High Court Of Madras
CIT vs. Chamundeswari
Section 147(b)
Asst. Year 1980-81
K. Raviraja Pandian & P.P.S. Janarthana Raja, JJ.
Tax Case No. 244 of 2001
13th December, 2005
Counsel Appeared
Mrs. Pushya Sitaraman, for the Appellant : N. Quadir Hoseyn, for the Respondent
ORDER
P.P.S. Janarthana Raja, J. :
At the instance of the Revenue, the Tribunal referred the following question said to arise out of its order in ITA No. 3542/Mad/1990, for the opinion of this Court in pursuance to the direction of this Court under s. 256(2) of the IT Act : “Whether, on the facts and in the circumstances of the case and taking into account the Supreme Court’s decisions in Kalyanji Mavji & Co. vs. CIT 1976 CTR (SC) 85 : (1976) 102 ITR 287 (SC) and A.L.A. Firm vs. CIT (1991) 93 CTR (SC) 133 : (1991) 189 ITR 285 (SC), the Tribunal was right in law in cancelling the reassessment made in the case for the asst. yr. 1980-81 ?”
2. The brief facts relating to the above reference are as under : The assessee-respondent was doing business in production and sale of cinematography films. The relevant assessment year is 1980-81 and the corresponding accounting year ended as on 30th June, 1979. The respondent-assessee by his return of income on 5th Dec., 1980, admitted a loss of Rs. 1,01,120 and the original assessment was completed under s. 143(3) determining the loss at Rs. 91,120 on 31st March, 1983. Subsequent to the completion of the assessment, the AO noticed that the respondent-assessee had filed a letter dt. 19th March, 1983 on 24th March, 1983 in which it had offered a credit of Rs. 5,000 standing in the name of Smt. Girija Pakriswamy as income of the respondent-assessee and the same was omitted to be taken into consideration while completing the assessment. In view of this, the assessment was reopened under s. 147 and in its proceedings, the amount of Rs. 5,000 was added to the total income of the respondent-assessee. In addition, the AO has made some other additions treating them as income from other sources. Aggrieved by this, the respondent-assessee preferred an appeal to the Dy. CIT(A). The said Dy. CIT(A), was of the view that the reopening of the assessment under s. 147(b) was valid and he accordingly confirmed the order of the reassessment made by the AO under s. 147(b) r/w s. 143 (3). Aggrieved by the said order, the respondent-assessee filed an appeal to the Tribunal and submitted that invoking the provisions of s. 147(b) and making reassessment was not justified. The learned Departmental Representative supported the order of the Dy. CIT(A) and maintained that the same did not call for any interference. The Tribunal held that it would not be open to the AO to invoke the provisions of s. 147(b) on the ground that invoking of jurisdiction under s. 147(b) was not justified and accordingly, cancelled the reassessment made on the basis of such reopening.
The Revenue filed a reference application before the Tribunal under s. 256(1) of the Act, requesting the Tribunal to refer the abovementioned question to this Court for its opinion. The Tribunal rejected the reference application on the ground that there is no question of law arising out of the order of the Tribunal. Later, the Revenue filed a petition under s. 256(2) of the Act, requesting this Court to give direction to the Tribunal to refer the matter to the High Court for its opinion. In pursuance of this Court order dt. 26th March, 1998 in TCP 438 of 1997, the Tribunal referred the above question of law.
The learned counsel for the Department submitted that the assessee has filed a letter dt. 19th March, 1983 on 24th March, 1983 in which it had offered a credit of Rs. 5,000 in the name of Smt. Girija Pakriswamy as income. The said letter was not placed by the AO in the records or might have been misplaced and consequently it was found that the amount offered as income for the assessment was not considered. Thus, there was information from the documents that the income chargeable to tax has escaped assessment. The information that the income has escaped income-tax assessment had come to the knowledge on the bare facts of the case and there was no reconsideration and change of opinion of the material on record and for this proposition, he relied on the following decisions of the apex Court : (a) Kalyanji Mavji & Co. vs. CIT 1976 CTR (SC) 85 : (1976) 102 ITR 287 (SC); (b) A.L.A. Firm vs. CIT (1991) 93 CTR (SC) 133 : (1991) 189 ITR 285 (SC).
5. On the other hand, the learned counsel appearing for the respondent-assessee submitted that the information regarding the credit of Rs. 5,000 standing in the name of Smt. Girija Pakriswamy was available before the AO and if the AO due to mistake or otherwise had failed to take note of this fact while making the assessment, it was not open to the AO to reopen the assessment under s. 147(b). Therefore, invoking the provision of s. 147(b) making reassessment was not justified. It is also submitted that an error discovered on a reconsideration of the same material does not give him that power and for this, he relied on the apex Court judgment reported as Indian & Eastern Newspaper Society vs. CIT (1979) 12 CTR (SC) 190 : (1979) 119 ITR 996 (SC), to support his proposition.
6. We have heard the arguments advanced by both the parties. The letter dt. 19th March, 1983 was placed before us. The said letter was addressed to the AO and the same was received by the officer on 24th March, 1983. The letter reads as follows : “In the course of hearing under s. 143(2), you doubted the genuineness of the following loan claimed : 1. Mrs. Girija Pakriswamy—Rs. 5,000 It has to be pointed out that the former accountant appears to have made this entry without any basis. This may please be added without levy of any penalty. Be pleased to condone.” From a reading of the above letter, it is clear that there was a hearing under s. 143(2). At the time of hearing, the AO doubted the genuineness of the loan claimed by the respondent-assessee. This fact clearly indicates that there was enquiry at the time of original assessment proceedings. In consequence of the enquiry, the abovesaid letter was addressed to the AO. The only grievance by the Department was that, the said letter was omitted to consider. Hence, reopening is justified. When the enquiry is made by the AO, the officer ought to have considered the purpose of making original assessment. He did not act upon at the time of original assessment even though the relevant materials were available at the time of original assessment. In consequence of the enquiry, the respondent-assessee wrote a letter dt. 19th March, 1983 stating that the entry was made by the former accountant without any basis and the same may be added without levy of any penalty. The said letter was filed at page No. 52 of the miscellaneous record of the AO. The learned counsel for the Department did not deny that the said letter was not filed. It is filed with the Department and the same was also available at page No. 52 of the miscellaneous record. We have also seen the reasons recorded by the AO for the purpose of reopening the assessment. The reason was recorded on 22nd Nov., 1984 in which it is stated that the said letter was kept separately and omitted to be considered while completing the assessment on 31st March, 1983. Before even the said letter was filed by the respondent-assessee, there was enquiry relating to the genuineness of the loan of Rs. 5,000 standing in the name of Mrs. Girija Pakriswamy and the AO did not proceed further. After the completion of the assessment, the officer cannot rely on the fact that they have omitted to consider the said letter which was kept in different file.
We are of the view that the information pertaining to the cash credit of Rs. 5,000 was already with the AO at the time he made the original assessment and there is no fresh information available with the AO enabling him to invoke the provision under s. 147(b) and as such, reopening of assessment under s. 147 was unjustified.
In view of the said factual position, we have answered the above question in favour of the assessee and the above tax case filed by the Revenue is dismissed. No costs.
[Citation : 290 ITR 583]
