Income-tax---

----Reassessment---Income escaping assessment, meaning of---Assessee filing revised return showing loss on ground of receipt shown in original return taxable in preceding year---Receipt taxed in year in question---Reassessment for earlier year to bring receipt to tax---Not permissible---Receipt in question did not escape assessment---Indian Income Tax Act, 1961, Ss, 147 & 148.

For the assessment year 1984-85, the petitioner filed its original return on June 27, 1984, declaring a total income of Rs.8,22,400. Subsequently, however, it filed a revised return showing a loss of Rs.55,660 on the ground that a sum of Rs.8,52,000 had been received on cash basis for engineering services and was to be included in the assessment year 1983-84, and excluded for 19.$4-85. The Assessing Officer held that the income of Rs.8,52,000 was to be included in the assessment year 1984-85 and accordingly passed an appropriate order. By an order under section 147 of the Income Tax Act, 1961, the income of Rs.8,52,000 was brought to tax in the assessment year 1983-84. On a writ petition:

Held, allowing the petition, that the order of reassessment was patently illegal. The question of income escaping assessment did not arise at all at any point of time, because the petitioner had all along been informing and requesting the Assessing Officer and other authorities of the Income-tax Department that its income of Rs.8,52,000 should be included in the assessment year 1983-84. In fact, the Assessing Officer after taking into consideration this aspect of the matter and pursuant to the direction of the Tribunal to decide the issue with reference to documents available, assessed this income for the assessment year 1984-85. Once the income was subjected to assessment for any particular year, it cannot be said to have escaped assessment, thus, permitting the Assessing Officer to invoke section 147 of the Act.

Pradip Dutta, Pratima Mishra and Swapna Misra for Petitioners

R. C. Prasad for Respondent.

JUDGMENT

It is on account of a palpable illegal action on the part of the respondents that the petitioners have been driven to this avoidable litigation. The facts in brief are that for the assessment year 1984-85, the petitioners filed their original return on June 27, 1984, declaring total income of Rs.8,22,400. Subsequently, however, they filed a revised return on November 24, 1.986, computing the total loss at Rs.55,660. The main reason for filing the revised return was on account of the fact that the petitioners claimed to have received an amount of Rs.8,52,000 as income on cash basis for engineering service rendered by the petitioners and the claim of -the petitioners that this income of Rs.8,52,000 should be included for the assessment year 1983-84. Since the petitioners wanted the inclusion of this income in assessment year 1983-84, they, as noticed above, filed the revised return showing a loss of Rs.55,660 for. the assessment year 1984-85 because the petitioners wanted to exclude the income of Rs.8,52,000 from the assessment year 1984-85. The Assessing Officer, however, did not agree with the contention of the petitioners and included the aforesaid income of Rs.8,52,000 in the assessment year 1984-85. The petitioners' appeal against this order was rejected by the Commissioner of Income-tax (Appeals). however, the Income-tax Appellate Tribunal C-Bench, Calcutta, in Appeal No:2034/Calcutta of 1989 vide its order, dated September 16, 1992, set aside the aforesaid order of the Assessing Officer, but instead of itself deciding the question about the inclusion of the income of Rs.8,52,000 either in the assessment year 1984-85 or in the assessment year 1983-84, directed the' Assessing Officer to decide the issue with reference to the documents available and those to be produced by the petitioners before him. Consequent upon the aforesaid direction of the Tribunal, vide order, dated September23, 1985, the Assessing Officer once again came to a conclusion that the income of Rs.8,52,000 was to be included in the assessment year 1984-85 and accordingly passed an appropriate order.

The Assessing Officer issued a notice on March 28, 1994, under section 148 of the Income-tax Act whereby it communicated to the petitioners that he has reasons to believe that income for the-assessment year 1983-84_ has escaped the assessment and that he wanted to reassess this income for the said assessment year. The petitioners were called upon to deliver the documents, etc., to the Assessing Officer. Thereafter, the impugned order dated March 29, 1996, was passed in terms of sections 147 and 148 of the Income-tax Act including the aforesaid income of Rs.8,52,000 for the assessment year 1983-84. It is against this order that the petitioners have filed this petition under Article 226 of the Constitution of India.

Undoubtedly, the order impugned in this petition is so patently erroneous and contrary to the well-established principles- of law that the maintainability of this petition on the ground of alternative remedy should not be called into question. The order impugned in this petition is so illegal on the very face of it that the petitioners should not be asked to avail of the alternative remedy.

Section 147 of the Income-tax Act authorises and permits an Assessing Officer to assess or reassess income chargeable to tax if he has reasons to believe that the said income for any assessment year has escaped assessment. The expression "escaped assessment" clearly connotes, a very basic postulate that the income for a particular assessment year went unnoticed by the Assessing Officer and because of it not being noticed by him for any reason, it escaped assessment. The meaning of the expression "escaped assessment" is so simple and straight that it does not leave anyone in doubt that power under section 147 of the Act could be invoked by the Assessing Officer if it is a case of escape of assessment of income for a particular year. In the present case, however, as the facts have clearly established that the income for the assessment year 1983-84 did not escape assessment inasmuch as the income, i.e., Rs.8,52,000, was very much in the knowledge and notice of the Assessing Officer and it was subjected to assessment for the assessment year 1984-85. In fact, the question of this income escaping assessment did not arise at all, at any point of time, because the petitioners had all along been informing and requesting the Assessing Officer and other authorities in hierarchy of the Income-tax Department that its income of Rs.8,52,000 should be included in the assessment year 1983-84. The income of Rs.8,52,000, which is the subject-matter of the impugned order, therefore, by no stretch of imagination can be said to have escaped assessment for any , assessment year much less for the assessment year 1983-84. In fact, the Assessing Officer after taking into consideration this aspect of the matter and pursuant to the directions of the Tribunal assessed this income for the assessment year 1984-85. Once the income was subjected to assessment for any particular year, it cannot be said to have escaped assessment, thus, permitting the Assessing Officer to invoke section 147 of the Act.

In the facts and circumstances, therefore, I am clearly of the view that the initiation of proceedings under section 147 of the Act and the issuance of show-cause notice under section 148 of the Act are wholly without jurisdiction and a patent abuse of the process of law by the respondents. In fact, I should not hesitate in saying that perhaps the respondents acted without any application of mind and mechanically not caring to find out that the income had already been assessed for the year 1984-85 and there was no question of its having escaped assessment. The impugned order, therefore, suffers from a patent illegality and being wholly invalid and illegal deserves to be quashed and set aside.

For the foregoing reasons, therefore, this writ petition is allowed. The impugned order is quashed and set aside, but without any order as to costs.

Certified xerox copy of this order, if applied for, be given to the parties forthwith.

M.B.A./4170/FC???????????????????????????????????????????????????????????????????????????????? Petition allowed.