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TMI Blog1979 (8) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... riginal assessment for the year 1960-61 was completed on March 14, 1960, whereunder a sum of Rs. 1,41,729 was added as income from undisclosed sources. On appeal, the AAC held that in respect of Rs. 90,721 out of Rs. 1,41,729 added as income from undisclosed sources in the assessment for the assessment year 1960-61, the order could not stand as it represents the receipts for the assessment year 1959-60 and consequently deleted the sum of Rs. 90,721 from the assessment for the assessment year 1960-61 by his order dated November 2, 1967. Soon thereafter the ITO, after obtaining the permission of the Commissioner initiated proceedings for reopening of the assessment for the assessment year 1959-60 so as to bring the sum of Rs. 90,721 to tax in that year by the issuance of a notice under on March 16, 1968. The ITO, found that a sum of Rs. 88,173, should be added as income from undisclosed sources and a further sum of Rs. 78,793 as deficiency in gross profit. Admittedly, no addition to the gross profit was made in the original assessment. The assessee had in fact returned a loss of Rs. 3,401 and after disallowing certain amounts towards interest and also bad debts the net profit was det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he finding of the AAC in respect of the unexplained cash credits and investments to the extent of Rs. 90,721. The answer to the question largely depends upon the scope of the proceedings initiated by the ITO pursuant to the finding of the AAC in his order dated November 2, 1967, while disposing of the appeal preferred by the assessee in respect of the addition of Rs. 1,41,729 for the assessment year 1960-61. Section 146 provides for reopening of the assessment at the instance of the assessee whereas s. 147 empowers the ITO to reassess if the income chargeable to tax has escaped assessment for any year. Section 147(a) would apply to cases where default is committed by the assessee by reason of his omission or failure to make a return or to disclose fully or truly all material facts necessary for that year, whereas cl. (b) will come into play only when there has been no default on the part of the assessee. Section 148 provides for the issuance of notice to the assessee by the ITO, whereas s. 149 prescribes time limit for the issuance of such notice which is not very material for our purpose. Section 150 which is material reads thus: "150. (1) Notwithstanding anything contained in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idly reopened under s. 147(a) the original assessment stands annulled and the ITO would be not only entitled but has a duty to include all items escaped income including the items which normally would fall under cl. (b) of s. 147 notwithstanding the fact that the four year period has expired. But we are unable to agree with the standing counsel that the present reassessment has been made under s. 147(a). In fact this particular plea raised by the ITO has been negatived by the Tribunal. Further, question No. 2, whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in holding that the reopening of the assessment was not under s. 147(a) of the Act, was disallowed by the Tribunal in the reference application. There is no application under s. 256(2) by the department seeking reference on that question. Hence we have to take it for granted that the finding of the Tribunal on this aspect has become final and the revenue is not entitled to urge this point in this reference. If the department was really aggrieved they could have taken steps to have that question referred as pointed above. The very question with which we are now concerned indicates th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny portion thereof of an from its or his total income for an assessment year in the order passed by the appellate or revisional authority under the Act shall be deemed to be one made in consequence of or to give effect to any finding or direction contained therein for the purpose of s. 150. From this Explanation, there is no option for the ITO but to hold that any amount excluded from the total income of the assessee by appellate or revisional order for any assessment year must be added under s. 150 to the relevant assessment year as he is bound to give effect to the finding or direction contained in the appellate or revisional order. We may now refer to the scope of the expression " in consequence of or to give effect to any finding or direction ". The scope of s. 34(3) of the Indian I.T. Act, 1922, which corresponds to the present s. 150 fell for consideration in ITO v. Murlidhar Das [1964) 52 ITR 335 at 345 (SC). The learned judge Subba Rao J. (as he then was), speaking for the majority view, ruled: "A 'finding', therefore can be only that which is necessary for the disposal of an appeal in respect of assessment of a particular year. The Appellate Assistant Commissioner may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consequence of or to give effect to any finding or direction for the purpose of s. 150. This amount alone can be added by the ITO when he reopens the assessment under s. 150. There is no power or authority for the ITO to make an addition of Rs. 78,793 pertaining to the deficiency in gross profit. We are unable to agree that the consequences that flow after the reopening of the assessment under s. 150 are the same as those in the case of reopening of the assessment under s. 147(a). We are unable to persuade ourselves to agree with the plea of Sri P. Rama Rao that after the reopening of the assessment although reasons for reopening under s. 147(a) and (b) or s. 150 are different, there can be no distinction between reassessment proceeding under s. 147(a) and (b) and that under s. 150. The scope and content of the proceeding under s. 147(a) are admittedly different from those arising on the reopening of the assessment under s. 150. If the plea of the revenue is accepted, it would lead to anomaly and hardship. The reassessment under s. 150 cannot be equated to the reassessment proceeding under s. 147. The very purpose and purport of s. 150 is only to make assessment or reassessment or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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