High Court Of Himachal Pradesh
Bakshi Ram Dogra vs. Commissioner Of Income Tax & Ors.
Section 276C
Asst. Year 1979-80, 1980-81, 1981-82, 1982-83
C.K. Thakker, C.J. & M.R. Verma, J.
Civil Writ Petn. Nos. 291 to 294 of 2001
29th November, 2001
Counsel Appeared
D.D. Sood with Ankush Dass, for the Petitioner : Inder Singh with Vijay Thakur, for the Respondents
JUDGMENT
C.K. THAKKER, C.J. :
Admitted. Mr. Inder Singh, senior advocate, instructed by Mr. Vijay Thakur, advocate, waives service of notice of admission on behalf of the respondents. In the facts and circumstances of the case, the matters have been taken up for final hearing today.
These petitions have been filed by the petitioner for an appropriate writ, direction or order quashing and setting aside a communication dt. 25th Oct., 2000 (annexure PK), and by directing the respondent-authorities to issue a certificate compounding the cases pending in the Court of the Chief Judicial Magistrate, Shimla, and prohibiting them from prosecuting the petitioner for any offence for the asst. yrs. 1979-80, 1980-81, 1981-82 and 1982-83. Other reliefs have also been claimed.
The case of the petitioner was that he received summons from the Court of the Chief Judicial Magistrate, Shimla, stating therein that proceedings have been initiated against him by the respondents for the above assessment years for commission of certain offences under the IT Act, 1961 (hereinafter referred to as “the Act”). It is stated by the petitioner that for the four asst. yrs. 1979-80, 1980-81, 1981-82 and 1982-83, the petitioner was assessed in accordance with law but thereafter notices were issued to him under s. 271C [sic-s. 276C] of the Act for not paying legal income-tax and he was asked whether he was ready and willing to get the cases compounded. Pursuant to the said notice, the petitioner appeared before the ITO and showed his willingness to get the cases compounded. Accordingly, on 18th March, 1999, orders were passed compounding the cases pending against him (annexure PB). The relevant part reads as under : “In this connection, I am to inform you that you will pay compounding fee before composition of prosecution for each of the years as under : Asst. yr: 1979-80 Rs. The petitioner was asked to appear before the CIT, Railway Board Building, Shimla, on 23rd March, 1999, during office hours and to give his consent whether he was ready to pay the compounding fee as worked out in the said order.
4. The petitioner vide a communication dt. 15th April, 1999 (annexure PC), stated that for his whole life he was paying tax honestly and co-operated with the Department in the finalisation of assessment proceedings as well as payment of tax. He submitted that it was his first offence and that too was “with some wrong advice” given by his lawyer and due to misunderstanding. He stated that he had already deposited the amount of tax, interest and penalty. He further stated that he was an old man and wanted to live life peacefully and did not want to go to Court because of his poor health. He, therefore, stated that he was ready and willing to pay the amount as per the communication vide annexure PB. He stated that he would deposit the amount as soon as intimation will be given to him. A communication, dt. 16th June, 1999, by the ITO, Ward No. 4, Shimla, shows that against an amount of Rs. 1,80,613, the petitioner was asked to pay an amount of Rs. 2,03,158. It is not in dispute by and between the parties that the said amount had already been paid by the petitioner.
5. According to the petitioner, thereafter, nothing was required to be done in the matter. Unfortunately, however, the authorities issued a communication on 25th Oct., 2000 (impugned in the present petition at annexure PK). The said communication, by the ITO, Ward No. 4, Shimla, stated that the compounding charges had not been correctly calculated in the letter dt. 18th March, 1999. As in the case of the petitioner, the “total concealed income” exceeded Rs. 1 lakh, the compounding fee payable by him would be more than the said amount and as such he was liable to pay Rs. 3,51,304. The case, therefore, could not have been compounded and accordingly proceedings launched against him would proceed. The said action of the Department is challenged by the petitioner in these petitions.
6. We have heard learned counsel for the parties. Several contentions have been raised by learned counsel for the petitioner. It is, however, not necessary for us to enter into the larger question.
7. From the record, it is amply clear that the allegation of the Department against the petitioner was that there was concealment of income-tax by the petitioner in four asst. yrs. 1979-80, 198081, 1981-82 and 1982-83. It is also not in dispute that the four cases have been instituted before a competent Court. Even in the present proceedings, four writ petitions have been filed. It cannot be disputed and is not disputed that if each assessment year is taken as an independent unit, the concealed amount does not exceed Rs. 1 lakh. A short question is whether each assessment year is to be taken into account as an independent unit or all the four years can be considered as one unit simultaneously and action can be initiated on that basis. In this connection, our attention has been invited by learned counsel for the petitioner to some of the decisions of the Supreme Court.
8. The point had been elaborately dealt with in Joint Family of Udayan Chinubhai vs. CIT (1967) 63 ITR 416 (SC) : TC 37R.190, wherein the Supreme Court observed thus : “It is true that an assessment year under the IT Act is a self-contained assessment period and a decision in the assessment year does not ordinarily operate as res judicata in respect of the matter decided in any subsequent year, for the AO is not a Court and he is not precluded from arriving at a conclusion inconsistent with his conclusion in another year. It is open to the ITO, therefore, to depart from his decision in subsequent years, since the assessment is final and conclusive between the parties only in relation to the assessment for the particular year for which it is made. A decision reached in one year would be a cogent factor in the determination of a similar question in a following year, but ordinarily there is no bar against the investigation by the ITO of the same facts on which a decision in respect, of an earlier year was arrived at. But this rule, in our judgment, does not apply in dealing with an order under s. 25A(1). Income from property of an HUF ‘hitherto’ assessed as undivided, may be assessed separately if an order under s. 25A(1) had been passed. When such an order is made, the family ceases to be assessed as an HUF. Thereafter that family cannot be assessed in the status of an HUF unless the order is set aside by a competent authority. Under cl. (3) of s. 25A if no order has been made, notwithstanding the severance of the joint family status, the family continues to be liable to be assessed in the status of an HUF, but once an order has been passed, the recognition of severance is granted by the IT Department, and cl. (3) of s. 25A will have no application.”
9. In M.M. Ipoh vs. CIT (1968) 67 ITR 106 (SC) : TC 44R.922, the apex Court observed that the doctrine of res judicata does not apply so as to make a decision on a question of fact or law in a proceeding for assessment in one year binding in another year. The assessment and the facts found are conclusive only in the year of assessment; the findings on a question of fact may be good and cogent evidence in subsequent year, when the same question falls to be determined in another year, but they are not binding and conclusive. A similar view was taken in Sri Ramdas Motor Transport Ltd. vs. Tadi Adhinarayana Reddy (1997) 90 Comp Cas 383 (SC).
10. It is no doubt true that if a question of law has been decided independent of the assessment year such as, the constitutional validity or vires of an Act, such a decision would operate as res judicata even in future litigation and cannot be challenged [vide Amalgamated Coalfields Ltd. vs. Janapada Sabha Chhindwara, AIR 1964 SC 1013]. But, so far as the assessment years are concerned, it is well settled that each assessment year is an independent unit.
11. In these circumstances, in our opinion, the contention raised by learned counsel for the petitioner that when the concealed amount did not exceed Rs. 1 lakh in any assessment year, each assessment year must be taken as an independent and separate unit and could not have been consolidated and no action could have been taken on that basis.
12. No doubt, our attention was invited by learned counsel for the respondents to the guidelines for compounding of offences under the direct taxes, namely, “Guidelines for Compounding of the Offences under the Direct Tax Laws”, (annexure R-2) to the affidavit-in-reply dt. 20th Oct., 1995, wherein the principles have been formulated when the concealed amount exceeded Rs. 1 lakh. Strong reliance was placed on para. 4 of the guidelines which reads as under : “To sum up, henceforth, the compounding fee would be worked out at 100 per cent of the tax calculated at the maximum marginal rate of income sought to be concealed, where the amount is less than Rs. 1 lakh and at 200 per cent of the income sought to be concealed exceeds Rs. 1 lakh.”
13. It was submitted that in the light of the above guidelines, statutory in nature, the impugned action cannot be held to be bad in law and the prosecution launched against the petitioner cannot be said to be ill-founded. We cannot uphold the argument. Firstly, the said communication does not expressly or specifically state that an assessment year will not be taken as an independent unit. But even otherwise, in our considered opinion, in the light of the law laid down by the Supreme Court in several cases, for the purpose of considering the provisions of the Act, each assessment year has to be considered as an independent unit for the purpose of payment of tax. If so, obviously, the guidelines dt. 20th Oct., 1995, would not apply to the cases on hand, inasmuch as, in none of the asst. yrs. 1979-80, 1980-81, 1981-82 and 1982-83, the concealed amount, reached Rs. 1 lakh. The petitions, hence, deserve to be allowed.
14. Alternatively, it was submitted that even if two interpretations are possible, the one which favours the assessee (petitioner) will be accepted and not the one which would favour the Revenue (respondents). We need not go into that question as, in our opinion, the law has been settled by the Supreme Court.
For the aforesaid reasons, all the petitions deserve to be allowed and are hereby allowed. The impugned communication at annexure PK dt. 25th Oct., 2000, is hereby quashed and set aside. It goes without saying that all consequential actions taken by the respondent-authorities on the basis of the said communication also deserve to be quashed and are hereby quashed.
The petitions are allowed to the extent indicated above. The respondent-authorities will now issue necessary compounding certificate within three months.
In the facts and circumstances, there will be no order as to costs.
[Citation : 255 ITR 38]
