INCOME-TAX OFFICER VS SARADBHAI M. LAKHANI
2001 P T D 1879
[243 I T R 1]
[Supreme Court of India]
Present: B.N. Kirpal and S. Rajendra Babu, JJ
INCOME‑TAX OFFICER
Versus
SARADBHAI M.LAK)‑IANI and another
C.As. Nos.837 and 838 of 1999, decided on 12/02/1999.
(Appeals by special leave from the judgment and order, dated December 5, 1997 of the Gujarat High Court in S.C.As. Nos.3827 and 3829 of 1997).
‑‑‑Reassessment‑‑‑Information that income has escaped assessment‑‑ Decision of High Court would constitute information‑‑‑Initiation of reassessment proceedings on basis of such decision is valid‑‑‑Indian Income Tax Act, 1961. S.147(b)‑‑‑[Saradbhai M. Lakhani v. ITO (1998) 231 ITR 779 reversed].
Held, reversing the decision of the High Court, that the information which was received by the Income‑tax Officer was the decision of the Gujarat High Court in Banyan & Berry v. CIT (1996) 222 ITR 831 (Guj.). When the Income‑tax Officer became aware of this decision, he could initiate the proceedings under section 147(b) of the Income Tax Act,'] 961.
A.L.A. Firm v. CIT (1991).189 ITR 285 (SC) fol.
Saradbhai M. Lakhani v. ITO (1998) 231 ITR 779 reversed.
Banyan & Berry v. CIT (1996) 222 ITR 831 (Guj.) ref.
Soli J. Sorabjee, Attorney‑General (B.K. Prasad, S. Rajappa and D.S. Mehra (NP),. Advocates) with him of Appellant.
JUDGMENT
Special leave granted.
Heard the learned Attorney‑General for the appellant.
This is an appeal against the judgment of the Gujarat High Court which had allowed a writ petition filed by the respondent who had challenged the notice issued under section 148 of the Income Tax Act, 1961, whereby the respondent's assessment in respect of year 1988‑89 was sought to be recorded.
The reason for re‑opening of the assessment was that the Gujarat High Court in Banyan & Berry v. .CIT (1996) 222 ITR 831, had held that after dissolution of ‑the partnership firm, the assessment could be only in the hands of the erstwhile partners.
The income was computed on the basis of the award of the arbitrator in favour of the firm. The amount received was apportioned amongst the partners and it is on this basis that the income was sought to be assessed in the hands of the partners.
The High Court quashed the notice under section .148 by observing that in the absence of mention of the judgment of the Gujarat High Court in Banyan & Berry's case (1996) 222 ITR 831, it was not open to the Income -tax Officer to justify the order by reference to the said decision.
It is evident that the aforesaid view of the High Court is not correct. This Court has held that on the basis of the information which is received by the Income‑tax Officer, reassessment proceedings can be initiated. The information which was received by the Income‑tax Officer was the decision of the Gujarat High Court in Banyan & Berry's case (1996) 222 ITR 831. When the Income‑tax Officer became aware of this decision, he could initiate the proceedings under section 147(b) as has been held by this Court in A.L.A. Firm v. CIT (1991) 189 ITR 285.
For the aforesaid reasons, we hold that the High Court was not right in allowing the writ petition filed by the respondent. Accordingly, the appeals are allowed and the judgment of the High Court is set aside the effect of which would be that the writ petition filed by the respondent would stand dismissed.
No order as to costs.
M.B.A./446/FCAppeals accepted.