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TMI Blog2015 (3) TMI 578X X X X Extracts X X X X X X X X Extracts X X X X ..... t to the Assessment Year 1969-70 ended on 31.12.1968. The original assessment under Section 143(3) of Income Tax Act, 1961 (hereinafter referred to as the "Act, 1961") completed on 30.03.1972, on a total income of Rs. 30,18,194/-. The Assessing Officer allowed development rebate at 35% in respect of electronic units. Based on Appellate Commissioner's order for Assessment Year 1970-71, the Income Tax Officer (hereinafter referred to as the "ITO") initiated proceedings under Section 147(b) of Act, 1961 by issuing a notice under Section 148 on 15.03.1974. The assessee objected thereto but the said proceedings were upheld by Tribunal with further observation that once ITO reopen assessment on the basis of one item, he is empowered to consider all other items afresh. In the notice dated 15.03.1974, issued by Assessing Officer under Section 148 read with Section 147(b), he said: "On the basis of "Information" within the meaning of Section 147(b), read from A.A.C.'s decision in the case of assessee for Asstt. Yr. 1970-71 regarding non entitlement of higher development rebate to the electronic unit, proceedings are initiated u/s 147(b)." 4. He further said that on the basis of ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Profits Tax, Andhra Pradesh, [1970] 75 ITR 373 in order to hold that once assessment is re-opened, the previous assessment is set aside and whole assessment proceedings restart afresh. This view has also been confirmed by Tribunal while confirming re-assessment proceedings and opening of entire matter afresh. 11. This reference is pending since 1986 and we find that the Apex Court's decision in V. Jaganmohan Rao (supra) has been considered and explained subsequently in Commissioner of Income Tax vs. M/s. Sun Engineering Works (P.) Ltd. (1992) 198 ITR 297 (SC). The Court having gone through the judgment in V. Jaganmohan Rao (supra) held that principle laid down therein is only to the extent that once an assessment is validly reopened by issuance of a notice under section 22(2) of Income Tax Act, 1922 (corresponding to Section 148 of Act, 1961), the previous under assessment is set aside and ITO would have jurisdiction and duty to levy tax on the entire income that had escaped assessment during previous year. What set aside is, thus, only the previous under-assessment and not the original assessment proceedings. The Court very categorically held: "An order made in relation to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s so as to make machinery unworkable. Having said so the Court in M/s. Sun Engineering Works (supra) held: "As a result of the aforesaid discussion, we find that in proceedings under Section 147 of the Act, the Income Tax Officer may bring to charge items of income which had escaped assessment other than or in addition to that item or items which have led to the issuance of notice under Section 148 and where reassessment is made under Section 147 in respect of income which has escaped tax, the Income Tax Officer's jurisdiction is confined to only such income which has escaped tax or has been under-assessed and does not extend to revising, reopening or reconsidering the whole assessment or permitting the assessee to reagitate questions which had been decided in the original assessment proceedings. It is only the under-assessment which is set aside and not the entire assessment when reassessment proceedings are initiated. The Income Tax Officer cannot make an order of reassessment inconsistent with the original order of assessment in respect of matters which are not the subject-matter of proceedings under Section 147." (emphasis added) 14. It is further said that words "such i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must be read as a whole and the observations from the judgment should be considered in the light of questions which were before the Court. The decision of Court takes it colour from the questions involved in the case in which it has rendered. While applying the decision to a later case, the Court must carefully try to ascertain the true principle laid down in the decision and not to pick out words from the decision, divorce from the context of question under consideration by Court. If the assessee cannot be allowed to convert the proceedings initiated under Section 147 as revisional or review, the same would also be not available to Revenue. 19. A Division Bench of this Court in Commissioner of Income Tax (Central) Kanpur Vs. M/s Omrao Industrial Corporation (Pvt.) Ltd., Kanpur, 2001 UPTC 897 has also taken similar view following M/s. Sun Engineering Works (supra) and observed: "6. We find that the scope of the powers of the Income Tax Officer and making a reassessment under Section 147(a) has been settled by the Supreme Court in CIT v. Sun Engineering Works Pvt. Ltd., (1992) 198 ITR 297 where the Supreme Court held that though the Income Tax Officer may bring to charge items of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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