Delhi H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the ITO had no jurisdiction under s. 147(b) to reopen the assessment in this case ?

Counsel Appeared

Sanjiv Khanna with Ajay Jha, for the Revenue : S.K. Aggarwal, for the Assessee

JUDGMENT

ARIJIT PASAYAT, C.J. :

Pursuant to the direction given by this Court under s. 256(2) of the IT Act, 1961 (in short the “Act”), the following question has been referred for the opinion of this Court :

“Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the ITO had no jurisdiction under s. 147(b) to reopen the assessment in this case ?”

2. The factual position as indicated in the statement of the case is as follows : The assessee, a statutory corporation, was set up as a Government undertaking for providing medium and long-term finance to industries. For the asst. yr. 1962-63, to which the present dispute relates, the accounting period ended on 30th June, 1961. After theoriginal assessment was completed on 14th Jan., 1974 (?), proceedings for reopening of the assessment was initiated under s. 147 of the Act. Such action was questioned by the assessee on the ground that all the relevant aspects were disclosed before the original assessment was completed, they were duly considered by the AO and the subsequent proceeding was initiated only on mere change of opinion. The AO did not accept the plea and made assessment under s. 143(3) r/w s. 147(b) of the Act. The matter was challenged in appeal before the Appellate Assistant Commissioner of Income-tax (in short the “AAC”). The said authority was of the view that the provisions of s. 147 of the Act were not attracted and the subsequent assessment made by order dt. 22nd Jan., 1968, was without jurisdiction. The Revenue carried the matter in appeal before the Tribunal. By its order dt. 19th July, 1973, the AAC’s conclusions were affirmed. An application under s. 256(1) of the Act was not entertained on being moved under s. 256(2) of the Act, this Court by order dt. 6th April, 1974, directed the Tribunal to refer the above question along with the statement of the case and that is how the reference has been made.

Learned counsel for the Revenue submitted that the conclusions of the Tribunal to the effect that there must be existence of some information emanating from an external source after the original assessment was completed is not the correct exposition of law. Further, it is submitted that there was no application of mind to the materials on record and, therefore, it cannot be said to be a case where there was change of opinion. Learned counsel for the assessee, on the other hand, submitted that the AO on consideration of the materials on record, which were disclosed by the assessee, had come to a definite finding and, therefore, the AAC and the Tribunal were justified in holding that this was a case of mere change of opinion. In order to appreciate the rival submissions, it is necessary to take note of the findings recorded by the AAC and the Tribunal. The AAC held with reference to the records that the ITO had in his own hand written “capital gains” against the description of the profit as “profit on sale of investments”. Further, the AO himself had bifurcated the capital gains to be short-term capital gains and other gains. This itself, according to the AAC, was sufficient to show that the AO at the time of the original assessment had considered the materials on record. The Tribunal recorded as one of its conclusions to the effect that the information must come from an external source. The same in not a correct position in law. But the factual position as well noted by the AAC as well as by the Tribunal, clearly goes to show that the assessee had not failed or omitted to disclose the primary facts and the ITO had considered the entire material. That being the position. The Tribunal’s conclusions are in order. Accordingly, we answer the question in the affirmative, in favour of the assessee and against the Revenue.

[Citation : 248 ITR 192]