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TMI Blog1982 (4) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... from certain firms. In the course of original assessment in the status of 'individual', the assessee had shown share income in a registered firm styled as M/s Parkash Chand Kedar Nath Amar Nath Vij, Mandi, at Rs. 5,670 which was accepted by the ITO as declared subject to rectification under s. 155/148 of the IT Act, 1961, as the case may be, on completion of assessment in the case of the firm. In the course of this assessment proceedings, the ITO vide his letter dt. 9th March, 1971, made an enquiry about the assessee's share in one firm of M/s Parkash Chand Kedar Nath Amar Nath Vij in regard to L-2 contract at Mandi in respect of which the assessee had shown 1/3rd share and the said query reads as under: "You have shown 1/3rd share in the firm M/s Parkash Chand Anand Kedar Nath and Amar Nath Vij in regard to L-2 contract in Mandi District. I have recorded the statement of Sh. Amar Nath Vij who categorically deposed that this business was owned by you in your individual capacity and he and Sh. Kedar Nath withdrew from the above in view of your withdrawing from the business in Kasumti Tehsil of Koti and Junga units in Mahasu District. Certain other facts were given out by Sh. Amar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,851 2. Amar Nath Vij -do- 10,066 1,851 3. Kedar Nath -do- 10,063 1,851 Serve a copy of this order upon the assessee." 5. After the assessment of the firm was made, the same ITO vide his letter No. 1631 dt. 3rd Feb., 1972, with other proposed rectifications mentioned therein in respect of the assessee's share in the said firm, wrote to him as under: "Your share from M/s Parkash Chand Kedar Nath Amar Nath Vin was taken as shown by you. The case of the firm has since been decided and the correct share as determined in that file be taken for assessment purposes." 6. Against the said assessment order of the ITO dt. 31st March, 1971, one of the partners Amar Nath Vij carried the issue before the AAC pertaining to the ITO's finding under s. 183(b) granting registration to the assessee-firm being beneficial to the Revenue. The AAC in the said order, after taking into consideration the depositions made by P.C. Anand, Kedar Nath and Amar Nath Vij, annulled the assessment framed in the name of URF of M/s Parkash Chand Kedar Nath Amar Nath along with the appeal of the assessee, but in the said order also made an obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of the share income allocated to him by the ITO on completion of the firm's assessment." This aspect of the matter was not controverted on behalf of Sh. P.C. Anand, nor by the ld. Departmental Representative and the Tribunal in the last line of para 9 of its order held that "the said appeal was under s. 247 of the IT Act." The Tribunal after discussing different contentions put by all the three persons, Parkash Chand, Amar Nath and Kedar Nath and the Revenue, finally observed regarding the main contention pertaining to finding which effected P.C. Anand in the following words, contained in para 19 of the Tribunal's order: "19. Another argument raised before us by Sh. Chadha was that as the case was not covered by s. 267, it was not necessary or competent for the AAC to give direction contained in para 14 of his order. We agree that as the AAC was not seized of an appeal filed by the firm, s. 267 was not attracted. But as pointed out by Sh. Aulakh for the Revenue, said paragraph 14 contains only a finding and not a direction as such. Thus, this argument also fails." 9. It was on 4th March, 1975 that s. 148 notice was served on P.C. Anand, as a consequence of reopeni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm filed its return. He submitted that there cannot be any motive when return is filed under s. 139(3) notice. He submitted that even as per the Tribunal's finding it was under s. 237 that the appeal was filed by Amar Nath and in an appeal under s. 247 by one of the partners no direction could be given and the Tribunal itself has agreed that finding of the AAC in para 14 of his order is not a direction but finding even as per the ld. Departmental Representative, as mention in the said order. He submitted whatever is the said finding worth of, it was uncalled for, unwarranted nor it could be given legally. He submitted at length that the said Tribunal's order has not been objected to by his client because he has no locus standi. He vehemently argued that s. 150 in the instant case would not be attracted. He relied on the Punjab and Haryana High Court judgment in the case of CIT vs. S. Raghubir Singh Trust (1971) 80 ITR 515 (P H) and submitted that even the Supreme Court judgment in the case of CIT vs. Vadde Pullaiah Co. (1973) 89 ITR 240 (SC) which has been relied upon by the ld. Deptl. Rep. Sh. M.P. Singh in his written submission, helps the assessee and not the Revenue because f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Calcutta High Court judgment in the case of ITO vs. Eastern Coal Co. Ltd. (1975) 101 ITR 477 (Cal). In respect of the contention that terminology supports 'information' he placed his reliance on the Gujarat High Court judgment in the case of K. Mansukhram Sons vs. CIT (1982) 133 ITR 65 (Guj). 14. In rejoinder, the ld. Counsel for the assessee submitted that the judgment in the case of Ess Ess Kay Engineering Co. (P) Ltd., on the other hand, helps the assessee and so does the judgment in the case of Vadde Pullaiah Co. He submitted that though the ld. departmental representative, while dealing with the contentions raised by the assessee in his appeal has gone to the extent of making submissions in respect of the Revenue's appeal also but, according to him, without prejudice, even if the assessee's contention is rejected, the Revenue's appeal cannot hold the ground because opportunity has to be allowed to the assessee before any issue is to be adjudicated by the ITO. It cannot just be adjudicated in the back of the assessee because not only technically but really the old quantum assessment in the case of the firm stands annulled, but all this is said without any prejudice. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se any further. We cannot ignore the fact in this case as to what was the appeal before the AAC? Who filed it? What was the relief claimed and under what section? We are of the view that the finding was incidental and not enough to qualify the submissions made by P.C. Anand earlier as untrue. 16. In the case of Ess Ess Kay Engineering Co. (P) Ltd., it was held by their Lordships of the Punjab and Haryana High Court that "..... the law, so far as this Court is concerned, is well-settled that though the assessee may have disclosed fully the facts at the time of the original assessment, if they are found to be untrue on the basis of the material discovered later on by the assessing authority, the reassessment would be liable to be reopened under s. 147(a) because in such a case the assessee failed to disclose truly all the material facts was mere change of opinion.....'On the basis of facts in the instant case, when we sort out as to what is the basis of the material discovered later on by the assessing officer, we find an incidental observation of the AAC, which is out of tone, if the issue to be adjudicated by him is to be taken into account. Had the issue before him been as to w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Eastern Coal Co. Ltd. is also misplaced because the issue in that case was whether a notice issued under s. 147 (a) can be treated as one, if the material conditions are fulfilled under cl. (b) of s. 147. There is no dispute about this proposition but in the instant case what we have held above is that finding of the AAC in para 14 of his order is no information and under none of the sub-ss. (a) or (b) of s. 147, proceedings in the instant case could be initiated. Reliance of the ld. Departmental Representative on the case of K. Mansukhram Sons is also misplaced because the said case cannot be of any assistance to the Revenue. In the instant case, there is no dispute that the decision of the Tribunal is 'information' within the meaning of s. 147(b) but factually when we have to see whether there is any decision of the Tribunal or that of the AAC in respect of the above issue, we find that there is none as we have already stated above, the issue before the AAC was never raised by the firm nor was it the issue whether the said business L-2 belonged to P.C. Anand or the firm. 17. After taking into consideration the assessment framed in the case of individual P.C. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oviso to s. 334(3) of the Indian IT Act, 1922". The case of Vadde Pullaiah Co. with which we have dealt with above, if read as a whole, supports the contention of the assessee's counsel. 19. In the light of our decision in the assessee's appeal wherein we held that s. 147 proceedings were not rightly initiated, we do not find it necessary to adjudicate the contention raised by the Revenue in its appeal, though the Revenue is in appeal against the order of the CIT(A) setting aside the order of the ITO and restoring it to his file to be made de novo and prayer in the said appeal is that his order should not have been set aside. In respect of annulment of reassessment, the ld. Counsel for the assessee has placed his reliance on the case of Munnalal Murlidhar, according to which, if the assessee is denied an opportunity to produce evidence, the assessment would be vitiated. Similar was the reliance of the ld. counsel for the assessee in the case of Radhey Shyam Jagdish Prasad, wherein the case of Munnalal Murlidhar was relied upon, but this will be of academic nature, in the light of our finding that the reassessment proceedings in the instant case were not properly initialled ..... X X X X Extracts X X X X X X X X Extracts X X X X
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