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The Commissioner of Income Tax and Another Vs. M/S Standard Chartered Finance Ltd. - Court Judgment

LegalCrystal Citation
CourtKarnataka High Court
Decided On
Case NumberITA NO. 1187 of 2006
Judge
AppellantThe Commissioner of Income Tax and Another
RespondentM/S Standard Chartered Finance Ltd.
Advocates:For the Petitioner: E.R. Indrakumar - Sr.Standing Counsel A/W E.I. Sanmathi – Standing Counsel. For the Respondent: Smt. Shashi M Kapila, Siddharth Kapila, Pravesh Sharma and Rupesh for M/s Aamstel Law Associates, Advocates.
Excerpt:
income tax act 1961 - section 260a - the revenue by issue of notice u/s.10 of the interest act has sought to reopen the assessment for the assessment year 1997-98 as the assessing authority was of the opinion that certain interest chargeable to tax had escaped assessment particularly by the non-disclosure of the chargeable interest which had accrued to the assessee due to its hire purchase transactions- no part of the income attributable to hire purchase transactions had been offered to tax as chargeable interest- rejected the objections raised on behalf of the assessee that as the original return filed by the assessee disclosing the chargeable interest of a sum of rs.76,63,540/- itself had not been finalised, there cannot be re-opening of the assessment for this year after the expiry of.....(prayer: this ita is filed u/s.260-a of i.t.act, 1961 arising out of order dated 07-04-2006 passed in int.t.a.6/bang/2002 for the assessment year 1998-99, praying to formulate the substantial questions of law, allow the appeals and set aside the order passed by the itat, bangalore in int.ta 6/bang/2002 dated 07-04-2006 confirming the order of the appellate commissioner and confirm the order passed by the dy., commissioner of income tax, central circle-v, bangalore and etc.,) 1. the appeal by the revenue u/s. 21h of the interest tax act, 1974 r/w. section 260a of the income tax act 1961 is directed against the order dated 7.4.2006 passed by the bangalore bench of the income tax appellate tribunal in ita no.42/bang/2003 posing the following questions of law for our answer as arising out of.....
Judgment:

(Prayer: This ITA is filed U/s.260-A of I.T.Act, 1961 arising out of order dated 07-04-2006 passed in INT.T.A.6/Bang/2002 for the assessment year 1998-99, praying to formulate the substantial questions of law, allow the appeals and set aside the order passed by the ITAT, Bangalore in INT.TA 6/Bang/2002 dated 07-04-2006 confirming the order of the appellate commissioner and confirm the order passed by the dy., Commissioner of Income Tax, Central Circle-V, Bangalore and etc.,)

1. The appeal by the Revenue u/s. 21H of the Interest Tax Act, 1974 r/w. Section 260A of the Income Tax Act 1961 is directed against the order dated 7.4.2006 passed by the Bangalore Bench of the Income Tax Appellate Tribunal in ITA No.42/Bang/2003 posing the following questions of law for our answer as arising out of the order of the Tribunal.

“1. Whether the Tribunal was correct in setting aside the order of assessment without taking into consideration the material relied on by the Assessing Officer and directing the Assessing Officer to reconsider the matter afresh without finding error in the assessment and without assigning any reasons for setting aside of assessment.

2. Whether the Appellate Commissioner was correct in holding that the judgment rendered by the Apex Court is under the provisions of Sales Tax and the same is not applicable to the Interest Tax proceedings without examining the principles and the law laid down by the Apex Court on the similar facts of the present case.”

2. Though the revenue had raised more questions, this Court had admitted the appeal to examine the questions as raised in ITA No.1162/2006 and therefore, these two questions are required to be examined as per the order dated 26.7.2007.

3. We have heard Sri.Indrakumar, learned counsel for the Revenue and Smt.Shashi M Kapila, learned counsel appearing for the assessee. We have also perused the orders of Assessing Officer, the first Appellate Authority, and the tribunal. We have also bestowed our attentions to the submissions of the learned counsel and the decisions relied upon by them.

4. The brief facts leading to the above appeal are that the Revenue by issue of notice u/s.10 of the Interest Act has sought to reopen the assessment for the assessment year 1997-98 as the Assessing Authority was of the opinion that certain interest chargeable to tax had escaped assessment particularly by the non-disclosure of the chargeable interest which had accrued to the assessee due to its hire purchase transactions which had generated income to the extent of Rs.771.83 lakhs which amount had been so indicated as the income from hire purchase, in the profit and loss account of the assessee, a copy of which had been appended to the return of chargeable interest filed by the assessee for this assessment year, whereas in the return of chargeable interest, the chargeable interest had been shown only as a sum of Rs.76,63,540/- and no part of the income attributable to hire purchase transactions had been offered to tax as chargeable interest.

5. The assessing officer being of the opinion that this amount also constituted chargeable interest for the purpose of Section 8 after issue of notice and brushing aside the objections raised by the assessee proceeded to pass re-assessment order bringing to tax the amount of Rs.771.83 lakhs. In so doing the Assessing officer rejected the objections raised on behalf of the assessee that as the original return filed by the assessee disclosing the chargeable interest of a sum of Rs.76,63,540/- itself had not been finalised, there cannot be re-opening of the assessment for this year after the expiry of the period of limitation for completing the assessment order on the return that it was not open to the Assessing Authority to assess the amount even by invoking Section 10 of the Interest Tax Act.

6. The assessee appealed to the Commissioner of Income Tax Appeals (VI). The Commissioner of Appeals who had occasion to call for the records of the returns filed by the assessee and not concluded by the Assessing Officer, opined that in respect of a return filed by the assessee voluntarily u/s.17(1) of the Act, not processed within the period of two years during the end of the assessment year and being of the opinion that as the processing of this return was barred by the period of limitation stipulated u/s.10A(1) of the Act, by the time the Assessing Authority issued the notice for re-opening of the assessment, opined that the notice itself was bad in law and therefore, annulled the assessment order and did not go into the further merits such as chargeable interest, as opined either by the assessing officer or as urged by the assessee.

7. The Revenue was in appeal before the Tribunal and the Tribunal noticing that the period of limitation for assessment having expired on 31.3.2000 and the notice u/s.10 having been issued on 21.06.2001 i.e. after the expiry of the period of limitation when the assessment has already become time barred, agreed with the view taken by the Appellate Commissioner that reopening is not permitted. The Appellate Tribunal also added an additional reason justifying the result that the order of dismissing the appeal for the reason that the Tribunal had already opined in the case of very assessee for the assessment year that re-opening was bad on the ground of the situation being one attributable to change of opinion and on the basis of circulars issued by the Board and therefore, the appeal against such order was only to be dismissed. The appellate tribunal was of the opinion that there was no need to go into the further merits of the question in the appeal before the CIT (Appeal) and accordingly, dismissed the appeal.

8. It is in this background the revenue has preferred the appeal to this Court.

9. Submission of Sri.Indrakumar learned counsel for the Revenue is that the Appellate Commissioner as well as the tribunal are both in error for the reason that there has been a considerable confusion with regard to the aspect of limitation for passing the assessment order and passing the re-assessment; that period of limitation contemplated for either reopening or concluding an assessment as provided for under Section 10A of the Act is independent of the period of limitation provided for passing or concluding an assessment and it is because of the confusion between the situation of assessment and re-assessment, the Appellate Commissioner and the Tribunal have fell into an error.

9.1 Further with reference to the provisions of Section 10A of Interest Act reading as under:-

1. No order of assessment shall be made under section 8 at any time after the expiry of two years from the end of the assessment year in which the interest was first assessable.

2. No order of assessment or reassessment shall be made under section 10 after the expiry of two years from the end of the financial year in which the notice under that section was served.”

Mr. Indrakumar, points out that in the present situation the notice was only for re-assessment and not for continuation or concluding a return that had been filed earlier and to finalise the original assessment; that if in a situation where a return filed by an assessee could have been looked into by an assessing officer based on it and an assessment order passed thereon, and after that if it should have resulted in a situation attracting either clause of Section 10 and therefore, the assessment could have been reopened that it is an afortiori case that even assuming that there was no assessment order passed on the return, if there is an escapement of chargeable interest to tax, independent of the outcome of the assessment on the return, reopening can be done; submits that even in a situation where an assessee does not file any return at all if chargeable interest can be brought to tax by re-opening u/s.10, the situation cannot be different for assessing to tax, some escaped chargeable interest by invoking the provisions of Section 10 of the Act if the non passing of the assessment order can result in a situation attracting either clause of Section 10 of the Act. He therefore, submitted that the view taken by the authorities particularly, the Tribunal is not sustainable in law. It should be set aside.

10. Countering such submissions of Sri.Indrakumar, Smt. Shashi M Kapila learned counsel for the assessee would strongly urge that if the assessing authority had not even finalised the assessment on the return filed by the assessee and if no assessment order had been passed, question of invoking Section 10 to revive or restore life to the proceedings for passing the assessment order cannot be permitted. That, when once the period of limitation as provided u/s.10A of the Act for completing an assessment order has expired, there is absolutely no way of either extending that period or reviving that by invoking the provisions of Section 10 of the Act and that the Appellate Commissioner as well as the Tribunal have rightly set aside the assessment order passed on an invalid notice issued under Section 10 of the Act and therefore, no interference is called for in this appeal, that the question should be answered against the revenue and the appeal dismissed.

10.1. The learned counsel for the assessee has placed strong reliance on the decision of the Supreme Court in the case of TRUSTEES OF HEH THE NIZAM’S SUPPLEMENTAL FAMILY TRUST –VS- COMMISSIONER OF INCOME TAX reported in 242 ITR 381 and the subsequent decision of the Delhi High Court reported in (2007) 292 ITR 49 in the case KLM ROYAL DUTCH AIRLINES V. ASSISTANT DIRECTOR OF INCOME-TAX.

10.2. By drawing attention to the judgment of the Supreme Court in Nizam Trust case, the learned counsel for the assessee would urge that the Supreme Court had very clearly ruled that during the pendency, a return filed u/s.139 of the Income Tax Act along with an application for refund u/s.237 of the Act, any action taken and for re-assessment by issue of notice u/s.148 of the Income Tax Act is not permitted and is not open to the Assessing Officer to reopen the assessment for the purpose of finalising the return and pointing out that the action taken in the instant case being under the corresponding provisions of the Interest Tax Act, the principle is equally applicable to the present situation and therefore, the appeal only deserves to be dismissed.

10.3. Even by referring to the decision of the Delhi High Court and the discussions as reflected particularly at paras 11, 12, 14, 15 and 21 wherein it is held as follows:-

11. In our opinion Sections 147/148 cannot be interpreted in isolation of the other provisions of Chapter-XIV of the Income-tax Act which is the fasciculus dealing with the procedure for Assessment. Section 139 makes it mandatory for every person whose total income exceeds the maximum amount which is not chargeable to Income-Tax, to furnish a Return of Income by the due date. Section 142 deals with the inquiry before Assessment. The first sub-section thereof empowers the Assessing Officer to issue a notice to any person to file a Return or to produce its accounts or any documents or to provide any information as the Assessing Officer may require. Sub-section (2) empowers the Assessing Officer to make any inquiry he considers necessary. Sub-section (3) incorporates the audi alteram partem rule of natural justice viz., providing to the affected party an opportunity of being heard. Section 143 deals with the dispatch of intimations specifying the sum payable as tax or interest that has been found by the Assessing Officer to be due on the basis of the return; it deals with refunds payable to the assessee. The neat question which arises before us is whether on the commencement of assessment proceedings they must first be brought to their logical conclusion by framing an assessment before embarking on the proceedings as envisaged in Sections 147/148 of the Income-tax Act; or more precisely stated, can resort to Section 147 be made even whilst the normal assessment proceedings are pending conclusion. To find the answer we must keep in perspective that every return of Income filed under Section 139 may not result in its active and in-depth perusal or consideration by the Assessing Officer as it may receive an automatic onward passage under Section 143(1). However, once an inquiry has been initiated by the Assessing Officer, it cannot but result in either the return being accepted as having been correctly computed by the concerned assessee, or in an assessment being conducted and concluded thereon by the Assessing Officer. The provisions of Section 147 would have no role to play at this stage of the proceedings. Once a return of Income attracts the attention and scrutiny of the Assessing Officer, it is his bounden duty to delve into every aspect thereof. The Assessing Officer is sufficiently empowered to ask for all information necessary for framing the assessment. The only fetter on the amplitude of his discretion is that the assessment must be framed within the time limit set-down by Section 153 which, in substance, is two years from the end of the Assessment Year in which the income was first assessable or one year from the end of the Financial Year. A perusal of its second sub-section makes it clear that proceedings under Section 147 are altogether different to those under Section 143. This distinction appears to have escaped the attention of the Revenue. Sub-section (2) stipulates that no order under Section 147 shall be made after the expiry of one year from the end of the Financial Year in which notice under Section 148 was served.

12. Section 147 of the Income-Tax Act deals with the powers of the Assessing Officer to “assess” or “reassess” the income chargeable to tax which has escaped assessment. Section 148 contemplates making the “assessment”, reassessment or recomputation under Section 147. Keeping the factual matrix before us in perspective, it becomes critical to define the word assess since the Assessing Officer is avowedly not reassessing or recomputing the income presented by the assessed for taxation in the form of its return. It is trite that the words assess, reassess or recompute are not synonymous with each other. It seems to us that an assessment must entail a conscious and concerted calculation carried out by the concerned officer with a view to determine the amount of tax payable by any person. The exercise commencing with Section 139 and ending at Section 145A cannot be interpreted as identical to or overlapping Sections 147/148/149. They are predicated on different circumstances and operate in disparate dimensions. The Income Tax Act makes it incumbent upon every person whose total income exceeds the maximum amount which is not chargeable to Income-Tax to file a return of Income in order to kick-start the normal assessment procedure. However, it may happen that a person fails to file a return of Income, say for the Assessment Year 2000-2001, even though he is liable to pay tax. It could also happen that a person may file a return of Income incorrectly offering for purposes of taxation a sum lower than the correctly calculated income. Both these situations have been obviously kept in view in Explanation 2 to Section 147 and in its Clauses (a) and (b). In either event the Assessing Officer would invoke the powers conferred upon him by Section 147 of the Income-tax Act culminating in the completion of the assessment. It is also conceivable that the incorrectness of the return may not be detected or noticed within the time period set-down in Section 153. In these circumstances if the Assessing Officer has reason to believe, predicated on information received by him, that income chargeable to tax has escaped assessment, he would invoke the powers under Section 147. On the other hand, where a return of Income has been filed but has been taken at its face value, without any proceedings under Section 143(2) and 143(3) having been conducted, no assessment exercise would obviously have been undertaken. After the expiry of the time period set-down in Section 153, this situation can be remedied by the Assessing Officer by invoking Section 147. The word “assessment” has been defined in the Act in a most unsatisfactory manner, merely by stating that it includes reassessment. A more comprehensive definition is readily available in the Australian decision titled Batagol v. Federal Commissioner of Taxation, [1963] 109 CLR 243 in these words:

“assessment means the completion of the process by which the provisions of the Act relating to liability to tax are given concrete application in a particular case with the consequence that a specified amount of money will become due and payable as the proper tax in that case.”

14. In Trustees of H.E.H. The Nizam’s Supplemental Family Trust v. CIT [2000] 242 ITR 381 the Apex Court has observed that it is (page 387) “settled law that unless the return of Income already filed is disposed of, notice for reassessment under Section 148 of the Income-tax Act, 1961, cannot be issued, i.e., no reassessment proceedings can be initiated so long as assessment proceedings pending on the basis of the return already filed are not terminated. According to the Revenue it is immaterial whether the order is communicated or not and the only bar to the reassessment proceedings is that proceedings on the return already filed should have been terminated”. The following concluding passage from the said Judgment is self-explanatory (page 390):

“A return of income filed in the form prescribed along with an application for refund under Section 237 of the Act is a valid return. There is no stopping the Income-tax Officer to complete the assessment on the basis of the return so filed. It may be that the Income-tax Officer may limit the scope of examination of the return to satisfy himself regarding the correctness of the amount claimed as refund. For that purpose, he will examine if the tax paid by the assessed exceeds the amount of tax with which he is chargeable. If it is found that the income was “nil”, he will direct that refund be granted to the assessed of any amount of tax paid. That will certainly be assessment. The filing of a return in the form prescribed under Section 139 of the Act along with the application for refund is not an empty formality. It assumes importance if such return had not been filed earlier. We have reproduced the note/order dated November 10, 1965, on the file pertaining to the assessment year 1963-64. In the file for the assessment year 1962-63 there is another note which is as under:

‘Please see my note in 1963-64 file. Refund to be considered in the hands of the beneficiaries’.

A mere glance at this note would show that it could not be said that the Income-tax Officer gave finality to the refund since no refund is granted either in the hands of the trust or in the hands of the beneficiaries. It is an inconclusive note where the Income-tax Officer left the matter at the stage of consideration even with regard to refund in the hands of the beneficiaries. This note was also not communicated to the trustees. When we examine the note dated November 10, 1965, on the file of 1963-64 nothing flows from that as well. In any case if it is an order, it would be appealable under Section 249 of the Act. Since the period of limitation starts from the date of intimation of such an order, it is imperative that such an order to communicated to the assessed. Had the Income-tax Officer passed any final order, it would have been communicated to the assessed within a reasonable period. In any case, what we find is that the note dated November 10, 1965, is merely an internal endorsement on the file without there being an indication if the refund application has been finally rejected. By merely recording that in his opinion, no credit for tax deducted at source is to be allowed, the Income-tax Officer cannot be said to have closed the proceedings finally. The decisions referred to by the Revenue are of no help in the present case. We are, thus, of the opinion that during the pendency of the return filed under Section 139 of the Act along with the refund application under Section 237 of the Act, action could not have been taken under Section 147/148 of the Act. Our answer to the question, therefore, is in the negative, i.e., against the Revenue.”

15. We would arrive at this very destination even if we were to traverse along a different dialectic, namely, if we were to analyze the circumstances in which Section 147 of the Income-tax Act could be invoked. There is plenitude of precedents on this aspect of the law; hence only some of them shall be discussed. The question that had arisen before the Bombay High Court in Western Outdoor Interactive P. Ltd. v. A.K. Phute, ITO (2006) 286 ITR 620 was whether, upon the rectification being set aside by the Commissioner (Appeals), notice for reassessment on the same grounds could validly be initiated; there was no failure on the part of the assessed to disclose material facts and no fresh information had been received by the Assessing Officer. At best, it was possible to say that two views were available and in such a situation it was held that the said provision was not available. In particular, the Bench noted the following enunciation of the law in Indian Oil Corporation v. ITO (1986) 159 ITR 956, 967, 970 (SC):

“The principles on this branch of law are well-settled.

To confer jurisdiction under Clause (a) of Section 147 of the Act beyond the period of four years but within a period of eight years from the end of the relevant year under Section 148, two conditions were required to be fulfilled: the first is that the Income-tax Officer must have reason to believe that the income, profits or gains chargeable to tax had been under assessed or escaped assessment; the second is that he must have reason to believe that such escapement or underassessment was occasioned by reason, so far as relevant for the present purpose, to disclose fully and truly all material facts necessary for the assessment of that year. Both these conditions are conditions precedent to be satisfied. See, in this connection, the observations of this Court in Calcutta Discount Co. Ltd. v. ITO (1961) 41 ITR 191...

As is well-settled now by the several authorities of this Court and of several High Courts, there must be materials to come to the conclusion that there was ‘omission or failure to disclose fully and truly all material facts necessary for the assessment of the year. It postulates a duty on every assessed to disclose fully and truly all material facts necessary for the assessment. Therefore, an obligation is to disclose facts; secondly, those which are material; thirdly, the disclosure must be full and fourthly, true. What facts are material and necessary for assessment will differ from case to case. In every assessment proceeding, for computing or determining the proper tax due from the assessed, it is necessary to know all the facts which help the assessing authority in coming to the correct conclusion. From the primary facts in his possession, whether on disclosure by the assessed, or discovered by him on the basis of the facts disclosed, or otherwise, the assessing authority has to draw inferences as to certain other facts. But on the primary facts, it is for the taxing authority to draw inferences. It is not necessary for the assessed to draw inferences for him. See, in this connection, the observations in Calcutta Discount. (1961) 41 ITR 191 (SC)”

19. Applying this line of decisions to the facts of the present case, the inescapable conclusion that would have to be reached is that while assessment proceedings remain inchoate, no “fresh evidence or material” could possibly be unearthed. If any such material or evidence is available, there would be no restrictions or constraints on its being taken into consideration by the Assessing Officer for framing the then current assessment. If the assessment is not framed before the expiry of the period of limitation for a particular Assessment Year, it would have to be assumed that since proceedings had not been opened under Section 143(2), the Return had been accepted as correct. It may be argued that thereafter recourse could be taken to Section 147, provided fresh material had been received by the Assessing Officer after the expiry of limitation fixed for framing the original assessment. So far as the present case is concerned we are of the view that it is evident that, faced with severe paucity of time, the Assessing Officer had attempted to travel the path of Section 147 in the vain attempt to enlarge the time available for framing the assessment. This is not permissible in law.

21. In this analysis the Writ Petitions are allowed. The initiation of proceeding under Section 147 of the Income-tax Act was irregular and illegal on the short ground that returns of income having been filed and since no order of assessment had been finalised by the Assessing Officer, there was no scope for invoking Section 147. The pending proceedings are quashed. Since this aspect of the law has already been clarified in various decisions, the Petitioner shall be entitled to costs quantified nominally at Rs.25,000/-. Costs to be paid within six weeks.

11. We have bestowed our attention to the submissions made at the bar, perused the orders and the authorities relied on.

12. Section 10 of the Interest Tax Act which is a corresponding provision of Section 147 of the Income Tax Act which is a provision for bringing to tax some chargeable interest if had escaped assessment by re-opening an assessment, where in a situation it had been assessed, but under-assessed or for any reason where there is no assessment at all, but any escapement or some chargeable interest having occurred.

12.1. While clauses (a) and (b) of Section 10 does operate in different situations and there is a period of limitation provided for insofar as clause (b) is concerned, four years from the end of the assessment order and no such limitation is contemplated in respect of the reopening of clause (a) of Section 10, but there is a period of limitation again stipulated for completing even the reopened assessment, within a period of two years from the end of the financial year in which notice is issued u/s.10.

12.2. While these limitations undoubtedly operate in respect of passing of an assessment order or to be precise a re-assessment order u/s.10, to import the limitations as imposed in respect of a regular assessment order u/s.8 and to engraft that to the provisions of Section 10 of the Act, in our considered opinion, is neither proper nor permitted and in fact will be defeating the very purpose and object of Section 10 of the Act.

12.3 Section 10 like it’s corresponding provision under the Income Tax Act is an enabling provision to reopen an assessment by re-opening a concluded assessment or for invoking this provision in a situation where the assessee has not only not disclosed any income or not filed return of taxable interest etc., to ensure that there is no leakage to the revenue. Therefore, in understanding or in interpreting this provision it is only to understand the provision in a manner so as to give effect to the statutory provision and not to frustrate it. Being an exceptional enabling provision or a special enabling provision occurring in a taxing statute, it no doubt should receive strict construction and there is absolutely no scope for enlarging the scope of Section 10 either by way of leakage or by way of analogy.

13. Bearing these principles in mind we have to examine the present situation and in the light of the law as is sought to be relied upon by the learned counsel for the assessee said to have been developed from the judgment of the Supreme Court in Nizam’s Trust case and the judgment of the Delhi High Court in Airlines case.

14. Insofar Nizam’s Trust case is concerned that was a situation where an assessee had filed a return of income and has also made an application along with it u/s.237 of the Income Tax Act seeking for refund and the record indicated in that case the assessing authority had made a note of ‘no assessment’ and in which event the assessee was entitled to refund of if any tax had been paid earlier. However, the Assessing Authority wanted to process the assessment by issue of notice u/s.143(3) r/w.147 which was for the purpose of processing the very return and this was held to be not permitted as it amounted to extending the time period permitted u/s.153 for completion of assessment order on the return filed by the assessee.

15. Even in the judgment of the Delhi High Court, the High Court after noticing the case law as has been adverted in the context of reopening etc. and as it occurred under the provisions of the Income Tax Act particularly with reference to the time limit set down u/s.153 of the Income Tax Act opined that the assessment in pursuance of a return u/s.139 is different from re-assessment by invoking Section 147 and by issue of notice u/s.148 of the Income Tax Act 1961 in the guise of reassessment if an earlier assessment is sought to be concluded on the return beyond the time permitted u/s.153, it was frowned upon particularly by employing the hybrid method of imparting reopening provisions to conclude the time barred assessment which was not permissible and therefore, opined that reopening was not permissible.

16. In both decisions we find the decisions turn upon the peculiar facts and circumstances and in a clear circumstance, where time barred assessment was sought to be revived or infused life, as rightly pointed out by the learned counsel for the assessee to conclude such assessment after the period had expired. This was clearly frowned upon by Courts.

17. In the instant case, we find the re-assessment is independent and re-assessment is one by invoking the provisions of Section 10. It is not for either completing the assessment on the return which in fact had been filed and admitted by the assessee and further not disputed by the Revenue that the return had not been processed.

18. But, to apply the principle as enunciated in the two cases referred to above to a situation of this nature in our considered opinion which also does not apply will only amount to defeating the very purpose of Section 10 as situations may develop where the assessing officer may be inactive may indecisive may be for justifiable reasons or deliberate and does not conclude assessment, but to hold or opine that even a re-assessment is not possible in such situations will be virtually amounting to re-writing the contents of Section 10.

19. In our considered opinion if a reopening is permitted even in a situation where an assessment order is passed, but that has resulted in escapement of some chargeable interest to tax and Section 10 called in aid of course subject to the limitations mentioned within the statutory provisions, it will be an afortiori case as in the present case where a return is filed, but no assessment order is passed within the time permitted for passing an assessment order u/s.10A of the Act.

20. Section 10 is a specific enabling provision only to remedy such situations and the only criteria is escapement of such chargeable interest to tax for whatever reason may be, but while invoking Section 10 it can only be within the parameters mentioned in Section 10 and not with reference to time stipulations provided for concluding an assessment or passing assessment u/s.8 of the Act.

21. It is the conclusion in the mind of the Appellate Commissioner as well as the Tribunal that Section 10 notice or proceeding is in continuation of the assessment order has resulted in the error in law.

22. It is therefore, that we have to inevitably answer that reopening was not barred by time as opined by the Appellate Commissioner and the Income tax Appellate Tribunal as it was a case in the opinion of the Assessing Authority a situation where the assessee has not disclosed fully or truly the chargeable interest.

23. It is therefore, we answer the first question in the negative and against the assessee. The second question having already been answered in respect of the very assessee for the earlier assessment years 1992-93 to 1996-97, it is also answered in the negative as the question of change of opinion has no relevance to the situation as indicated in the discussion while answering the questions in ITA No.1156/2006 and therefore, answered in the negative and against the assessee.

24. In the result, the appeal is allowed. The order passed by the Tribunal as well as the Income Tax Commissioner of Appeals are both set aside and the order passed by the Assessing Authority is restored.


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