9911796707
TMI Blog1979 (6) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... sment year 1948-49, the relevant previous year being the one ended on Rathajatra, Samvat year 2004. Long thereafter, the ITO discovered that there were several deposits in the United Commercial Bank aggregating to Rs. 1,96,000 in the names of Bhudarmal Khaitan, Mukhalal Khaitan, Durgadutt Agarwalla and Ramkaran Khaitan which had been furnished as security against an overdraft account of the firm with the said bank and he called upon the assessee to explain the source of the said deposits. The explanation furnished having been found unsatisfactory and unacceptable, the ITO, with the prior approval of the CBDT, initiated proceedings against the assessee under s. 147(a) of the I.T. Act, 1961 (hereinafter referred to as " the 1961 Act "), for the assessment year 1947-48, and issued a notice under s. 148 thereof. The said notice and subsequent notices under s. 142(1) of the 1961 Act were not complied with. The ITO, accordingly, made the assessment under s. 144 of the 1961 Act to the best of his judgment. The said sum of Rs. 1,96,000 with interest and the capital contribution of Rs. 3,00,000 by the three partners in the said firm were held to be income of the assessee from undisclosed so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following question of law for the opinion of this court : " Whether, on the facts and in the circumstances of the case, and having regard to the position that the Appellate Assistant Commissioner discussed regarding the applicability of section 147(a) of the Act in his order, the Tribunal was right in holding that the assessee could not agitate the applicability of section 147(a) of the Act against an order passed under section 144 of the Act when the assessee denied the liability to be assessed during the previous year ? " Mr. Sanjoy Bhattacharyya, the learned counsel for the assessee, contended before us that s. 246 of the 1961 Act conferred on the assessee a specific right of appeal where the assessee denied his liability to be assessed under the said Act. He could also appeal from assessments under ss. 143 or 144 challenging the quantum of the income assessed or tax determined and also against assessment or reassessment or recomputation under s. 147 of the 1961 Act and, where the liability to be assessed was denied, it was not confined to any particular section of the Act. Mr. Bhattacharyya drew our attention to s. 146 of the 1961 Act under which an assessee had a right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee and at his directions the ITO made a fresh assessment treating the assessee as an unregistered firm and super-tax was levied. The assessee's appeal to the AAC was dismissed. On an application under s. 33 of the said Act the Commissioner held that no appeal lay against an order of assessment under s. 23(4) of the said Act. He rejected the application of the assessee but on the same ground quashed the order of the AAC. There was a reference to the High court and the matter ultimately went up to the Privy Council which considered the validity of the said order of fresh assessment made by the ITO levying super-tax and observed as follows (p. 426) : " For the order could only be justified, if at all, as one made, not under section 23(4) but under either section 34 or section 35. If it was made as the Commissioner has found, in purported exercise of the powers given by section 23(4) the assessee nevertheless had a right of appeal to the Assistant Commissioner under section 33 and the Commissioner was in error when he quashed the proceedings on that appeal. " Sundermul Co. v. CIT [1967] 66 ITR 277 (AP). Here, on the failure of the assessee, a registered firm, to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without material, or acted arbitrarily or capriciously ...... It may here be stated that prior to the amendment of the Income-tax Act in 1939, a best judgment assessment under section 23(4) could only be challenged or questioned by an application under section 27, and, thereafter, by an appeal under section 30. But the Amendment Act has made a provision, in section 30, permitting an appeal by an assessee against an order of the Income-tax Officer making an assessment under section 23(4), thereby enlarging the right of the assessee to question the assessment itself ...... If an assessee does not choose to appeal against an order under section 27, he simply loses the right to have the assessment reopened on the ground mentioned in section 27...... Though the assessee might have lost that right by not appealing against an adverse order under section 27 or by not succeeding in an appeal which he might have preferred against such an order, it does not preclude the Appellate Assistant Commissioner under section 31(2) to order further enquiry for the purposes of disposing of the appeal or the question in appeal before him. " M. M. Muthuwappa v. CIT [1962] 46 ITR 1107 (Mad). Here one o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the stage of execution and even in collateral proceedings. A defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the subject-matter of the action, strikes at the very authority of the court to pass any decree, and such a defect cannot be cured even by consent of parties. " Mr. B.K. Naha, the learned counsel for the revenue, contended on the other hand that the assessee could not prefer an appeal against a best judgment assessment without first exhausting the other remedy provided by the 1961 Act, that is, without first making an application under s. 146 of the 1961 Act. Mr. Naha urged that in objecting to a best judgment assessment in an appeal the assessee must in the first instance prove that he was prevented by sufficient cause from making a return of his income or from appearing before the ITO when called upon to do so. Mr. Naha further urged that by an application under s. 146 for cancellation of the best judgment assessment the assessee also denies his liability to be assessed otherwise there will be no meaning in his seeking to reopen the assessment. In the instant case, the assessee did not make any application under s. 146 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as regards those sections to the quantum of the assessment or tax. " (b) Gaurishanker Kedia v. CIT [1963] 49 ITR 655 (Bom). In this case the ITO initiated proceedings under s. 34(1)(a) of the Indian I.T. Act, 1922, and served a notice on the assessee under s. 34(1)(a) read with s. 22(2) of the said Act. The assessee not having filed any return in response to the said notice, the ITO made a best judgment assessment under s. 23(4) of the said Act and issued a notice of demand to the assessee. The assessee made an application under s. 27 of the said Act for reopening of the said assessment contending, inter alia, that he was neither a resident nor carried on any business nor had any taxable income in Bombay and as such had no address there and as no notice either under s. 22(4) or s. 23(2) or any other notice was served on him he had no opportunity to comply with the same. On the date fixed for hearing of the said application the assessee prayed for adjournment which was allowed. On the adjourned date, however, no one appeared and the ITO dismissed the said application. The assessee did not appeal against the said order but preferred an appeal against the assessment before the AA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where the assessee objects to the amount of income assessed, or to the amount of tax determined, or to the amount of loss computed, or to the status under which he is assessed ; (d) an order under section 146 refusing to reopen an assessment made under section 144; (e) an order of assessment, reassessment or recomputation under section 147 or section 150..........." From a comparison of the above provisions for appeals in the two Acts, it appears that under the 1961 Act, at least for the purposes of appeal, an assessment or reassessment under s. 147 of the said Act is treated in a separate category as distinct from assessments made under other sections or provisions of the said Act, and a specific and separate provision for, appeals against such assessment or reassessment under s. 147 has, therefore, been provided for. In the 1922 Act there was no separate provision for appeal from an assessment or reassessment under s. 34 of the said Act. In the instant case, we are concerned only with the 1961 Act, the scheme of which is basically as follows : Section 139 requires the assessee to file a return of his income and authorises the ITO to make an assessment under s. 143 in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnished, the appeal from such assessment or reassessment would be limited only to objection as to the amount of the income assessed or tax determined and not on the question of reopening of an assessment under s. 147. In the instant case, the assessee has denied its liability to be assessed at all under the 1961 Act and one of the contentions of the assessee is that the proceedings initiated under s. 147 of the 1961 Act is without jurisdiction and a nullity. In these circumstances, we cannot read s. 246 of the 1961 Act in a manner which will limit and circumscribe the assessee's right to agitate all questions in the appeal. The right to appeal from an assessment or reassessment under s. 147 appears to be a general right and if such an appeal is admissible then it does not appear to us that the assessee is confined only to certain grounds and not others. The Privy Council in the case of Khemchand Ramdas [1938] 6 ITR 414 noted the distinction between an order under s. 34 and that made under s. 23(4) of the Indian I. T. Act, 1922. We hold that in the facts and circumstances of the instant case the assessee had a specific right of appeal against the reassessment made under s. 147 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
