1991 (8) TMI 159 - AT - Income Tax

Appellate Assistant Commissioner Assessment Notice Business Premises Promissory Estoppel Reassessment Notice

Issues Involved:
1. Validity of reopening assessments under Section 147(a) of the Income-tax Act.
2. Whether the alleged assurance given by the Commissioner of Income-tax regarding non-prosecution under Section 277 of the Income-tax Act was binding.
3. Whether the doctrine of promissory estoppel applies to the case.
4. Binding nature of the settlement agreement between the assessee and the Income-tax Department.
5. Competency of appeals filed by the assessee against reassessments.

Detailed Analysis:

1. Validity of Reopening Assessments under Section 147(a):
The Tribunal held that there was sufficient material to justify reopening the assessments for the years 1966-67 to 1970-71. The material included the ledger seized during the search on 23-1-1971, which showed a discrepancy in the capital accounts of the partners. The Tribunal found that the reasons recorded for reopening were not vague and were based on concrete evidence, including statements made by the partners and the Munim during the search. The Tribunal emphasized that the reasons for reopening must have a material bearing on the question of escapement of income due to the assessee's failure to disclose fully and truly all material facts. The Tribunal concluded that the reopening was valid under Section 147(a).

2. Alleged Assurance Regarding Non-Prosecution:
The Tribunal found no evidence to support the claim that the Commissioner of Income-tax, late Shri R.V. Ramaswamy, had given an oral or written assurance that the partners would not be prosecuted under Section 277 of the Income-tax Act. The Tribunal noted that the minutes of the settlement dated 29-9-1972 and the terms of the settlement dated 20-3-1973 did not contain any such assurance. The Tribunal concluded that the alleged assurance was not a part of the settlement agreement and was not binding on the department.

3. Doctrine of Promissory Estoppel:
The Tribunal held that the doctrine of promissory estoppel did not apply to the case. The Tribunal referred to the Supreme Court's decision in Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh, which stated that promissory estoppel cannot be invoked to compel the government to do an act prohibited by law. The Tribunal found that there was no clear and unequivocal promise made by the department regarding non-prosecution under Section 277 of the Income-tax Act. Therefore, the assessee could not claim relief based on promissory estoppel.

4. Binding Nature of the Settlement Agreement:
The Tribunal observed that the settlement agreement dated 20-3-1973, which was confirmed by the assessee's letter dated 26-3-1973, was binding on both parties. The Tribunal noted that the assessee had derived benefits from the settlement, including the spread over of the escaped income over multiple assessment years. The Tribunal held that having derived benefits from the settlement, the assessee could not now turn against the settlement and claim that it was not binding. The Tribunal cited the Bombay High Court's decision in CIT v. Army & Navy Stores Ltd., which stated that a party cannot deny the truth of a representation made by it to obtain a benefit.

5. Competency of Appeals Filed by the Assessee:
The Tribunal held that the appeals filed by the assessee against the reassessments were incompetent. The Tribunal referred to the decisions in Ramanlal Kamdar v. CIT and CIT v. Cochin Malabar Estates & Industries Ltd., which stated that no appeals lie against admitted assessments. The Tribunal found that the reassessments were made based on the amounts disclosed by the assessee in its income-tax returns filed in the reassessment proceedings. Therefore, the assessee could not be considered aggrieved by the reassessments and was not entitled to file appeals against them.

Conclusion:
The Tribunal dismissed the appeals filed by the assessee, upholding the validity of the reassessments and the binding nature of the settlement agreement. The Tribunal found no merit in the arguments regarding the alleged assurance of non-prosecution and the applicability of promissory estoppel. The Tribunal concluded that the appeals were incompetent as they were filed against admitted assessments.

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