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Bhagwandas JaIn Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMadhya Pradesh High Court
Decided On
Case NumberMiscellaneous Civil Case Nos. 192 and 198 of 1981
Judge
Reported in[1985]156ITR608(MP)
ActsIncome Tax Act, 1961 - Sections 147
AppellantBhagwandas Jain
RespondentCommissioner of Income-tax
Appellant AdvocateB.L. Nema, Adv.
Respondent AdvocateB.K. Rawat, Adv.
Cases ReferredVishwanath v. Asst.
Excerpt:
.....to prove his innocence. conviction of appellant is liable to be set aside. - this reassessment made by the income-tax officer has been upheld by the appellate assistant commissioner as well as the tribunal for all the aforesaid assessment years. 4. having heard both sides, we are satisfied that the first question must be answered in favour of the assessee. for this assessment year, it is sufficient to state that the scope of clause (a) of section 147 is much narrower than that of clause (b). the facts found proved by the tribunal do not bring the case within the scope of clause (a) which relates to omission or failure on the part of the assessee to make a return or to disclose fully and truly all the material facts necessary for his assessment, etc......officer, treating the opinion of the audit party as the requisite information for this purpose. on reassessment, the income from the self-occupied property of the assessee was assessed at rs. 13,500 net and rs. 18,000 gross. this reassessment made by the income-tax officer has been upheld by the appellate assistant commissioner as well as the tribunal for all the aforesaid assessment years. at the instance of the assessee, the tribunal has referred the two aforesaid questions for a decision of this court. it is common ground that in case the aforesaid first question is answered in favour of the assessee, the other question does not arise for decision and the proceedings for reassessment would be without jurisdiction. 4. having heard both sides, we are satisfied that the first question.....
Judgment:

J.S. Verma, J.

1. Both these cases are disposed of by this common judgment as they involve for decision the same questions of law, namely :

'1. Whether, on the facts and in the circumstances of the case, there was justification for the Tribunal to hold that the income-tax authorities were right in initiating proceedings under Section 147(b) of the Income-tax Act, 1961

2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in upholding the assessment of annual letting value of house property at Rs. 18,000 ?'

2. Miscellaneous Civil Case No. 192 of 1981 relates to the assessment year1968-69 and is a reference made under Section 256(1) of the Income-tax Act, 1961. Misc. Civil Case No. 198 of 1981 is for the assessment years1969-70, 1970-71, 1971-72 and 1972-73, and the aforesaid questions have been referred by the Tribunal on a direction by this court under Section 256(2) of the Income-tax Act, 1961. It may be mentioned that in the aforesaid question No. 1, the relevant provision for the assessment year 1968-69 is Section 147(a) and not Section 147(b) mentioned inadvertently in the question framed. It is, therefore, refrained and amended accordingly as stated later.

3. The original assessment for the assessment years 1968-69 to 1972-73, in respect of the assessee, Bhagwandas Jain of Sagar, were made by the Income-tax Officer in due course. Assessment of the self-occupied property of the assessee was made by the Income-tax Officer in accordance with sections 22 to 27 of the Income-tax Act, 1961, and the net income therefrom was assessed at Rs. 2,000 per annum. Subsequently, the internal audit party of the Department gave the opinion that computation of income from the self-occupied property of the assessee was less so that the income from this source had been under-assessed. This opinion of the audit party was obviously on the same facts which were relied on by the Income-tax Officer for making the assessment. In the opinion of the audit party, computation of income at a higher amount was required to be made byan application of a different principle to the same sot of facts. Accordingly, a notice under Section 148 of the Act was given to the assessee, who filed a return under protest. A fresh assessment was made for the assessment year 1968-69 under Section 147(a) and for the remaining years under section 147(b) of the Act by the Income-tax Officer, treating the opinion of the audit party as the requisite information for this purpose. On reassessment, the income from the self-occupied property of the assessee was assessed at Rs. 13,500 net and Rs. 18,000 gross. This reassessment made by the Income-tax Officer has been upheld by the Appellate Assistant Commissioner as well as the Tribunal for all the aforesaid assessment years. At the instance of the assessee, the Tribunal has referred the two aforesaid questions for a decision of this court. It is common ground that in case the aforesaid first question is answered in favour of the assessee, the other question does not arise for decision and the proceedings for reassessment would be without jurisdiction.

4. Having heard both sides, we are satisfied that the first question must be answered in favour of the assessee.

5. In Indian & Eastern Newspaper Society v. CIT : [1979]119ITR996(SC) it has been held by their Lordships of the Supreme Court that 'the opinion of an internal audit party of the Income-tax Department on a point of law cannot be regarded as 'information' within the meaning of Section 147(b) of the Income-tax Act, 1961, for the purpose of reopening an assessment'. This decision squarely applies to the facts of the present case, where reassessment has been made under Section 147(b) for the assessment years 1969-70 to 1972-73. It is undisputed that there was no discovery of any new fact and on the same set of facts, the Income-tax Officer after having made the initial assessment, had thereafter made reassessment only because the internal audit party was of the opinion that a different principle of law should have been applied to the same set of facts. It is clear from this decision of the Supreme Court that the opinion of the internal audit party in the present case could not constitute 'information' within the meaning of Section 147(b) of the Income-tax Act, 1961, so as to permit reassessment in exercise of that power for the assessment years 1969-70 to 1972-73. This decision of the Supreme Court has been followed in similar situations by this court in Vishwanath v. Asst. CED [1983] 139 ITR 610 and CIT v. Abhoji Rao : [1985]156ITR604(MP) .

6. For the assessment year 1968-69 (Misc. Civil Case No. 192 of 1981), the relevant provision for reassessment is Section 147(a), which, by inadvertence, has been mentioned as section 147(b) in the question framed at the end of the statement of the case. By consent of both counsel, the first question in Misc. Civil Case No. 192 of 1981 is reframed so as to readSection 147(a) in place of Section 147(b) therein. For this assessment year, it is sufficient to state that the scope of Clause (a) of Section 147 is much narrower than that of Clause (b). The facts found proved by the Tribunal do not bring the case within the scope of Clause (a) which relates to omission or failure on the part of the assessee to make a return or to disclose fully and truly all the material facts necessary for his assessment, etc. Admittedly, all the material facts had been disclosed and were relied on by the Income-tax Officer for making the assessment and the reassessment was made only on the basis that a different principle was to be applied to the same set of facts. Accordingly, even Section 147(a) of the Income-tax Act, 1961, did not empower the Department to make reassessment for the assessment year 1968-69, as it has done.

7. Consequently, both these references are answered in favour of the assessee as under:

Misc. Civil Case No. 192 of 1981

Answer to reframed, question No. 1 :

On the facts and in the circumstances of the case, there was no justification for the Tribunal to hold that the income-tax authorities were right in initiating proceedings under Section 147(a) of the Income-tax Act, 1961. Answer to question No. 2 :

This question does not arise in view of the answer to question No. 1. Misc. Civil Case No. 198 of 1981 Answer to question No. 1 :

On the facts and in the circumstances of the case, there was no justification for the Tribunal to hold that the income-tax authorities were right in initiating proceedings under Section 147(b) of the 'Income-tax Act 1961. Answer to question No. 2 : This question does not arise in view of the answer to question No. 1.

8. Parties shall bear their own costs.


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