1984 (3) TMI 168 - AT - Income Tax

Assessment Proceedings Attributable To Income From Property Reassessment Proceedings Voluntary Contributions

Issues Involved:
1. Validity of the reopening of assessment under section 147(a) of the Income-tax Act, 1961.
2. Taxability of foreign remittances received for the purchase of a vehicle.
3. Determination of income from house property.

Detailed Analysis:

1. Validity of the Reopening of Assessment:
The reopening of the assessment for the year 1977-78 was initiated under section 147(a) of the Income-tax Act, 1961. The Income Tax Officer (ITO) recorded reasons on 24-3-1982, stating that remittances from abroad towards the acquisition of a vehicle were taxable income that had escaped assessment. The ITO also found that income from house property had not been fully taxed. The assessee contended that the reopening was invalid, arguing that the ITO had already considered the remittances during the original assessment and had accepted them as non-taxable.

The Appellate Assistant Commissioner (AAC) initially observed that the ITO could not reopen the assessment on a mere change of opinion. However, the Tribunal held that the reopening was valid. It was noted that the original assessment was made under section 143(1) in a summary manner, and the ITO had jurisdiction to reassess the entire escaped income, including the remittances for the vehicle, under section 147(a). The Tribunal cited the Full Bench decision of the Andhra Pradesh High Court in CWT v. Subakaran Gangabhishan, which stated that once an assessment is validly reopened, the assessing authority has the jurisdiction to reassess the entire escaped income.

2. Taxability of Foreign Remittances:
The primary issue was whether the remittances received from foreign donors for the purchase of a vehicle were taxable. The assessee argued that the remittances were personal gifts and not connected to his vocation as a Christian pastor. The ITO, however, contended that the remittances were connected to the assessee's vocation and should be taxed.

The Tribunal examined the evidence, including letters from foreign donors and the statements accompanying the original and revised returns. The initial statements indicated that the remittances were for purchasing a vehicle "to be used in his ministry." However, later statements claimed the remittances were personal gifts. The Tribunal found that the remittances had a bearing on the assessee's vocation and were not purely personal. The Tribunal referred to the Supreme Court's decision in P. Krishna Menon v. CIT and the Madras High Court's decision in CIT v. P.S. Chelladurai, which supported the taxability of such remittances when connected to the vocation.

The Tribunal concluded that three-fourths of the benefit from the remittances could be attributed to the performance of the duties of the office, while one-fourth was for personal use. Consequently, one-fourth of the amount of Rs. 31,631, i.e., Rs. 7,908, was subjected to tax.

3. Determination of Income from House Property:
The ITO found that the income from house property had not been fully taxed. The assessee had initially shown property income of Rs. 1,083 but later revised it to Rs. 1,583, including deemed income from a self-occupied house. The Tribunal upheld the ITO's finding that additional property income of Rs. 500 had escaped assessment and should be brought to tax.

Conclusion:
The Tribunal allowed the department's appeal in part. It upheld the validity of the reopening of the assessment under section 147(a) and confirmed the taxability of one-fourth of the foreign remittances received for the vehicle. The additional property income of Rs. 500 was also brought to tax. The final addition to the assessee's income was Rs. 7,908 from the remittances and Rs. 500 from property income.

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