BUDHINDRA NATH SARNIA VS COMMISSIONER OF INCOME-TAX
2001 P T D 2782
[240 I T R 35]
[Gauhati High Court (India)]
Before Brijesh Kumar, C.J. and D.N. Chowdhury, J
BUDHINDRA NATH SARMA
versus
COMMISSIONER OF INCOME‑TAX
Income‑tax Reference No.6 of 1997, decided on 03/09/1999.
(a) Income-tax---
‑‑‑‑Assessment‑‑‑Limitation‑‑‑Extension of period of limitation‑‑‑Extension of limitation if Assessing Officer is satisfied on materials on record that S.271(1)(c) is applicable‑‑‑No satisfactory explanation regarding deposits in assessee's name‑‑‑Limitation for completion of assessment could be extended‑‑‑Indian Income Tax Act, 1961, Ss. 153 & 271(1)(c).
The Assessing Officer is armed with the jurisdiction to prolong the assessment on fulfilment of the conditions set out in clause (b) to subsection (1) of section 153 of the Income Tax Act, 1961. The power is not arbitrary. The Assessing Officer can stretch the period of limitation on being satisfied, on the material on record, about the necessity of invoking section 271(1)(c).
In the course of assessment for the assessment year 1985‑86, the Assessing Officer asked the assessee to explain certain bank deposits, bank accounts, fixed deposits and investments in respect of properties which stood in his name and in the name of his wife and children. He was also required to produce the names of the creditors from whom he had taken loans. Summons were issued to the creditors some of whom were examined by the Assessing Officer on March 8, 1988. Under the normal course, the assessment was to be completed on or before March 31, 1988, in terms of section 153(l)(a)(iii) of the Act. The Assessing Officer, however, held the opinion that the assessee was at fault for the concealment of his income thereby making him liable under section 271(l)(c) of the Act. The Assessing Officer completed the assessment on March 31, 1989, after making additions of various amounts under the head "Other sources". The assessment was assailed in appeal on the ground that the assessment was barred by limitation. The Appellate Tribunal held that the assessment was not barred by limitation and that the provisions of section 153(1)(b) read with section 271(1)(c) of the Act were applicable to the case. In a reference, it was submitted that it was incumbent on the part of the authority to inform the assessee about the discovery of concealment of income within the normal period of limitation and the said fact being evident from the record, it was a fit case in which the Court should call for a supplementary statement of the case:
Held, (i) that the question now sought to be raised of the issue of notice, was neither raised before the Appellate Tribunal, nor was the same considered by it. The High Court could not require a supplementary statement of case to decide the question.
(ii) That, in the case in hand, the Assessing Officer had provided opportunity to the assessee to give an explanation for‑the various amounts of deposits and for the withdrawals in the names of the assessee, his wife and sons. The Assessing Officer noted in his order, dated March 28, 1988 about his satisfaction for extending the period of limitation. The Tribunal accepted the finding of the Assessing Officer. In these circumstances, it could not be said that the Assessing Officer acted illegally in extending the period of limitation for assessment. The assessment was made on March 31. 1989 i.e., within the period of eight years and in the circumstances the assessment made on March 31, 1989, could not be said to be barred by limitation.
(b) Income‑tax‑‑‑
‑‑‑‑Reference‑‑‑Powers of High Court‑‑‑Power to call for supplementary statement of case‑‑‑Power cannot be used to ascertain fresh facts‑‑‑Indian Income Tax Act, 1961, S.258.
The power under section 258 of the Act, is wide in nature, but there are inherent limitations also. The High Court in exercise of its advisory powers is not to send back a case to the Tribunal to ascertain fresh facts and to embark upon a fresh line of enquiry. The High Court's power under section 258 of the Act is not to be exercised for providing one more chance to the party to establish its case by fresh evidence.
CIT v. Scindia Steam Navigation Co. Ltd. (1961) 42 ITR 589 (SC); CIT v. Surajpal Singh (1977) 108 ITR 746 (All.); New Jehangir Vakil Mills Ltd. v. CIT (1959) 37 ITR 11 (SC) and Savitri Rani Malik (Smt.) v. CIT (1990) 186 ITR 701 (Gauhati) ref.
R. Gogoi, Senior Advocate and R.K. Joshi for the Assessee.
U. Bhuyan for the Commissioner.
JUDGMENT
D.N. CHOWDHURY, J.‑‑‑The reference under section 256(1) of the Income. Tax Act, 1961, raised at the instance of the assessee revolves round the time limit for completion of assessment and reassessment as enjoined in section 153(1)(b) of the Income Tax Act, 1961, pertaining to the assessment year 1985‑86 and the accounting year ending on March 31 1985.
In the course of assessment, the Assessing Officer asked the assessee to explain certain bank deposits, bank accounts, fixed deposits and investments in respect of properties that stood in his name and in the name of his wife and children. He was also required to produce the names of the creditors from whom he had taken loans. Summons were issued to the creditors some of whom were interrogated/examined by the Assessing Officer on March 8, 1988. The Assessing Officer noticed that the assessee had various bank deposits in his name which were not explained. The Assessing Officer mentioned some of those transactions. Under the normal course, the assessment was to be completed, on or before March 31, 1988, in terms of section 153(1)(a)(iii) of the Act of 1961. The Assessing Officer, however, held the opinion that the assessee was at fault for the concealment of his income thereby making him liable under section 171(1)(c) of the Act of 1961. The Assessing Officer completed the assessment on March 31, 1989, after making additions of various amounts under the head "Other sources". The assessment was assailed in appeal in the ground that the assessment was barred by limitation and that there was no material of whatsoever manner iii the possession of the Assessing Officer to hold that the case fell within the rigour of section 271(1)(c) of the Act of 1961. The appellate authority accepted the contention of the assessee and held that the assessment was barred by limitation and that the provision of section 153(1)(b) of the Act of 1961, was not applicable. On appeal by the Revenue, the Appellate Tribunal held that the assessment was not barred by limitation and that provisions of section 153(1)(b) read with section 271(1)(c) of the Act of 1961, were applicable to the case. The Appellate Tribunal distinguished the judgment of the Allahabad High Court in CIT v. Surajpal Singh (1977) 108 ITR 746, which was relied upon by the Commissioner of Income‑tax (Appeals), on the facts. The Tribunal held that till March 28, 1988, no proper explanation was given/filed by the assessee in respect of the deposits. The Tribunal, after evaluating the materials in record, found that since no materials were produced before the Assessing Officer explaining the amounts/accounts as indicated by the Assessing Offices, extension of limitation under section 153(1)(b) read with section 271(1)(c) of the Act of 1961, was permissible and accordingly, directed the Assessing Officer to pass a fresh order after giving an opportunity to the parties. The assessee not being satisfied with the order of the Appellate Tribunal, made the reference application under section 256(1). of the Act of 1961, to draw up a statement of the case and to refer the two questions indicated in the application to the High Court for its opinion. The Appellate Tribunal refrained the questions and accordingly made the following reference:
"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the provisions of section 153 (1)(b) of the Income Tax Act, 1961, read with section 271(1)(c) were applicable and that the extended period of limitation of eight years was available to the Assessing Officer and in that vie in holding that the assessment made on March 31, 1989, was not barred by limitation under section 153(1)(a)(iii) of the Act?"
Mr. R. Gogoi, learned senior counsel appearing of behalf of the assessee, referred to the statutory provisions pertaining to assessment and submitted that the statute has provided procedure for assessment and also set out the time limit for completion of assessment and reassessment. Assessments are to be made within the period delineated by the statute. Extension of the period is permissible only under the exceptions set out by the statute. Mr. Gogoi, learned senior counsel, referred to 'the provisions of subsection (1) of section 153 of the Act of 1961, and submitted that on the face of the admitted facts borne out by the records, the authority was duty bound to complete the assessment within the normal period. The Department did not have any, material in its possession to extend the limitation in aid of clause (b) of subsection (1) of section 153 of the Act, 1961. Mr. Gogoi, learned senior counsel appearing on behalf of the appellant/applicant, in support of his contentions referred to the Bench decision of the Allahabad High Court in CIT v. Surajpal Singh (1977) 108 ITR 746. Learned senior counsel submitted that the Assessing Officer in the instant case deliberately allowed the four years' period to elapse without any positive action and thereafter in a most illegal, fashion, sought to avail of the exceptions contained in section. 153(1)(b)(iii) of the Act of 1961. Referring to the materials relied upon by the Assessing Officer, Mr. Gogoi, learned senior counsel, submitted that those materials were not sufficient to extend the period of limitation.
Mr. U. Bhuyan, the learned standing counsel appearing on behalf of the Revenue, strenuously opposed the plea of the assessee and submitted that there was no illegality or impropriety on the part of the Assessing Officer in taking aid of clause (b) to subsection (1) of section 153 of the Act of 1961. Learned counsel for the Revenue, referred to the order, dated March 28, 1988, passed by the Assessing Officer and submitted that in the absence of any explanation of whatsoever manner, the Assessing Officer has had no alternative but to extend the period of limitation for assessment in aid of clause (b) of subsection (1) of section 153 of the Act of 1961. On the facts, the decision referred to in Surajpal Singh's case (1977) 108 ITR 746 (All), is not applicable to the case in hand, contended Mr. U. Bhuyan, learned standing counsel for the Revenue.
Parliament showed its concern for expeditious disposal of the assessment proceedings and for that purpose of time limit for completion of assessment and reassessment has been set out in section 153 of the Act of 1961. In order to expedite the disposal of the assessment proceedings during the relevant time, amendment was made by the Finance Act of 1968, effecting a phased reduction in the time limit from four years to two years as indicated in sub‑clauses (i), (ii) and (iii) of clause (a) to subsection (‑1) of section 153 of the Act of 1961. However, in those cases wherein the assessee has made concealment of particulars of his income or furnished inaccurate, particulars of such income, as mentioned in section 27.1(1)(c) of the Act of 1961; a longer time period is prescribed in view of the fact that such enquiry al the assessment stage would be likely 'to consume more time and accordingly, a longer time limit for completion of such assessment is prescribed. In aid of the aforesaid or provisions, the Assessing Officer is armed with the jurisdiction to prolong the assessment on fulfilment of the conditions set out in clause (b) to subsection (1) of section 153 of the Act of 1961. The power is not arbitrary. The. Assessing Officer can stretch the period of limitation on being satisfied; on the materials on record, about the necessity of invoking section 271(1)(c) of the Act of 1961. It is no doubt true that the power conferred on the Assessing Officer is not arbitrary power. It has to be exercised only when condition (s) set out iii clause (b) of subsection (I) of section 153 of the 1961, is/are satisfied. But no such issue arises in the present matter.
In the case in hand, the Assessing Officer provided, opportunity to the assessee to give explanations for the' various .amounts of deposits arid for the withdrawals in the names of the assessee, his wife and children (sons). In those circumstances, the assessing Officer noted in his order, dated March,28, 19$8, about his satisfaction for extending the period of limitation. The Tribunal accepted the finding, of the Assessing Officer. In these circumstances, it cannot be said that the Assessing Officer acted illegally in extending the period of limitation for assessment. The assessment was made on March 31, 1989, i.e., within the period of eight years and in the circumstances the assessment made on March 31, 1989, could not be said to be barred by limitation. The decision in Surajpal Singh's case (1977) 108 ITR 746 (All.), has no application in the case.
In the aforesaid case Surajpal Singh (1977) 108 ITR 746 (All), the assessee did offer an explanation. That apart, the material particulars required for exercise of the power under section 153(1)(b) were non‑existent. The decision of this Court in Smt. Savitri Rani Malik v. CIT (1990) 186 ITR 701, also does not come to the aid of the assessee. In the aforesaid case of Smt. Savitri Rani Malik (1990) 186 ITR 701 (Gauhati), the assessee was not made aware of the move of the Revenue authority to take the case out of the normal period of limitation in the absence of any notice within the period of limitation. Confronted with this situation Mr. R. Gogoi, learned senior counsel for the applicant/appellant (assessee), submitted that it was incumbent on the part of the authority to inform the assessee about the discovery of concealment of income within the normal period of limitation and the said fact being evident from the record, it is a fit case in which this Court should call for a supplementary statement of the case. Learned senior counsel appearing on behalf of the assessee submitted that in order to answer the questions referred to it satisfactorily, it is necessary to have additional materials included in the statement of the case and, accordingly, this Court should issue appropriate direction in that behalf to submit a supplementary statement of the case. In support of his contention, Mr. Gogoi referred to two decisions of the Supreme Court in New Jehangir Vakil Mills Ltd. v. CIT (1959) 57 ITR 11, and in CIT v. Scindia Steam Navigation Co. Ltd. (1961) 43 ITR 589. hi our view, the aforesaid decisions need not detain us since the question now sought to be raised on the issue of notice, was neither raised before the Appellate Tribunal nor was the same considered by it.
In New Jahangir Vakil Mills Ltd.'s case (1959) 37 ITR 11, the Supreme Court held that the scope of a reference under section 66(2) of the Indian Income‑tax Act, 1922, was co‑extensive with that of the one under section 66(l) of the Act, 1922, and, therefore, the Court (High Court) had no power or jurisdiction under section 66(2) to travel beyond the ambit of section 66(l). Under both these provisions, it is only a question of law arising out of the order of the Tribunal that could be referred; that the object of section 66(4) of the Act of 1922, was to enable the. Court to obtain an additional statement of the case only for the purpose of deciding questions referred under sections 66(1) and 66(2) and no investigation could be ordered in respect of new 'questions which were not and could not be the subject-?matter of reference under sections 66(1) and 66(2) of the Act of 1922.
The Supreme Court in CIT v. Scindia Steam Navigation Co. Ltd. (1961) 42 ITR 589, summed up its discussion on the issue in the following manner (page 611):
"(1) When a question is raised before the Tribunal and is dealt with by it, is clearly one arising out of its order.
(2) When a question of law is raised before the Tribunal but the Tribunal fails to deal with it, it must be deemed to have been dealt with by it, and is, therefore, one arising out of its order.
(3) When a question is not raised before the Tribunal but the Tribunal deals with it, that will also be a question arising out of its order.
(4) When a question of law is neither raised before the Tribunal nor considered by it, it will not be question arising out of its order notwithstanding that it may arise on the findings given by it.
Stating the position compendiously, it is only a question that has been raised before or decided by the Tribunal that could be held to arise out of its order. "
Section 66 of the Indian Income‑tax Act, 1922, is projected in section 256 of the Income Tax Act, 1961. Section 66(4) of the Act of 1922, is found in section 258 of the Act of 1961. The power under section 258 of the Act of 1961, though wide in nature, there are inherent limitations also. The High Court in exercise of its advisory powers is not to send back a case to the Tribunal to ascertain fresh facts and to embark upon a fresh line of enquiry. The High Court's power under section 258 of the Act of 1961, is not to be exercised for providing more chance to the party(ies) to establish its case by a fresh and divergent evidence with a different colour. The question that was canvassed in this proceeding was neither raised before the Tribunal, nor the Tribunal considered the same.
For the reasons stated above, we answer the reference in the affirmative and in favour of the Revenue and against the assessee.
In the circumstances of the case, there shall, however, be no order as to costs.
M.B.A./292/FC?????????????????????????????????????????????????????????????????????? Reference answered.