Income-tax---

----Reference---Question of law---Assessment framed under S.143(1)---Later Assessing Officer invoking S.143(2)(b) and framing assessment under S.144---Tribunal finding that Assessing Officer not required to state reasons for reopening assessment as required under S.147 and entire thing depended on satisfaction of Assessing Officer---Satisfaction cannot be unfettered and has to rest on proper reasons---Whether Assessing Officer had requisite jurisdiction to reopen assessment under S.143(2)(b)---Is a question of law fit for reference---Indian Income Tax Act, 1961.

The assessment of the assessee was framed under section 143(1) of the Income Tax Act, 1961, on a returned income of Rs.13,620. Thereafter, the Assessing Officer invoked the provisions of section 143(2)(b) and served a notice of hearing on the assessee, which led to the framing of Assessment under section 144 for want of cooperation from the assessee, on an income-of Rs.3,35,000. The appeal of the assessee before the Commissioner (Appeals) was dismissed. The Tribunal held that there was no allegation by the assessee as to the arbitrariness or mala fides in the reopening of the assessment under section 143(2)(b) of the Act, that the Assessing Officer was not required to state the reasons for reopening of the assessment as was required under section 147 of the Act and that the entire thing depended on the satisfaction of the Assessing Officer. The Tribunal, however, allowed the appeal of the assessee with a direction to the Assessing Officer to make fresh assessment after giving reasonable opportunity of hearing to the assessee. The Tribunal refused to state a case under section 256(1) on the question, whether the assumption of jurisdiction for making fresh assessment by the Assessing Officer was illegal because no reasons were recorded for reopening of the assessment under section 143(2) of the Act. On an application filed by the assessee under- section 256(2) for directing the Tribunal to refer a question of law:

Held, that the satisfaction of the Assessing Officer could not be unfettered and had to rest on proper reasons. It had to be considered whether there were no reasons and if so, whether the Assessing Officer had requisite jurisdiction to reopen the assessments under section 143(2)(b) of the Act. In tax matters as well as in other matters, the eventual goal is to attain finality. Therefore, a question of law, namely, whether assumption of jurisdiction for making fresh assessment by the Assessing Officer was illegal because no reasons were recorded for reopening of assessment under section 143(2)(b) of the Act, arose for reference.

Parashuratn Pottery Works Co. Ltd. v. ITO (1977) 106 ITR(SC) ref.

V.S. Samvatsar for the Assessee

Pathrekar for the Commissioner.

JUDGMENT

A. R. TIWARI, J:---The applicant-assessee has filed this application under section 256(2) of the Income Tax Act, 1961 (for short "the Act"), seeking direction to the Tribunal to state tire case and refer the proposed six questions, as mentioned in the application and extracted below, arising out of the order, dated March 6, 1992, passed by the Tribunal in I.T.A. No.640/IND of 1990 for the assessment year 1985-86 after rejection of the application presented under section 256(1) of the Act and registered as .RA No. 1 17/IND of 1992 oh February 15, 1993:

"(1) Whether assessment is vitiated because no approval was taken by the Assessing Officer of the Inspecting Assistant Commissioner before issuance of notice of hearing tinder section 143(2)(b)?

(2) Whether assumption of jurisdiction for malting fresh assessment by the Assessing Officer was illegal because no reasons stood record for reopening of assessment under section 143(2)(b) of the Income? tax Act? .

(3) Whether additions made during fresh assessment could be justified by taking recourse to the provisions of section 143(2)(b) of the Income-tax Act?

(4) Whether in view of the provisions of the Benami Transactions, Prohibition Act, 1988, and in the light of the Supreme Court judgment in case of Mithilesh Kumari v. Prem Bihari (1989) 177 ITR 97, the Income-tax Officer was justified in making fresh assessment?

(5) Whether learned Income tax Officer was justified in making fresh assessment without following the procedure laid down under section 143(2)(b) of the Income-tax Act?

(6) Whether the learned Commissioner of Income-tax (Appeals) has erred in confirming the addition of Rs.50,000 merely on the basis of concession of the assessee which was forced one in circumstances there exists?"

Briefly stated, the facts of the case are that the assessee is an individual having income from salary from S. M. Kabra and Company besides the income from other sources. The assessment was framed on December 9, 1986, under section 143(1) of the Act. The returned income was Rs.13,620. Thereafter, the Assessing Officer invoked the provisions of section 143(2)(b) of the Act and served a notice of hearing on the assessee, ultimately leading in framing of an assessment under section 144 of the Act on March 30, 1988, for want of cooperation from the assessee at an income of Rs.3,35,000. The assessee went in appeal before the Commissioner of Income-tax (Appeals) which was dismissed. Thereafter, the assessee filed the appeal before the Tribunal. The appeal was allowed with the direction to the Assessing Officer to make fresh assessment after reasonable opportunity of hearing to the assessee Aggrieved, the assessee filed the application under section 256(1) of the Act which was rejected. The assessee has, thus, filed this application under section 256(2) of the Act.

We have heard Shri V. S. Samvatsar, learned counsel for the applicant, and Shri Pathrekar, Income-tax Officer, who appeared for the non?-applicant-Department

Right at the threshold we may mention that although six questions are proposed counsel for the applicant pressed only question No.2 for direction and reference. We therefore, do not consider the other questions.

We notice that the Tribunal declined to state t "Se holding that this, as other questions, is not a referable question of law. The Tribunal held that there was no allegation from the assessee as to the arbitrariness or mala fides in reopening of the assessment under section l43(2)(b) of the Act. According to the Tribunal, the Assessing Officer was not required to state the reasons for reopening of the assessment as is required under section 147 of the Act. According to the Tribunal, the entire thing depended upon the satisfaction of the Assessing Officer.

It is, however, contended before us that satisfaction cannot be unfettered and has to rest on proper reasons. It is because of the aforesaid observation of the Tribunal that we find that the aforesaid question No. 2 is the one which needs to be answered by this Court after hearing both the parties. It has to be considered whether there were no reasons and if so, whether the Assessing Officer had requisite jurisdiction to reopen the assessment under section 143(2)(b) of the Act? It is held in Parashuram Pottery Works Co. Ltd. v. ITO (1977) 106 ITR 1 (SC) that in tax matters, as also in other matters, the eventual goal is to attain finality.

On consideration of the facts and features, we are satisfied that the Tribunal should be called upon to state the case and refer question No.2 as noted above.

Accordingly, we allow this application in part and call upon the Tribunal to state the case and refer question No. 2 as noted above as expeditiously as possible, for our consideration and opinion.

This miscellaneous civil case is thus allowed in part, but without any orders as to costs.

A copy of this order shall be transmitted to the Tribunal for compliance.

M.B.A./3213/FC ?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? ?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? ?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? ?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? ?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? ?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? Order accordingly.