9911796707
TMI Blog2006 (4) TMI 179X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee on 23-12-1993 showing total loss of Rs. 19,17,080 along with a covering letter. The assessee requested to issue notice under section 148 of the Income-tax Act and requested that the said return may be treated as filed in response to the said notice. It is recorded in the assessment order that accordingly the notice was issued under section 148 on 27-3-1995 and in reply thereto the assessee submitted that the return has already been filed with the department by RPAD along with covering letter dated 13-10-1993. Thereafter the Assessing Officer issued notice under section 142(1) of the Act calling for the details which were furnished vide letter dated 10-3-1997 and assessment was framed at a loss of Rs. 18,41,744 vide assessment order dated 17-3-1997 passed under the provisions of section 143(3), read with section 147 of the Act. In the said assessment order it has been mentioned that as the depreciation of Rs. 24,25,514 is more than the total business income, the balance amount of depreciation is also to be carried forward, even though the return has been filed late and loss allocated from trust is not allowed to be carried forward. Against such assessment order the CIT initi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it amply clear that this section has no application to a case where there is no escapement of assessable income from the taxable net. This provision is intended for retrieval of revenue where there is escapement of income either on account of lapse on the part of the assessee or otherwise. In a case where there is no assessable income or tax, the provisions have no application to such a situation at all. In the case of the assessee the return as well as the assessed figure is a loss and there is no tax implication in the proceedings. The assessment framed under section 148 is, therefore, absolutely erroneous as also prejudicial to the revenue inasmuch as it allow carry forward of loss which was not permissible in the situation. 5. In the result, the assessment framed under section 148 on 17-3-1997 for assessment year 1991-92 is hereby cancelled. The Assessing Officer is directed to give effect to this order." It is against such order of CIT the assessee is aggrieved hence in appeal. 4. The ld. Counsel appearing on behalf of assessee after narrating the facts pleaded that assessment of loss is due to the claim of depreciation. He contended that according to the decision of Hon'b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the benefit of the revenue and not for assessee. They are aimed at garnering the 'escaped income' of an assessee, the same cannot be allowed to be converted as "revisional" or "review" proceedings at the instance of the assessee, thereby making the machinery unworkable. (ii) Chettinad Corpn. (P.) Ltd. v. CIT [1993] 200 ITR 320 (SC) Wherein Hon'ble Supreme Court reiterated their decision in the case of Sun Engg. Works (P.) Ltd. to hold that re-opening of assessment could only be for the benefit of revenue. Subject-matter at the instance of the assessee not relevant to proceedings could not be considered at the state of reassessment. In the said case, their Lordships have affirmed the decision of Madras High Court in the case of Chettinad Corpn. (P.) Ltd. wherein it was held that the reopening can only be for the benefit of the revenue. But this is subject to one exception. Where a particular item is sought to be brought to charge for the first time in the re-assessment proceedings, any allowance, deduction or other relief in relation to that item can be put forward by the assessee. All other items of disallowance or relief claimed by the assessee which are not relevant to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings under section 147 of the Act are for the benefit of the Revenue and not an assessee and are aimed at garnering the 'escaped income' of an assessee, the same cannot be allowed to be converted as 'revisional' or 'review' proceedings at the instances of the assessee, thereby making the machinery unworkable." Thus the law is well-settled that proceedings under section 147 of the Act are for the benefit of the revenue and not for an assessee and are aimed at garnering the 'escaped income' of an assessee and the same cannot be allowed to be converted as "revisional" or "review" proceedings at the instance of the assessee. As pointed out earlier there is no income of assessee which can be said to be assessable for the year under consideration rather the assessee is getting benefit in the shape of assessed loss as well as unabsorbed depreciation which is to be carried forward to subsequent years in pursuance of the impugned assessment order. The subject-matter of dispute before us is the order of CIT passed under section 263 of the Act. Therefore, we have to decide whether or not provisions of section 263 were validly invoked by ld. CIT. For invoking section 263, the order of As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no income which could escape for the year under consideration, the Assessing Officer could not confer the benefit to the assessee by way of reassessment. Even if the notice was issued, the Assessing Officer was not within his right to complete the assessment to determine the loss thereby giving the assessee a right to claim set off of loss in subsequent years to the detriment of revenue. 12. We are unable to agree with the contention of Id. Counsel of the assessee that for the purpose of applying the ratio of decision of Supreme Court in the case of Sun Engg. Works (P.) Ltd., there should be earlier assessment proceedings (original assessment proceedings). The above mentioned decision in the case of Sun Engg. Works (P.) Ltd. was later on considered by the Jammu and Kashmir High Court in the case of CIT v. State Agro Development Corpn. [2001] 248 ITR 487. It will be relevant to state briefly the facts therein. The assessee in that case did not file its return of income for assessment year 1975-76 within the time allowed under section 139(1). No notice was issued under section 139(2) of the Act. However, on February 27, 1978 a notice under section 148 was issued and served on the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich escaped assessment in the relevant assessment year. It is applicable only to a case where the ITO has reason to believe that the income of the assessee has escaped assessment. The power under this section can also be exercised in cases where excessive loss or depreciation allowance has been computed. In the instant case, reassessment proceedings were initiated by the ITO for the assessment year 1975-76 by issue of notice under section 148 of the Act because he was satisfied that the income of the petitioner-Corporation for that year had escaped assessment by reason of the non-submission of return by the assessee. In such a case, if at any stage of the proceedings, the ITO finds that income chargeable to tax has not escaped assessment, he is free not to take further action pursuant to the notice under section 148 of the Act and drop the proceedings. He is not bound to conclude the proceedings and make assessment to the detriment of the Revenue. If pursuant to notice under section 148 of the Act, the assessee submits a loss return, and the ITO is satisfied that the income of the assessee during the relevant year was really negative as claimed by the assessee in his return, he is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ohan Rao's case cannot be read to imply as laying down that in the reassessment proceedings validly initiated, the assessee can seek reopening of the whole assessment and claim credit in respect of items finally concluded in the original assessment. The assessee cannot claim recomputation of the income or redoing of an assessment and be allowed a claim which lie either failed to make or which was otherwise rejected at the time of original assessment which has since acquired finality. In the reassessment proceedings, it is of course open to an assessee to show that the income alleged to have escaped assessment has, in truth and in fact, not escaped assessment but that the same had been shown under some inappropriate head in the original return. The Supreme Court, therefore, said in clear terms that to read the judgment in V. Jaganmohan Raos case, as laying down that reassessment wipes out the original assessment and that reassessment is not only confined to 'escaped assessment' or 'underassessment' but to the entire assessment for the year and starts the assessment proceedings de novo giving the right to an assessee to reagitate matters which he had lost during the original assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ITO would be to drop the proceedings under section 147 of the Act. 10. In the instant case, by refusing to allow the assessee the benefit of carry forward of loss, the ITO had, in effect, dropped the proceedings under section 148 of the Act. In our opinion he was right in doing so. In the proceedings under section 147 of the Act, he could not have allowed the assessee the benefit of carry forward of loss of Rs. 16,58,038 which obviously was to the detriment of the revenue. The CIT(A) and the Tribunal were not justified in law in reversing the above action of the Income-tax Office." From the above observations of their Lordships it is clear that proceedings under section 147/148 are for the benefit of the revenue and not for the assessee and the assessee could not be permitted to take advantage of the reassessment proceedings and seek relief which, in the absence of proceedings for assessment of escaped income, he could not have claimed. Income for the purpose of assessment under section 147 of the Act cannot be a negative figure. In a case, even at any stage of these proceedings the Assessing Officer finds that income chargeable to tax has not escaped assessment, he is free not ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
