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Ameenabad Charitable Trust Vs. Income-tax Officer - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Bangalore
Decided On
Judge
Reported in(1984)10ITD324(Bang.)
AppellantAmeenabad Charitable Trust
Respondentincome-tax Officer
Excerpt:
.....the case of haji latif salt charitable trust, an allied institution. aggrieved with the same, the trust appealed to the aac, who confirmed the assessment. hence, this appeal before us.3. on behalf of the trust it was submitted that the original assessment made under section 143(1) of the act could not be made the subject-matter of a supplementary assessment under section 147(6), inasmuch as the latter section was not applicable on the facts and in the circumstances of the case. he submitted that the assessment having been made under section 143(1), the only course open to the ito was to have pressed into service the provisions of section 143(2)(6), if he had considered necessary or expedient to verify the correctness and completeness of the return by requiring the presence of the.....
Judgment:
1. This appeal by the assessee is against the order of the AAC holding that the provisions of Section 13(1)(c) of the Income-tax Act, 1961 ('the Act') read with Section 13(2)(h) were applicable to the assessee's case and, therefore, no exemption under Section 11 of the Act was admissible to it.

2. The facts in this regard are briefly as under : The original assessment in this case was completed on 4-7-1977 treating the trust as not assessable. Later, the ITO noticed that the trust had invested funds with United Traders with 20 per cent share in its profits and the other partners of the firm included relatives of the trustees. He, therefore, came to the conclusion that, in view of the provisions of Section 13(1)(c) read with Section 13(2)(h), the income of the trust was not eligible for exemption under Section 11. Hence, the assessment proceedings were reopened under Section 147(6) of the Act and the exemption claimed under Section 11 was denied to the assessee following the decision of the Tribunal in IT Appeal Nos. 316 and 437 (Bang.) of 1981 dated 12-8-1982 for the assessment years 1977-78 and 1978-79 in the appellant's own case, following their earlier decision in IT Appeal No. 392 (Bang.) of 1978-79 dated 18-8-1979 in the case of Haji Latif Salt Charitable Trust, an allied institution. Aggrieved with the same, the trust appealed to the AAC, who confirmed the assessment. Hence, this appeal before us.

3. On behalf of the trust it was submitted that the original assessment made under Section 143(1) of the Act could not be made the subject-matter of a supplementary assessment under Section 147(6), inasmuch as the latter section was not applicable on the facts and in the circumstances of the case. He submitted that the assessment having been made under Section 143(1), the only course open to the ITO was to have pressed into service the provisions of Section 143(2)(6), if he had considered necessary or expedient to verify the correctness and completeness of the return by requiring the presence of the assessee or the production of evidence in this behalf. According to him, the assessment having been made under Section 143(1), this was the only provision available to the ITO according to law and, therefore, the application of Section 147(6) was invalid. He further submitted that these two provisions were not mutually supplementary but, on the other hand, they were mutually exclusive. He relied on the decision of the Tribunal, Bombay in Sixth ITO v. Pithva Engg. Works [1983] 6 ITD 413, in which it has been held that the provisions of Section 154 of the Act for rectification of mistakes were not available to the department in a case, where the assessment had been completed under Section 143(1), inasmuch as the provisions of Section 143(1) and the other provisions relating thereto in Section 143, constitute a complete code in itself, being special provisions relating to assessment made under Section 143(1). In coming to this conclusion, they followed the rule, that the special excludes the general. On behalf of the department, the learned departmental representative submitted that the fields of operation of Sections 143(1) and 147(6) are totally different; that they are not mutually exclusive and in any case, the provisions of Section 147(b) were rightly applied to this case, as the ITO had reason to believe that the income of the assessee had escaped assessment and he came to this conclusion in consequence of information received after the original assessment. He also submitted that the Tribunal's decision in Pithva Engg. Works' case (supra) is distinguishable as it applies to rectification under Section 154 of an assessment made under Section 143(1) in respect of which special provisions of Section 143(2)(6) existed and, therefore, there was no mutual exclusivity between those sections.

4. We have carefully considered the rival submissions. We do not agree with the view that an assessment completed under Section 143(1) cannot be reopened under Section 147(6). There is no statutory bar against an assessment completed under Section 143(1) being reopened under Section 147(6), provided the requirements of Section 147(6) are satisfied. The existence of Section 143(2)(6) does not act as a legal bar against the application of Section 147(6) to an assessment made under Section 143(1). The powers conferred on the ITO to reopen an assessment originally completed under Section 143(1) under Section 143(2)(6) are only to enable him to verify the correctness or completeness of the return by requiring the presence of the assessee or the production of evidence in this behalf in case he considers it necessary and expedient. It has absolutely nothing to do with escapement of assessment of any income, which is the primary requirement for invoking the provisions of Section 147(6). Moreover, the conditions requisite for applying the provisions of Section 147(6) are that the ITO should have reason to believe that the income of the assessee had escaped assessment and his conclusion in this behalf should be in consequence of information received after the original assessment. Both the conditions in this case are satisfied as held by the AAC in para 5 of his order. Action in this case under Section 147(6) was in consequence of the order of the Tribunal in the case of Haji Latif Salt Charitable Trust (supra). Moreover, the decision of the Tribunal in Pithva Engg.

Works' case (supra) was in respect of an order of rectification under Section 154, which for all intents and purposes fell within the purview of the provisions of Section 143(2)(6). Since there was a special provision in the shape of Section 143(2)(6), the Tribunal held that the recourse to Section 154 in that case by the ITO was not justified and, accordingly, struck down the order, In coming to this conclusion, they followed the rule that the special excludes the general, thereby meaning that Section 143(2)(b) is a special provision, whereas Section 154 a general provision. In the present case, if we should follow this principle, Section 147(6) would amount to a special provision as against the general provision in the shape of Section I43(2)(b), inasmuch as the areas of operation of these two provisions are totally different. We are, therefore, of the opinion that these two sections are not mutually exclusive as their scope and fields of operation are totally different. We, accordingly, negative this claim of the assessee.

5. Coming to the provisions of Section 147(6), we find that the reopening of the assessment on the basis of the information contained in the Tribunal's order referred to above was entirely justified as held by the AAC. We, accordingly, confirm the same.

6. As regards the question, whether the provisions of Section 13(1)(c) and 13(2)(h) are applicable to the facts of this case, we find that apart from the decisions relied in this behalf by the AAC in para 6 of his order, there is a decision of this Bench in the assessee's own case for the assessment year 1979-80 in IT Appeal No. 690 (Bang.) of 1982 dated 21-2-1984, in which the Tribunal has held, following their earlier order in IT Appeal Nos. 317 and 436 (Bang.) of 1981 and 316 and 437 (Bang.) of 1981, dated 12-8-1982 that the matter should be restored back to the ITO with a view to enable him to complete the same in accordance with the directions of the Tribunal in its order referred to earlier. The directions referred to in the earlier order are as under : The same issue had come up before the Tribunal in IT Appeal No. 392 (Bang.) of 1978-79 and the Tribunal in its order dated 18th August, 1979 upheld the contention of the revenue. Following that order, we accept the contention raised by the revenue that Section 13(1)(c) is applicable to the case of the assessee.

3. However, it is seen that the provisions of Section 13(4) have not been considered by the Income-tax Officer to determine the quantum of exemption available to the assessee under that section ....

We, therefore, restore the matter back to the ITO's record to enable him to dispose of the case in the light of the above-mentioned directions of the Tribunal.


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