notice issued against the appellant is, on the face of it, invalid, because it is barred by time. We did not allow Mr. Pathak to develop this point, because we took the view that a plea of this kind must ordinarily be taken before respondent No. 1 himself. The jurisdiction conferred on the High Court under article 226 is not intended to supersede the jurisdiction and authority of the Income-tax Officers to deal with the merits of all the contentions that the assessees may raise before them, and so it would be entirely inappropriate to permit an assessee to move the High Court under article 226 and contend that a notice issued against him is barred by time. That is a matter which the income-tax authorities must consider on the merits in the light of the relevant e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment year., Irrespective of the contention of Mr. Suhas Sen whether this question should be; gone, into by, the writ court or should be left to the ITO, the stark fact remains that all the reassessment proceedings pursuant to the impugned notices are clearly barred by limitation, That being so, no other question really arises for consideration. Having regard to the elaborate arguments advanced from the Bar, I shall very briefly record the contentions on merits and refer to the authorities cited in support thereof. With regard to the merits of the question of reopening of the assessment before I deal with them it will be useful to set out the recorded reasons for the relevant assessment years, namely 1970-71, 1971-72 and 1972-73, which were, by consent of parties, tendered and forms part of the records of this case. The recorded reasons by the ITO dated the 28th June, 1974, are as follows : "The assessee started construction of his, house properties at 106/E, Amherst, Street, Calcutta-9, in April, 1968, and completed the same in July, 1971. This is a four-storeyed house property measuring about 950 sq. ft in each, floor. The assessee claimed that the total cost of constru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the Revenue really sought to justify the reopening of the assessment under s. 147(b) of the Act, I refrain from dealing with these authorities, mentioned above, in any detail. Mr. Bhattacharyya, for the assessee, sought to contend that this is merely a change of opinion on the part of the ITO and no fresh information. In support of this proposition Mr. Bhattacharyya relied on a decision in the case of Jamna Lal Kabra v. ITO [1968] 69 ITR 461 (All). Reference was also made to a decision of the Patna High Court on the question of reason recorded in the case of C. M. Rajgharia v. ITO [1975] 98 ITR 486 (Pat). I do not see how this case is of any relevance to the present case. On the question of what is information within the meaning of s.147(b) of the Act, reference was also made to the decision of this court in Ballarpur Paper and Straw Board Mills Ltd. V. CIT [1975] 101 ITR 55 (Cal) and in the case of Grindlays Bank Ltd. v. ITO [1979] 116 ITR 710(Cal). On the question of valuation report my attention was drawn to a decision of this court in the case of Murarka Paints and Varnish Works Ltd. v. ITO [1978] 114 ITR 480. Mr.Suhas Sen, appearing for the Revenue, placed very stro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the conference hall and rooms did not attract s. 10 of the Act and that the assessment should have been made under s. 9. While ss. 9 and 10 can be described as law, the opinion of the audit party in regard to their application is not law. It is not a declaration by a body authorised to declare the law. That part alone of the note of an audit party which mentions the law which escaped the notice of the, ITO constitutes ' information ' within the meaning of s. 147(b); the part which embodies the opinion of the audit party in regard to the application or interpretation of the law cannot be taken into account by the ITO. In every case, the ITO must determine for himself what is the effect and consequence of the law mentioned in the audit note and whether in consequence of the law which has now come to his notice he can reasonably believe that income has escaped assessment. The basis of his belief must be the law of which he has now become aware. The opinion rendered by the audit party in regard to the law cannot, for the purpose of such belief, add to or colour the significance of such law. In short, the true evaluation of the law in its bearing on the assessment must be made directly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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