TMI Blog1999 (5) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued notice under s. 148 for both the years. In compliance to which the assessee filed return for both the years on23rd May, 1990. Reassessment was completed by the AO on31st Oct., 1990. Against this reassessment order, the assessee took up the matter in appeal before the CIT(A). The learned CIT(A) summarised the contentions of the assessee in the appellate order for asst. yr. 1986-87 as follows: "(1). In the return of income filed originally the appellant had claimed deduction under s. 80-I amounting to Rs. 196.39 lakhs in respect of following new industrial undertakings: Rs. (in lacs) Refrigerators 13.63 Compressors 106.47 Lamination 37.49 Control 38.80 Total 196.39 In the course of the assessment proceedings which were completed on8th March, 1989, queries were raised in respect of claim under s. 80-I and were replied vide letters dt.7th March,1989and8th March, 1989. Assessment was completed on8th March, 1989, accepting the claim under s. 80-I. (2). Notice under s. 148 was issued on20th April, 1990. The AO during the course of the reassessment proceedings pointed out that ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ghdas Bagree vs. ITO Anr. (1961) 61 ITR 172 (Cal), CIT vs. Bhagwan Das K. Bros. (1973) 91 ITR 256 (Bom), CIT vs. Vijay Laxmi Sugar Mills Ltd. (1975) 101 ITR 670 (All). 8. When the primary facts necessary for assessment are fully and truly disclosed at the stage of original proceedings, the AO is not entitled to commence proceedings under s. 147(a) merely on a change of opinion. Reliance was placed in this connection on decision in the case of CIT vs. Bhanji Lavji (1971) 79 ITR 582 (SC) and Sirpur Paper Mills Ltd. vs. ITO 1977 CTR (AP) 138 : (1978) 114 ITR 404 (AP). There has been no lapse on the part of the appellant to disclose primary facts at the time of original assessment. 9. In the cases of Arvind Boards Paper Products Ltd. vs. ITO (1980) 124 ITR 626 (Guj), K.C.P. Ltd. vs. ITO 13 Taxman 104 (AP) and Chemical Fibres of India Ltd. vs. M.K.N. Pillai (1983) 32 CTR (Bom) 97, which all dealt with deduction under s. 80-I and can be said to be similar cases, reopening was held not to be justified. 10. Asst. yr. 1986-87 is not the first year for the purposes of deduction under s. 80-I. This deduction has been claimed and allowed in the earlier assessment years on the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In these circumstances, action under s. 147(b) is also not justified." 5. The learned CIT(A) considered the various contentions raised and eventually came to the conclusion that the AO was not entitled to commence proceedings under s. 147(a) or 147(b) as there was no fresh facts or material with the AO but it was only on reappraisal of the same material that he discovered an error which he has sought to correct by virtue of the present proceedings. He accordingly quashed the reassessment proceedings for asst. yr. 1986-87. 6. For similar reasons, the learned CIT(A) quashed the proceedings for asst. yr. 1988-89. 7. The Revenue has come up in appeal before the Tribunal. For the asst. yr. 1986-87, the following specific ground is raised: "On the facts and in the circumstances of the case, the learned CIT(A) has erred in quashing the reassessment proceedings initiated under s. 147(a)/147(b) by holding that the same were not validly initiated because there was no fresh facts or material with the AO." 8. Similarly, for asst. yr. 1988-89, the CIT raised the following ground: "On the facts and in the circumstances of the case, the CIT(A) has erred in quashing the proceedings in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 47 of the Act applicable w.e.f. 1st April, 1989, which had not been considered either by the AO or the CIT(A). The subject-matter of the original appeal has altogether been changed and, therefore, the revised appeals filed in February, 1997, after more than 5 years of filing of the original appeals is clearly belated and, therefore, the same should be dismissed in limine on the grounds of laches/inordinate delay. It is also submitted that there is no provision in the Act or the Rules to revise the grounds of appeal to completely alter the controversy at issue. The Tribunal, at best, can grant leave for additional grounds of appeal in accordance with the procedure laid down under r. 11 of the IT (Appellate Tribunal) Rules, 1963. Since no application under r. 11 of the Rules has been filed, nor any reasons adduced to explain the inordinate delay in filing the revised appeals/grounds, the same is liable to be dismissed. 12. Since the appellant cannot seek to completely alter the subject-matter of the appeal to the prejudice or detriment of the respondent by raising altogether new grounds which were not considered by the lower authorities, it is submitted that these revised grounds c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bring out more clarity regarding issues involved and put them in sharper focus. Broadly speaking the subject-matter of the appeal is whether the reopening of assessment under s. 147 of the Act is valid or not. The AO in his reasons recorded for the reopening has referred to only s. 147 and there is no reference to cls. (a) or (b) because w.e.f.1st April, 1989, the provisions of s. 147 have been amended and cls. (a) and (b) have been deleted. Since the learned CIT(A) ignored the amended provisions of s. 147 and decided the appeal on the basis of the old provisions of s. 147(a)/147(b), the grievance of the Revenue before the Tribunal was that the learned CIT(A) should have decided the appeal on the basis of the amended provisions of s. 147. Reliance was placed on the decision of the Hon ble Delhi High Court in the case of CIT vs. Edward Keventer (Successor) (P) Ltd. (1980) 123 ITR 200 (Del) where the Hon ble court has held that the subject-matter of appeal should be understood not in a narrow and unrealistic manner but should be so comprehanded as to encompass the entire controversy between the party which is sought to be adjudicated upon by the Tribunal. 16. Since in both the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the AO but it was only on reappraisal of the same material that he discovered an error which he sought to correct by virtue of the present proceedings. 20. In terms of s. 253 of the Act, the CIT objects to the order passed by the CIT(A) and direct the AO to file appeal to the Tribunal against the order on the original grounds extracted above. However, for the asst. yr. 1987-88, the CIT raised the following ground : "On the facts and in the circumstances of the case, the learned CIT(A) erred in holding that the proceedings initiated under s. 147 of the IT Act by issue of notice under 148 on 20th April 1990, were not valid without taking into consideration the amended provisions of s. 147 introduced by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1st April, 1989." 21. Since the same CIT directed the AO to file appeal against the order of the CIT(A) for the above three years and authorised specific grounds as indicated above, it cannot be said that the identical ground raised for asst. yrs.1986-87 and 1988-89 is a mistake or omission on the part of the CIT. The ground raised is clear and specific contending that the learned CIT(A) has erred in quashing the reassessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rigid formula. In order to sustain a complaint of violation of principle of natural justice on the ground of absence of opportunity, it has to be established that prejudice has been caused to the parties concerned by the procedure followed. In the instant case, the assessee has not been provided with the specific section under which the proceedings were initiated. Determination of the proper clause under which reassessment notice is issued is indispensable because the cls. (a) and (b) of s. 147 contemplate two separate and mutually exclusive jurisdiction. 23. On the other hand, if the proceedings are initiated under the amended provision which comes into effect from 1st April, 1989, the assessee has to be given an opportunity to argue its case that the amended provisions are not applicable in this case as the assessments involved are 1986-87 to 1988-89. This opportunity was denied and eventually the learned CIT(A) decided the issue on the basis of the unamended provisions and held that the initiation of proceedings cannot be sustained even under sub-cl. (a) or (b) of s. 147. The CIT who authorised the appeals to the Tribunal also challenged the finding of the CIT(A) under sub-cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... picted in the revised claim for which calculations were furnished before the AO during the original assessment proceedings. The assessee by its letter dt.7th March, 1989, drew the attention of the AO to the detailed revised working for claim under s. 80-I and by letter dt.8th March, 1989, the basis for revising the working for claim in deduction was provided. It was further recorded by him that in the revised computation of deduction permissible under s. 80-I filed along with letter dt.22nd Feb., 1989, before the AO depreciation had been deducted and income from other sources in respect of refrigeration division at Rs. 2.44 lacs has also been deducted as per the understanding of the assessee. There was, therefore, no omission or failure on the part of the assessee to disclose fully and truly all material particulars necessary for the assessment. It was also brought to the notice of the Bench that the income from other sources objected to by the AO included items like unclaimed balances written back amounting to Rs. 22,31,167, profit on sale of assets and various interests from ICICI debentures, from customers fixed deposit including receipt from insurance companies and receipt from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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