9911796707
TMI Blog1995 (7) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... ect rate of exchange intimated by the Central Board of Direct Taxes, New Delhi. 3. Aggrieved by the said re-assessment, the assessees took up the matter in appeal before the Commissioner (A) contending that the ITO was not justified in reopening the assessment under section 147(b) of the Income-tax Act, 1961. At the time of hearing before the learned Commissioner (Appeals) the various grounds raised in the grounds of appeal as per the memo of appeal filed before him were not properly highlighted. The learned Commissioner (A) held the re-opening to be invalid. According to him, an order under section 172(4) does not fall under the category of cases which can be re-opened under the provisions of section 147. Section 147 applies only to those orders which are based upon the returns filed under section 139 and not under any other section. Accordingly, the learned CIT(A) held that the provisions of section 147 are not applicable and hence the re-assessment proceedings become invalid. He, accordingly set aside the re-assessment proceedings and restored the original order under section 172(4) of the Income-tax Act. In doing so, the learned Commissioner (Appeals) did not deal with other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a number of assessments of a particular ship on the basis of the number of visits during the year. In any case, the option for regular assessment is only given to the assessee under sub-section (7) of section 172. Unless the assessee makes a claim for an assessment to be made of the total income of the previous year, the ITO cannot invoke the general provision in view of the non obstante clause. Since the section begins with the term 'Notwithstanding anything contained in the other provisions of the Act', the ITO cannot fall back upon the other provisions of the Act so as to re-open the assessment already concluded under section 172. The only option that is given is to the assessee who can demand re-assessment in terms of section 172(7). Alternatively, it is submitted by the learned counsel of the assessee that the learned Commissioner (A) did not dispose of the remaining grounds of the appeal. Shri G.N. Gadgil further submitted that the liability of the agent terminated with the filing of the return as contemplated under sub-section (3) and as such, the assessee cannot be assessed again under the main provision. 4. We are unable to subscribe to the above view. The scheme of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... completed under section 172(4) of the Income-tax Act if there is evidence to show that there is escapement of income under the Income-tax Act. We, accordingly, uphold the validity of the order of the Income-tax Officer under section 147 re-opening the assessment and vacate that of the Commissioner (Appeals). 6. However, the learned Commissioner (Appeals) has not considered the appeals on merits including the various grounds raised before him. It will, therefore, be fair and proper to restore the appeals to his file for fresh disposal in accordance with law and deal with all the grounds raised in the memo of appeal. The appeals are accordingly restored to the file of the Commissioner (Appeals) for fresh disposal as indicated above. 7. In the result, the appeals shall be treated as partly allowed for statistical purposes. Balasubramanyam, JM. --- I have had the advantage of reading the order proposed by the learned AM. As I am unable to persuade myself to agree with the conclusion reached by him, I place on record my views in the matter. 2. The impugned assessments are those framed against agents of non-residents under the provisions of section 172(4), IT Act. For a reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave assessed in the normal course on his total income, for, in some case, it may be advantageous to the assessee. Else, the assessment under section 172(4) is final. 6. Chapter XIV deal with procedure for assessment. Section 130 specifies return of income of the previous year. Sections 140A to 144B are the provisions underlying an assessment. They are all assessment of income of a previous year. Section 146 speaks of reopening the assessment at the instance of the assessee. Section 147 is about reopening the assessment at the instance of the ITO. Looking to the sequence of the provisions from section 139 upto section 146, it appears that draftman had only income of the previous year in mind in wording section 147. 7. If the language in section 147(a) and (v) is seen closely, it will be seen that the provision has application only to a case assessment in the general way regarding income of a previous year only. Cl. (a) specifically refers to a return made under section 139. Therefore, 147(a) applies to a case where the assessee has filed a return under section 139 or is obliged to file a return under section 139. In cl. (v), the basis for reopening is consequence of information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been no escapement of income chargeable to tax at all. Rule 115 prescribed that conversion of income expressed in foreign currency into rupees shall be at the "telegraphic transfer buying rate" of such currency on the specified date. Explanation says that "telegraphic transfer buying rate" shall have the same meaning as the Explanation to Rule 26, according to which it is the rate adopted by the State Bank of India for buying currency. The conversion rate applied by the ITO accords with what is prescribed in Rule 115 r/w. 26. The premise of income escaping assessment is misconceived, and resort to section 147(b) is without justification. 11. To the argument that erroneous assessment made under section 172(4) will remain in force if authority is not conceded to ITO under section 147, it may be mentioned in passing that rectification (under section 154) or revision by CIT may be proper. 12. In the result, I hold that the reassessments under section 147(b) are without jurisdiction and the CIT(A) was correct in holding that the same are illegal, and the appeals by the revenue are to be dismissed. ORDER UNDER SECTION 25 5(4) OF THE INCOME-TAX ACT, 1961 Whereas we are unable t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The learned Judicial Member, on the other hand, disagreed with the opinion of the learned Accountant Member and examined the various provisions of the Income-tax Act. He was of the view that the provisions of section 172 and sections 174 to 176 constituted exceptions to the concept of income of the previous year. After examining the relevant provisions of the Income-tax Act, he expressed an opinion that the assessment completed under section 172(4) could not be reopened under section 147 of the Act. He therefore, upheld the order of the CIT(A). 6. Before me, the assessees vide their letter dated June, 1995 stated that the appeals may be decided on merits. In the absence of the assessees, I have heard the learned Senior Departmental Representative Dr. Sunil Pathak at length. He pointed out that while completing the original assessment, the Assessing Officer did not apply the correct rate of exchange on the specified date and, therefore, the assessees were assessed at too low a rate. There was therefore, escapement within the meaning of section 147 of the Act. In such a situation, the assessment could be reopened and therefore, the Assessing Officer was within his legal rights to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceived in India by or on behalf of the assessee on account of the carriage of passengers, livestock, mail or goods, etc. In contrast, section 172 of the Act does not refer to a nonresident assessee. It only refers to levy and recovery of tax in the case of any ship belonging to or chartered by a non-resident which carries passengers, livestock, mail or goods shipped from a part in India. A non-resident engaged in shipping business subject to the qualification of carrying goods, passengers, livestock, mail or goods, etc., being an assessee shall be assessed in accordance with section 143 of the Act and not in accordance with the procedure prescribed for a non-resident ship owner or charterer covered by section 172(1) and (2) of the Act. Therefore, the inevitable conclusion is that the shipowner or charterers in section 172(1) of the Act is not an assessee as defined in clause (7) of section 2. He is a mere shipowner who is a non-resident or a charterer of a ship, also a non-resident. In other words, the heading under H in Chapter XV assumes some significance in interpreting section 172 of the Act. The said heading is as follows: 'H'. Profits of non-residents from occasional shipp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluded in such an assessment. 11. The expressions used in section 147(a) are "for that year" and "any year'. These words refer to the assessment year which is the relevant one. These expressions have been used with reference to the failure on the part of the assessee to file a return or to make full and true disclosure of material facts for a specific year. Thus, the provisions of section 147, can be applied where the assessee has failed to file the return under section 139. The proceedings can be initiated for the previous year relevant to any assessment year. In other words, for putting into operation section 147 of the Act, there should be a return under section 139 and the re-opening should pertain to previous year relevant to assessment year. When the assessment is completed under section 172(4) of the Act there is neither any return under section 139 nor any assessment year is involved. As already stated above, there is no previous year in an assessment under section 172(4) of the Act. For the purpose of computation of tax and its recovery under section 172, no return of income is required to be filed under section 139 of the Act. It therefore, appears that the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
