2002 (4) TMI 883 - HC - Income Tax

Reassessment Law Applicable Validity - I feel that the Commissioner is right in rejecting the contentions of the petitioner. The contention of the petitioner that returns are non est does not have any relevance because the returns are not treated as returns for the purpose of assessment. The Assessing Officer has got information regarding the escaped income and thereafter assessment was completed after issuing notice under section 147 though mistakenly quoted as section 147(a) of the Act. Section 147 of the Act authorises the Assessing Officer to make an assessment for charging the escaped income if the officer has reason for the same. In this case the assessment on the settled position of law is about the returned income which constituted information for invoking the amended provision of section 147 of the Act. When the Assessing Officer has sufficient reason for the assessment there is no scope for examination as to whether the officer has proceeded under the amended provision of section 147 of the Act. - In the circumstances I see no ground to interfere with the order passed by the Commissioner of Income-tax under section 264 of the Act and the original petition is therefore dismissed.

Issues:
1. Interpretation of sections 147(a) and 147(b) of the Income-tax Act, 1961.
2. Application of amended provisions of section 147 introduced from April 1, 1989.
3. Validity of assessments completed under section 143(3) read with section 147(a) of the Act.
4. Effect of misquoting section 147(a) instead of section 147 in the assessment.
5. Assessment of escaped income and limitation period for reassessment.
6. Authority of the Assessing Officer to issue assessment orders under section 147.

Analysis:

1. The judgment dealt with the interpretation of sections 147(a) and 147(b) of the Income-tax Act, 1961. The petitioner argued that section 147(b) should apply for assessments due to the returns being considered non est after several years. However, the Income-tax Department contended that the amended provision of section 147 introduced from April 1, 1989, replaced sections 147(a) and 147(b), rendering them irrelevant.

2. The court analyzed the application of the amended provisions of section 147 from April 1, 1989. It was established that assessments initiated after this date must adhere to the new section 147, which provides guidelines for completing assessments and pending assessments. The judgment emphasized that procedural sections for assessment must be in force at the initiation of proceedings.

3. The validity of assessments completed under section 143(3) read with section 147(a) of the Act was questioned. The petitioner argued that the Department lacked authority to complete the assessments under section 147(a) due to the limitation for proceeding under section 147(b. However, the Commissioner upheld the assessments under the amended provisions of section 147 introduced in 1989.

4. The issue of misquoting section 147(a) instead of section 147 in the assessment was raised. The Commissioner justified the assessments under section 147, citing section 292B of the Act, which states that misquoting a section does not invalidate an order if the officer has the authority to issue the order under another section.

5. Assessment of escaped income and the limitation period for reassessment were crucial aspects of the judgment. The court determined that since there was no prior assessment under section 143(3), the Department had a ten-year limitation to issue notices under the new section 147 for evaded tax exceeding Rs.50,000 per year.

6. Lastly, the judgment affirmed the authority of the Assessing Officer to issue assessment orders under section 147 based on sufficient reasons for assessing escaped income. The court dismissed the petitioner's contentions regarding the relevance of the returns filed and upheld the Commissioner's decision under section 264 of the Act, leading to the dismissal of the original petition.

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