1. This appeal relates to the assessment year 1977-78. A chronological narration of the events culminating in the reassessment from which the present appellate proceedings arise is necessary for a proper decision.
2. For the assessment year 1977-78, the previous year was the financial year ended 31-3-1977. On 20-8-1977, a return was filed by the assessee showing an income of Rs. 1,083 from house property and income from profession of Rs. 6,808. The total income shown was Rs. 7,890.
Accompanying the return was the following statement of case : The assessee is a Christian pastor running the institution 'Fellowship of Indigenous Gospel Churches, Kakinada'. During the year of account, the assessee received some cheques from foreign countries towards his maintenance which may be treated as his income. During the year of account, he also received some cheques from foreign countries towards purchase of a vehicle to be used in his ministry. The value of those cheques being Rs. 35,913.76 is excluded from his total income since the amount received is not for his maintenance. The taxable income of the assessee is computed as per particulars shown below : Property income: This income may be taken as per previous years 1,083,00 Profession : Total receipts from foreign separate sheet 6,808.98 7,891.98 or The assessee thereafter filed a revised return on 12-9-1977. The property income returned was as before. Having regard to the income from profession, however, it was shown at Rs. 11,092. Voluntary offerings (preaching) of Rs. 1,000 was shown under the head 'Income from other sources', thus giving a total income of Rs. 13,180. The statement of case accompanying the aforesaid revised return was as under : The assessee is a Christian pastor running the institution 'Fellowship of Indigenous Gospel Churches, Kakinada'. During the year of account, the assessee received some cheques from foreign countries towards his maintenance which may be treated as his income. During the year of the account, he also received some cheques from foreign countries towards purchase of a vehicle to be used in his ministry. The value of these cheques being Rs. 35,913.76 out of which an amount of Rs. 31,630.70 has been spent for the purpose, the balance of Rs. 4,283.06 is also treated as his income for his maintenance. Since Rs. 31,630.70 is only spent for the vehicle, the balance of Rs. 4,283.06 is also added to his income for maintenance. The taxable income of the assessee is computed as shown below :Property income : This amount may be taken as per previous years 1,083.00 Accompanying this revised return was also a copy of letter dated 9-8-1976 from the Shady Grove Baptist Church, Louisiana, USA, the contents of which read as under : This cheque for 500 dollars to Rev. G.R. Lome is to be applied to the purchase of an automobile to be used in his ministry.
3. On 21-9-1977, the assessment was completed under the provisions of Section 143(1) of the Income-tax Act, 1961 ('the Act') accepting the income shown in the revised return of Rs. 13,180. Subsequently there was a decision rendered by the Tribunal in the case of Fellowship of Indigenous Gospel Churches. This decision apparently was passed in IT Appeal No. 441 (Hyd.) of 1980, dated 12-1-1981 which was followed in a later decision in IT Appeal No. 32 (Hyd.) of 1981, dated, 16-10-1981.
Apparently having regard to the records in that case, the Commissioner wrote to the ITO that it may be worthwhile to consider whether, having regard to the decision of the Supreme Court in the case of P. Krishna Menon v. CIT  35 ITR 48, any portion of the remittances from abroad which were received towards acquisition of the vehicle and which was not taxed would have to be brought to tax as also whether income from property had escaped assessment.
4. The ITO recorded reasons dated 24-3-1982. He stated that he had gone through the judgment of the Supreme Court in P. Krishna Menon's case (supra) and was of the view that remittances from abroad towards acquisition of the vehicle would be taxable income which has escaped assessment. He also recorded the finding that income from house property had not been fully taxed. Proceedings under Section 147(a) of the Act were, therefore, initiated.
5. In compliance with the notice issued under Section 148 of the Act, the assessee filed a return of income on 30-4-1982. The income from property was shown at Rs. 1,583 instead of Rs. 1,083, which was the income shown in the revised return filed earlier. In Part III the assessee made a mention that the assessee received gift of Rs. 31,630 from abroad towards purchase of a car which is purely in the nature of personal gift. This, it was stated, had been considered by the ITO at the time of original assessment and was, therefore, not shown as income. Accompanying the return was another statement of the ease which was as under : The assessee is a Christian pastor running the institution 'The Fellowship of Indigenous Gospel Churches, Kakinada'. During the year of account, the assessee received some cheques from foreign countries towards his maintenance which may be treated as his income. During the year of account, the assessee received some cheques from foreign countries towards purchase of vehicle. The value of these cheques being Rs. 35,913.76 out of which an amount of Rs. 31,630.70 has been spent for the purpose, the balance of Rs. 4,283.06 is also treated as his income for his maintenance. The amount thus received for purchase of car is purely in the nature of personal gift. The same has been submitted to and considered by the Income-tax Officer at the time of original assessment. Therefore, the same is not shown as income. Rents received from Fellowship (Hospital Deptt.) 1,300.00 (Municipal taxes not deducted since they are paid by the tenants for that year)Profession : Total receipts from foreign countries towards his maintenance as per Note No. 1 - Smt. Victoria Lome, w/o G.R. Lome, died on 8-4-1976. The house property bearing Door No. 10-3-9, assessment No. 1652 has been devolved upon the son and daughter of the assessee with a life interest to the assessee as per the will dated 1-8-1968 of the deceased wife of the assessee. However, the assessee has admitted deemed income from the said house at Rs. 506 on estimate basis, and in line with the earlier assessment years." The ITO stated that the original assessment was made under Section 143(1) in a summary manner. He referred to the ratio of the judgment of the Supreme Court in the case of P. Krishna Menon (supra). He emphasised that the assessee was a Christian preacher by profession and received the remuneration from donors abroad towards services and the same donors had sent the amount of Rs. 35,914 for the purchase of a car. According to the ITO, but for his connection as preacher, the donors would not have remitted the amounts in question. Since Rs. 4,283 had already been brought to tax, the ITO completed the reassessment by bringing to tax Rs. 31,631 out of the foreign remittances, which was for acquiring the vehicle. He also brought to tax additional property income of Rs. 500.
6. The assessee appealed to the AAC. The assessee contested the validity of the reopening. The assessee also sought to submit one letter each from (1) Shady Grove Baptist Church (dated 1-5-1980), (2) Christian Aid Mission (dated 8-9-1976), and (3) Highway Baptist Church Academy. In these letters it was stated that the cheques in question were given for purchasing car for the assessee's personal use. The assessee sought to rely on these letters to say that there was no nexus between the vocation and the receipts of the cheques and it was pleaded that the amount should be exempted. The ITO in certain written submissions before the AAC objected to the admission of the three letters which he termed as additional evidence. He also in particular urged that there was an earlier letter on record of the Shady Grove Baptist Church dated 9-8-1976 wherein it was stated that the cheque of 500 dollars (which was the cheque referred to in the letter) was for purchase of a car for use of the ministry. Therefore, the ITO contended the entire receipts were taxable and were given towards the vocation.
The AAC wrote an elaborate order. He referred to the facts relating to foreign remittances already available on the record and then mentioned that once the plea was accepted that there was a gift, on mere change of opinion, the ITO could not reopen the assessment. He, thereafter, stated that the ITO had an option to investigate any other matter but had to refrain from giving any finding on the legal issue, viz., the validity of the reopening of the assessment. The first grievance of the revenue is that the AAC ought to have held that the reassessment made was legal and valid instead of making observations which could have an implication that the reassessment was not valid. In particular it was urged that the AAC had not given due weight to the written representations submitted by the ITO during the course of appeal proceedings. This ground of course related to both merits as well as the preliminary objections relating to jurisdiction.
7. The AAC went into the merits. He held that since the ITO in making the original assessment accepted the plea that the remittances represented pure gifts, the question of the assessee submitting evidence at that stage did not arise. Only when the successor ITO required evidence such evidence was produced. But the AAC stated that the foreign parties had stated that the remittances were for purchasing the car for the assessee's personal use. He concluded that the amounts were given out of purely personal regard and there was no nexus between the gift and any benefit received by the donor. The AAC, therefore, directed exclusion of the amount of Rs. 31,631.
8. The learned departmental representative stated that since the original assessment was made under Section 143(1), there could not be any implication that the assessee's plea that the remittances represented pure gift had been examined by the ITO and accepted. He relied on the entire correspondence and his plea was that whatever may have been stated in the latters, the remittances were really testimonial to the vocation practised by the assessee, viz., that of an Evangelist. The remittances were, therefore, connected with the work of the assessee and, according to him, the full amounts were taxable. He also made reference to the decision of the Madras High Court in CIT v.P.S. Chelladurai  145 ITR 139 apart from the decision of the Supreme Court in the case of P. Krishna Menon (supra).
9. The learned Counsel for the assessee submitted that even if some property income may have escaped assessment and proceedings for reassessment were initiated and for such initiation, escapement of property income may have been one reason, it was not open to the ITO to examine every item 'where in view of the earlier findings there was no escapement of income'. The learned Counsel elucidated his argument by submitting that the assessee had earlier placed on record all facts regarding the remittances and where the ITO had considered the same and had decided not to tax the said amount consciously and had completed the original assessment without including such amount, there was no escapement of income. If subsequently the ITO decided to bring the said amount to tax then it was only as a result of change of opinion and he was not subjecting to tax any amount which had escaped assessment.
According to him, therefore, legally it was not permissible to bring to tax the amount of Rs. 31,631. Apart from it on merits, the learned Counsel had relied heavily on the letters filed before the AAC from different parties and submitted that it was amply clear that the gifts were purely voluntary and it. was for acquiring a car for the personal use of the assessee. The remittances, thus, he stated, as the evidence showed, has nothing to do with the vocation. Adverting to the decision of the Supreme Court in the case of P. Krishna Menon (supra), the submission of the learned Counsel was that the ratio of this judgment was not applicable to the present case.
10. We have considered the rival submissions. The assessee in the original return and the revised return, read together, had placed all facts relating to the remittances before the I.TO. There was no omission or failure, therefore, on the part of the assessee to furnish material facts relating to the item of Rs. 31,631. We are unable to subscribe to the argument of the learned departmental representative that merely because the assessment is made under Section 143(1), the inference would be that the ITO had not applied his mind to the various submissions of the assessee which were contained in the covering letter to the return. Section 143(1) only permits the ITO to make an assessment accepting the figures shown by the assessee without requiring the presence of the assessee or production of evidence.
Whether the presence of the assessee is required or production of evidence is required has to be decided by the ITO and this he can do only by perusing the return and accompanying material. Where the facts set out in the accompanying material are explicit and no attempt has been made to tax the amount, it cannot be said that the ITO omitted to tax the amount without applying his mind unless there is some other material to suggest such an inference being drawn. Such material is absent in this case and the inference, in our view, is that the ITO had applied his mind earlier but did not bring the amount to tax. Had this been the only reason for reopening the assessment then the proceedings under Section 147(a) would have been quashed. But the assessee does not succeed in spite of this finding. The assessee has to fail in the contention that the initiation of reassessment proceedings is without jurisdiction because of the note relating to the property income which accompanied the return filed on 30-4-1982, in compliance with the notice under Section 148, from which it is clear that income from residential property may be only of an amount of Rs. 500 which was omitted to be shown earlier. As long as there was an omission and facts in that regard were not given earlier regarding that item, which was one of the reasons recorded by the ITO, the provisions of Section 147(a) were attracted. The decision of the Full Bench of the Andhra Pradesh High Court in the case of CWT v. Subakaran Gangabhishan  121 ITR 69 has observed with reference to analogous provisions of Section 17 of the Wealth-tax Act, 1957, as under : On a careful reading of the provisions of Section 17(1) of the Act, we are of the view that once an assessment is validly reopened under Section 17(1) no distinction can be made between the items falling under Clause (a) and Clause (b) thereof, that the reassessment proceeding wipes out the original assessment which results in obtaining the same position as it was prior to the completion of the original assessment and that the assessing authority would, consequently, have jurisdiction to assess the items falling under Clause (a) as well as Clause (b) of Section 17(1) of the Act. The expression 'and may proceed to assess or reassess such net wealth, and the provisions of this Act shall, so far as may be, apply as if the notice had been issued under that sub-section' would indicate that the WTO has not only jurisdiction but has a duty and obligation to assess or reassess the entire escaped net wealth chargeable to tax for that year irrespective of the fact that some of the items fall under Clause (a) and others under Clause (b) of Sub-section (1) of Section 17 ... The assessing authority would get or acquire jurisdiction to reassess the entire net wealth under Section 17(1)(a) when once the provisions of Section 17(1)(a) are attracted.
The provisions of Section 17(1)(a) would be attracted even if one of the items that escaped assessment falls under this category. Where there is not even a single item which falls under Clause (a) the assessing authority has no jurisdiction to make reassessment under Clause (a) but has to confine his assessment only to items falling under Clause (b). Such a case would arise when the escapement of assessment is caused not due to the failure of the assessee either to file a return in time or to disclose fully and truly all material and primary facts but due to some other reason. The Sovereign Parliament designedly made this distinction. If the provisions of Clause (a) are rightly attracted even in respect of one item and the assessing authority sought to interfere and assess or reassess the entire net wealth including such net wealth which would have normally fallen under Clause (b), the assessee cannot complain that the net wealth which would have fallen under Clause (b) cannot be assessed or reassessed. It is the assessee that should blame himself for such a situation since he himself has given room or opportunity for reopening of the earlier assessment and for making fresh assessment or reassessment under Clause (a)... .
Therefore, what follows from the aforesaid statement is where proceedings are validly initiated under Section 147(a) irrespective of whether any other item falls under Section 147(b), or not, it is the duty of the ITO to make a proper assessment and bring to tax all income which has escaped assessment. The term 'escaped assessment' in the context only means that income which has not been properly assessed.
Thus, it was open to the ITO to examine whether having regard to the ratio of the judicial pronouncements and in particular the pronouncement of the Supreme Court in the case of P. Krishna Menon (supra) the amount of Rs. 31,631 had escaped assessment. Therefore, we hold that the reopening of the assessment was valid. The examination by the ITO whether the amount of Rs. 31,631 could be taxed was also equally competent.
11. Coming to the facts, we have set out the statement of case which accompanied the original return and the revised return. In both these statements the assessee had categorically stated that he had received some cheques from foreign countries towards purchase of a vehicle 'to be used in his ministry'. This averment in the statement of case accompanying the two returns stood corroborated by the accompanying letter dated 9-8-1976 of the Shady Grove Baptist Church which referred to a particular cheque for 500 dollars which was to be utilised for the purchase of a car 'to be used in the ministry'.
12. It was only in compliance with the notice under Section 148, when the return was filed, that in the accompanying statement of case the assessee took the stand that the amount received for the purchase of the car was purely in the nature of personal gift. No doubt certain other letters which were filed before the AAC dated 1-5-1980 and 8-9-1976 and that from the Highway Baptist Church (without date) had mentioned that the amounts had been remitted for purchasing a car for the personal use as a gift. All these cheques referred to in the aforesaid letters also formed part of the aggregate amount of cheques and received the equivalent value which was Rs. 35,930 and in relation to which the assessee stated in the statement of case accompanying his original return as well as the revised return that the amount represented funds for purchasing a vehicle to be used in the ministry.
Therefore, the material on record does not support the plea that the gift was purely for personal purposes and had nothing to do and was totally unconnected with the vocation of the assessee. Remittances were made and had a bearing to the vocation practised by the assessee, viz., evangelism or preaching. Whatever amounts were given to the assessee and which were exclusively to be spent by him for the purpose of the vocation carried on by him and which were actually spent by him for such purposes or was a benefit towards such purposes would not constitute his personal income. As a matter of fact the provisions of Section 10(14) of the Act read as under : any special allowance or benefit, not being in the nature of an entertainment allowance or other perquisite within the meaning of Clause (2) of Section 17, specifically granted to meet expenses wholly, necessarily and exclusively incurred in the performance of the duties of an office or employment of profit, to the extent to which such expenses are actually incurred for that purpose.
Explanation : For the removal of doubts, it is hereby declared that any allowance granted to the assessee to meet his personal expenses at the place where the duties of his office or employment of profit are ordinarily performed by him or at the place where he ordinarily resides shall not be regarded, for the purposes of this clause, as a special allowance granted to meet expenses wholly, necessarily and exclusively incurred in the performance of such duties ; The terminology is wide and as far as a preacher is concerned, the benefit given in the form of a car insofar as it pertains to his ministry would be a benefit for the performance of the duties of the office of a priest. However, exemption would not be available to the extent to which the benefit is not used exclusively in discharging the duties of his office. In the case of P.S. Chelladurai (supra) the Madras High Court had upheld the stand of the ITO that where an assessee who received remittances from abroad and utilised a greater part of it for running orphanages, Sunday classes and Bible classes and a part of the money for the maintenance and upkeep of the assessee and his family, that portion out of which the family was maintained could be considered as his income. The observations of the Madras High Court in the case of P.S. Chelladurai (supra) in this regard were : We are, therefore, satisfied in this case that quite within the proprieties of his occupation, the assessee has, if it is the right expression to use, helped himself from the funds of the charity.
Having regard to the nature of the occupation and the fact that all other avenues of income earning had been hermetically sealed off for him, by his own choice, the assessee must be regarded as having earned the income to the extent at least of the unquestioned expenditure which he meted out for himself and the members of his family.
At the end of the discussion we must hasten to point out that we are not breaking new ground in income-tax law in whatever we have said in the foregoing paragraphs. For nearly 60 years and more we in this country have been living under an express provision in the income-tax code which has not spared from the charge even windfalls, named by the statute as 'casual and non-recurring receipts', if they come into the taxpayer's hands in the exercise of a vocation or occupation. See Section 4(3)(vii) of the Indian Income-tax Act, 1922, and Section 10(3) of the Income-tax Act, 1961. P. Krishna Menon v. CIT  35 ITR 48 (SC) and Rajagopalachariar v. CIT  50 ITR 196 (Mad.), were decided in the way they were only under this specific statutory provision. The special merit of these two cases was only that they tended to add to the list of taxable occupations those of a vedantin and of a free-lance writer too, something of a novelty at the time when the decisions were rendered, but not now. What we have endeavored to do in this case is no more than apply the law by looking the facts in the face, which, incidentally, is an easy thing to do if we rid ourselves of our inhibitions first.
Therefore, the issue boils down to determine what portion of the benefit could be attributed to the cost of the car which would have been exclusively used for the purpose of duties of his office by the assessee. We do not have any bifurcation but considering that a person who evangelises has to undertake quite a bit of touring, it would be reasonable to assume that the major portion of the benefit would be used fully and exclusively for the purposes of performance of the duties of his office. We would, accordingly, fix three-fourths of the benefit as relating to such performance of duties but the balance of one-fourths would clearly be for personal use.
The Supreme Court in the case of P. Krishna Menon (supra) had observed : ... We have no doubt in this case that the imparting of the teaching was the causa causans of the making of the gift ; it was not merely a causa sine qua non ....
So also in the case before us, as far as the entire benefit attributable for personal use of the car is concerned, the ministry carried on by the assessee was the causa causans for making the gift.
Therefore, that portion of the benefit has to be subjected to tax.
Accordingly, we would hold that one-fourth of the amount of Rs. 31,631 has to be subjected to tax, i.e., we would restore the addition to the extent of Rs. 7,908.
13. In the result, the appeal filed by the department is allowed in part.