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TMI Blog1980 (1) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... rns of income for the assessment years 1969-70 to 1972-73, in which there was a claim for development allowance, as provided by s. 33A of the I.T. Act, 1961. In dealing with this claim for the assessment year 1969-70, the ITO observed : " No business was done in tea in the year of account. But the assessee has claimed development allowance under section 33A of the Act. The expenses incurred so far that qualify for such allowance is admitted to be Rs. 2,70,982. This is found to be in order. 50% of the claim is Rs., 1,35,491. As already mentioned in the assessment order for 1967-68 only 40% of this amount will be allowed." He, therefore, allowed Rs. 54,196 in that assessment. In the assessment order for the assessment year 1970-71, the same claim was made by the assessee and the ITO wrote in his order: "The assessee has claimed development allowance under section 33A on new tea planting of Rs. 37,421. Necessary details have been furnished. As stated in prior years, the allowance under section 33A will be restricted to 40% on the sums (sic) works out to Rs. 14,968. No business was done in the year of account and this loss of Rs. 14,968 will be set off against other income." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 147 by issue of a notice under section 148. " The above passage occurs in the reassessment order for the year 1969-70 and the reasons for the reopening for the other years are identical. In the reassessment orders that were passed on 28th May, 1974, for each of these years, the ITO observed : " The provisions of section 33A are quite clear in that it applies to an assessee who carries on the business of growing and manufacturing tea. In the absence of any manufacturing operations by the assessee, the assessee is not entitled to any development allowance. Hence the development allowance originally allowed is now disallowed and the assessment is finalised as under. " Then the several amounts were disallowed for the respective years. The assessee appealed against all these assessments before the AAC. One of the contentions taken by the assessee was that the assessments were not properly reopened as the reassessments were based on a mere change of opinion and could not have been validly made by recourse to s. 147. In the course of his order, the AAC observed: " Turning to the other ground, it is noticed that there is nothing in the record of the case wherefrom it cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that arises is, could it be said that the view taken by the Income-tax Officer was patently erroneous. We are unable to say this was so. The Income-tax Officer was aware of the fact that no manufacturing operation was done and he granted development allowance to the assessee in the view that the assessee was growing tea and that was sufficient and the deduction of development allowance was expressly computed and allowed under the head 'Business'. " In the view of the Tribunal, the ITO had no jurisdiction for reopening the assessments for the aforesaid years. It is this part of the order that has been challenged by the Commissioner in the form of the question set out earlier. Section 147(b) empowers the ITO to reopen an assessment if he had, in consequence of information in his possession, reason to believe that income chargeable to tax had escaped assessment for any assessment year. Therefore, the material question that has to be considered is whether there was information in the possession of the ITO. It is not in dispute that the letter dated 7th August, 1973, extracted earlier, was received by the ITO on August 13, 1973. It is, thereafter, that he went into the question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt year. The learned counsel for the assessee referred us to the decision of the Supreme Court in Indian and Eastern Newspaper Society v. CIT [1979] 119 ITR 996. In that case, the question that arose for the consideration of the Supreme Court was whether the ITO was legally justified in reopening the assessments under s. 147 on the basis of the view expressed by the internal audit party and received by him subsequent to the original assessments. It was held that the view expressed by the internal audit party could not be binding on him. In that decision there was no occasion for the Supreme Court to consider the question, like the one before us, where another authority brought to the notice of the ITO that he had made a wrong allowance in the assessments made by him. The Commr. of Agrl. I.T. cannot be considered to be a stranger to these assessments because the assessments made under the Central Income-tax are inextricably connected with the agricultural I.T. assessments so that he had vital stakes in such assessments. He cannot be regarded as a rank outsider or a person incompetent to express any opinion. Having regard to these facts, we are satisfied that there was information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed unless the planting has commenced after the 31st day of March, 1965, and no deduction shall be allowed under clause (ii) unless the planting has commenced after the 31st day of March, 1965, and been completed before the 1st day April, 1970. " The rest of the provisions are omitted as they are unnecessary for our present purpose. The learned counsel for the assessee contended that it was enough for the assessee to grow tea in India and that it is not necessary also to manufacture tea in India to get the benefit of the allowance. In other words, the contention was that the growing and manufacturing were not cumulative conditions but only alternative conditions. The question is whether the interpretation sought to be placed by the assessee is correct or not. In this context, the learned counsel for the assessee drew our attention to the following passage from the Notes on Clauses and also from the Memorandum explaining the provisions in the Finance Bill, 1965. The relevant passages are: " Clause 9 seeks to insert a new section 33A in the Income-tax Act. Under this section, a deduction by way of development allowance equivalent to 40 per cent. of the actual cost of plant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... planatory memorandum apparently to assist the legislators. They sometimes prove to be a positive hindrance, as in the present case, to those whose lot it is to construe them, especially when they do not truly reflect the meaning of the statute as drafted. We have to construe the statute on its words and not on what the supposed intention behind it was except in the somewhat rare event of the provision not yielding any meaning unless the intention is taken into account. In the present case, the description of the provisions by the explanatory memorandum is the very opposite of what the section says. Considerable argument was addressed before us on the basis of this memorandum and the result was only to make a simple matter of interpretation more difficult. It would do good to the drafting and interpretation of fiscal laws if greater care is taken in the preparation of those explanatory memoranda. The courts can always jettison the explanatory memoranda and go into the statutory provision itself, but the common man is likely to be taken in by them and he is likely to have arranged his fiscal affairs accordingly. If ultimately, the explanatory memorandum is proved to be based on a wro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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