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TMI Blog2003 (7) TMI 265X X X X Extracts X X X X X X X X Extracts X X X X ..... rs sister Smt. Yagyawati Jayaswal married to Shri Gulab Singh Jayaswal. The Trust deed was amended by an agreement dated 16-4-1981. On 12-1-1965 the Trustees of the Trust entered into a lease agreement with Gulab Singh Jayaswal Others (HUF) in respect of property situated at P-1l7 Lake Terace, Kolkata for a period of 21 years commencing from 1st day of January 1965, at a monthly lease rent of Rs. 1,300 in the terms and conditions contained in the lease deed. The said lease period was renewed for a further period of 15 years at an enhanced rent of Rs. 2,500 per month by virtue of a letter dated 1st December 1985 by the Trustees. The rent received by Gulab Singh Jayaswal Others (HUF) was offered for taxation under the head 'income from house property'. The assessee-trust had sub-let the property to various tenants and the rent received therefrom was disclosed under the head 'income from other sources' after claiming deduction on account of various expenses. The returns filed by the assessee for several assessment years were accepted and the assessments of income were made under the head 'income from other sources' by the Department. 3. For the assessment years 1991-92 to 1997-9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 147 are without jurisdiction. He also contended that there was no change in facts right from the year 1965, and the revenue has consistently accepted the assessable source of income under the head 'income from other source'. According to ld. counsel the Assessing Officer has changed his opinion about the head under which the income is assessable which is not permissible in the proceedings under section 147. In this connection reliance has been placed on the decision of the Delhi High Court in the case of CIT v. Kelvinator of India Ltd. [2002] 256 ITR 1. Reliance has also been placed on the decision of Calcutta High Court in the case of CIT v. Supreme Credit Corpn. Ltd. [1998] 230 ITR 700 in support of the contention that income from leasehold property is assessable under the head 'income from other sources' unless the lessee has constructed the property on the leasehold land the income from which can be subjected to tax under the head 'income from house property'. It was accordingly pleaded that the reassessments made by the Assessing Officer may be quashed. 6. The ld. DR, on the other hand, contended that section 147 has undergone a change with effect from 1-4-1989 and by v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty referred to in sub-clause (i) of clause (d), means transfer of such property by way of sale or exchange or lease for a term of not less than twelve years, and includes allowing the possession of such property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882). Explanation-For the purpose of this sub-clause, a lease which provides for the extension of the term thereof by a further term or terms shall be deemed to be a lease for a term of not less than twelve years, if the aggregate of the term for which such lease is to be granted and the further term or terms for which it can be so extended is not less than twelve years; (ii) in relation to any immovable property of the nature referred to in sub-clause (ii) of clause (d), means the doing of anything (whether by way of admitting as a member of or by way of transfer of shares in a co-operative society or company or other association of persons or by way of any agreement or arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, such property." A perusal of sections 27(i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance, as the case may be, for the assessment year concerned (hereafter in sections 148 to 153) referred to as the relevant assessment year). Explanation 1. -For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely- (a) where income chargeable to tax has been under-assessed; or (b) where such income has been assessed at too low a rate; or (c) where such income has been made the subject of excessive relief under this Act or under the Indian Income-tax Act, 1922 (11 of 1922); or (d) where excessive loss or depreciation allowed has been computed. Explanation 2.-Production before the Assessing Officer of account books or other evidences from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of this section." Section 147 as applicable from the assessment year 1989-90 is also reproduced hereunder: "147. If the Assessing Officer has reason to believe that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under this Act; or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed." It is evident from the language of section 147, as applicable to assessment year 1989-90 onwards in comparison with section 147 before its amendment that there is substantial change in the language of the provisions. Before amendment, the Assessing Officer was empowered to reopen an assessment if in consequence of any information he had reason to believe that income of the assessee chargeable to tax had escaped assessment. The Assessing Officer was also empowered to reopen an assessment if the income of the assessee had escaped assessment by reason of the assessee's failure to disclose fully and truly all material facts necessary for the assessment in respect of relevant assessment year. After the amendment, the Assessing Officer has been empowered to reopen an assessment for the purpose of assessing or reassessing the income which had escaped assessment, if the Assessing Officer has reason to believe that any income chargeable to tax had escaped assessment. The condition for forming an opinion on the basis of information received by the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onclusion: (1) Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191 (SC) (2) ITO v. Lakhmani Mewal Das [1976] 103 ITR 437 (SC) (3) ITO v. Madnani Engg. Works Ltd. [1979] 118 ITR 1 (SC) (4) ITO v. Mewalal Dwaraka Prasad [1989] 176 ITR 529 (SC) (5) Indian Oil Corpn. v. ITO [1986] 159 ITR 956 (SC) (6) Indo-Aden Salt Mfg. Trading Co. (P.) Ltd. [1986] 159 ITR 624 (SC). In this case, on the basis of the amendment in section 27(iiib), the Assessing Officer formed a reasonable belief that income of the assessee; has escaped assessment. In the case of Ganga Saran Sons (P.) Ltd. v. ITO [1981] 130 ITR 1 (SC), the Hon'ble Supreme Court held as under: "The important words in section 147(a) are 'has reason to believe' and these words are stronger than the words 'is satisfied', The belief entertained by the ITO must not be arbitrary or irrational. It must be reasonable or in other words it must be based on reasons which are relevant and material. The court, of course, cannot investigate into the adequacy or sufficiency of the reasons which have weighed with the ITO in coming to the belief, but the court can certainly examine whether the reasons are relevant and have a bearing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht of the above-mentioned facts and law, particularly the amended provisions of section 147 and section 27(iiib) I am of the opinion that the action under section 147 was justified in this case for the respective assessment years under consideration. 10. However, it is also important to note that proceedings under section 147 are made subject to the condition of issue of notice under section 148. In this case, the Assessing Officer has undoubtedly issued notices under section 148 for all the respective assessment years. However section 149 provides limitation for issue of notice under section 148. The limitation provided in the said section is four years from the end of the relevant assessment year unless the income chargeable to tax which has escaped amounts to or is likely to amount to rupees on lakh or more for that year. In the assessment years 1991-92 to 1997-98 the income originally assessed and re-assessed are indicated below: Asst. Income originally Income re-assessed Year assessed Rs. Rs. 1991-92 36,780 57,700 1992-93 66,360 72,030 1993-94 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re was no non-disclosure of the material facts by the assessee. I have elsewhere in this order held that in this case there was even non-disclosure of material facts by the assessee in not disclosing the income from sub-letting under the head 'income from house property' and in claiming excess deduction not permissible under the statute as the income was computed and declared under the head 'income from other sources'. 13. I, therefore, uphold the action of the Assessing Officer for reopening the assessments for the years 1995-96 to 1997-98. I would, however, in fairness to the assessee, point out that the assessee has been persistent with the claim that its income is assessable under the head 'income from other sources'. The assessee, therefore, did not get any chance to claim deduction permissible under the statute against the income assessable under the head 'income from house property'. I, therefore, restore this issue to the file of the Assessing Officer for the assessment years 1995-96 to 1997-98 for assessment of income under the head 'income from house property' after giving proper opportunity of being heard to the assessee for the purpose of claiming permissible deductio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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