COMMISSIONER OF INCOME-TAX VS TARAJAN TEA CO. (P.) LTD.
1999 P T D 3248
[236 I T R 477]
[Supreme Court of India]
Present: M. Srinivasan and U. C. Banerjee, JJ
COMMISSIONER OF INCOME-TAX
Versus
TARAJAN TEA CO. (P.) LTD.
C. A. No. 1941 of 1993, decided on 04/02/1999.
(Appeal from the judgment and order, dated February 3, 1992, of the Gauhati High Court in I.T.R. No.7 of 1986).
Income-tax---
----Reassessment---Failure to disclose material facts necessary for assessment---Information that income had escaped assessment---Decision by A.A.C. in case of another assessee which was already available when original assessment was made would not constitute information within the meaning of S.147(b)---Reassessment was not valid---Indian Income Tax Act, 1961, S.147.
The assessee, a tea company, was duly assessed by the Income-tax officer for the relevant period on the basis of the information supplied by the assessee. No particulars were left out by the assessee for enabling the completion of his assessment. However, the Income-tax Officer reopened the assessment and issued a notice under section 147(a) of the Income Tax Act, 1961, on the basis that in the case of another tea company, the Appellate Assistant Commissioner had taken the view that sale of standing trees constituted revenue receipts and, therefore, liable to tax. The order of the Income-tax Officer, was challenged before the Appellate Assistant Commissioner who set aside the same. But, on further appeal by the Revenue, the Tribunal modified the order of the Appellate Assistant Commissioner and permitted the Income-tax Officer to proceed afresh. under section 144-B of the Act. When the, matter came before the High Court the reference was answered in favour of the assessee and the order passed by the income-tax Officer on reassessment was set aside. On appeal to the Supreme Court:
Held, dismissing the appeal, that a perusal of the record in this case showed that there Was no omission or failure on the part of the assessee' to make a return under section 139 as, contemplated-in clause (a) of section 147; nor was there any information in the possession of the Assessing Officer obtained by him subsequent to the assessment order. Whatever information was necessary was already available to the Assessing Officer when the first assessment was made: The order passed by the Appellate Assistant Commissioner in another, case is not "information" within the meaning of the section. Hence, neither clause (a) nor clause.'(b) of the section would apply in this case. The reassessment was not valid.
Tarajan Tea Co.(P.) Ltd. v. CIT (1993) 200 ITR 12 affirmed.
Dr. V. Gauri Shankar, Senior. Advocate (Rajiv Nanda, P. Parmeswaran and B.K. Prasad, Advocates with him) for Appellant.
Vijay Hansaria, Sunil Kumar Jain and Ajay Kumar Gupta, Advocates for Respondent .
JUDGMENT
The three questions referred to the High Court. (see (1993) 200 ITR 12), for answer in this matter areas follows (page 145) : .
"(1) Whether, on the facts and in the circumstances of the case, the Tribunal having held that there was no case for reopening the assessment under section 147(a) of the Income-tax Act, 1961, on the reasons recorded, nor any cause -for reopening of the assessment under section 147(b) of the Act on the reasons recorded on March 21, 1977, was justified in law in sustaining the reopening of assessment under section 147(b) of -the Act on the reasons and grounds given in the order passed in appeal?
(2) Whether? on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the reassessment proceedings initiated under section 147(a), of the Act, by issue, of notice, dated December 31,1976, under section 148 of the Act on the reasons recorded; could be validly converted into a proceeding under section 147(b) of the Act subsequently?
(3) Whether, on the facts and in -the circumstances of the case, the ' Tribunal was justified in law in setting aside the order of .the Appellate Assistant Commissioner of Income-tax 'cancelling the reassessment orders passed by the Income-tax Officer in ignorance of section 144B of the Act, and in directing the Income-tax Officer to resort to the provisions of section 144B afresh instead of annulling and/or cancelling the reassessment- orders and without also taking into consideration the legal bar of limitation for the passing of reassessment orders under section 153 of the Act?"
The short facts, which gave rise to that reference were that the respondent-assessee was duly assessed by the Income-tax Officer for the relevant period on the basis of the information supplied by the assessee. No Particulars were left out by the assessee for enabling the, completion of his assessment. However, the Income-tax Officer reopened the assessment and issued a notice under section 14.7(a) of the Income-tax Act on the basis that in the case of another tea company, the Appellate Assistant 'Commissioner had taken the view that sale of standing trees constituted revenue receipts and, therefore, liable to tax. The Income-tax Officer was of-the opinion that the decision of the Appellate Assistant Commissioner in the other case would amount to "information'." within the- meaning of section 147(a) of the Act in so far as the assessee7company is concerned.
In the course of the proceedings under section 147(a), the Income-tax officer found that it could not be sustained under that subsection and convened -the same into a proceeding under section 147(b) and concluded the matter. The order of the Income-tax Officer was challenged before the Appellate, Assistant Commissioner who set aside the same. But, on further appeal by the Revenue, the Tribunal modified the order of the Appellate. Assistant Commissioner and permitted the Income-tax Officer to proceed afresh under section 144B of the Act. When the matter came before the High Court, the reference was answered in favour of the assessee and the order Passed by the Income-tax Officer on reassessment was set aside. In fact, the High Court observed that the Tribunal ought to have quashed the order converting the proceedings under section 147(b) from that under section 147(a).
On perusal of the records, we find that neither section 147(a) nor section 147(b) would apply in this case. The said section at the relevant period (and prior to the Direct Tax Laws (Amendment) Act, 1987, with effect from April 1, 1989), read as follows
"If-
(a) the Assessing Officer has reason to believe that, by reason of the omission or failure on the part of an assessee to make a return under section 139 for any assessment year to the Assessing Officer or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year, or.
(b) notwithstanding that there has been no omission or failure as, mentioned in clause (a) on the part of the assessee, the Assessing Officer has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year,
he may, 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)."
A perusal of the record in this case shows that there was no omission or failure on the part of the assessee to make a return under section 139 as contemplated in clause (a); nor was there any information in the possession of the Assessing Officer obtained by him subsequent to the assessment order, Whatever information was necessary was already available to the Assessing Officer when the first assessment was made. The order passed by the Appellate Assistant Commissioner, in another case is not "information" within the meaning of the section. Hence, neither clause (a) nor clause (b) of the section would apply in this case.
In the circumstances, it is unnecessary for us to consider the question whether a proceeding under section 147(a) could be converted into a proceeding under section 147(b) in the course of the proceedings without issuing a fresh notice and initiation of a fresh proceeding. Without deciding that question, we come to the conclusion in this case that the order of the Assessing Officer reopening the earlier order and passing a fresh assessment, order is unsustainable and the view taken by the Revenue Authorities ha: been rightly set aside by the High Court.
The appeal fails and is dismissed. No costs.
?M.B.A./3309/FC ?????????????????????????????????????????????????????????????????????????????? Appeal dismissed.