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2015 (3) TMI 578 - ALLAHABAD HIGH COURT

2015 (3) TMI 578 - ALLAHABAD HIGH COURT - [2015] 375 ITR 533 (All) - Reopening of assessment - whether on re-opening of a case under Section 147, it is open to ITO to consider all other items and not to confine to the item on which re-assessment notice has been given? - Held that:- From the order dated 13.03.1975, whereby the Assessing Officer not only re-opened the case but made assessment in respect to various other items, other than the quantum of development rebate, we find that he has relie .....

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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 initi .....

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reference application has come up at the instance of assessee vide Income Tax Application No. 4 of 1982, arising out of ITA No. 386 (Alld.)/1978-79 and the following reference has been made by Tribunal: "Whether on the facts and in the circumstances of the case, the Tribunal was correct in holding that once the Income Tax Officer re-open the assessment under Section 147(b) of the Income Tax Act, 1961, he is empowered to consider and assess all the other items afresh?" 2. The dispute re .....

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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. .....

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allowed excess relief amounting to ₹ 57,088/- (development rebate on electronic unit allowed at the rate of 35% amounting to ₹ 1,33,205/- instead of allowable at the rate of 20% i.e. ₹ 76,117/-). 5. The notice under Section 148 was accordingly issued on 31.07.1973. Initially proceedings were dropped on 15.03.1974 but again initiated on that very date. 6. The Assessing Officer thereafter proceeded to make re-assessment not only in regard to development rebate but other items al .....

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lied on the decisions in Commissioner of Income Tax vs. Kerala State Industrial Development Corporation Ltd., [1979 ]116ITR 158 (Ker) and Indian & Eastern Newspaper Society, New Delhi vs. Commissioner of Income Tax, New Delhi, [1979 ]119ITR 996 (SC) for taking the view that once assessment is re-opened in respect of one item, all other aspects would also be opened for re-assessment.. 8. The assessee made an application under Section 255(i) of Act, 1961 before Tribunal requesting for making r .....

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hich re-assessment notice has been given". 10. From the order dated 13.03.1975, whereby the Assessing Officer not only re-opened the case but made assessment in respect to various other items, other than the quantum of development rebate, we find that he has relied on Apex Court's decision in V. Jaganmohan Rao and Ors. vs. Commissioner of Income Tax and Excess Profits Tax, Andhra Pradesh, [1970] 75 ITR 373 in order to hold that once assessment is re-opened, the previous assessment is se .....

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an 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 proceedin .....

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s. Sun Engineering Works (supra) explaining the decision in V. Jaganmohan Rao (supra) the Court very categorically said: "The judgment in Jaganmohan Rao's case, therefore, cannot be read to imply as laying down that in the reassessment proceedings validly initiated, the assessee can seek reopening of the whole assessment and claim credit in respect of items finally concluded in the original assessment. The assessee cannot claim recompilation of the income or redoing of an assessment and .....

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ssment wipes out the original assessment and that reassessment is not only confined to "escaped assessment" or "under assessment" but to the entire assessment for the year and start the assessment proceeding de-novo giving right to an assessee to re-agitate matters which he had lost during the original assessment proceeding, which had acquired finality, is not only erroneous but also against the phraseology of Section 147 of the Act and the object of reassessment proceedings. .....

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eview proceedings 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 h .....

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er 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 income" in Section 147 clearly referred to the income which is chargeable to tax but has escaped assessment and ITO's jurisdiction under the section is confined only to "such income" which has escaped assessment. It does not extend to consider generally .....

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R 527 (Cal); CIT v. Assam Oil Co. Ltd. (1982) 133 ITR 204 (Cal); CIT v. Standard Motor Products of India Ltd. (1983) 142 ITR 877 (Mad); CIT v. Rangnath Bangur (1984) 149 ITR 487 (Raj); State Bank of Hyderabad v. CIT (1988) 171 ITR 232 (AP); and, CIT v. Indian Rare Earth Ltd. (1990) 181 ITR 22 (Bom) (FB). 15. Sri Shambhu Chopra, learned counsel appearing for Revenue attempted to contend that aforesaid judgment must be read to impose such a restriction at the instance of assessee and not for Reven .....

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here should be no restriction at all. 16. The submission, in our view, is thoroughly misconceived. 17. Before the Apex Court, assessee was attempting to argue that once assessment proceedings recommenced, the entire assessment would be re-opened as if earlier assessment has gone which argument was rejected by Court. That is how the reference with respect to assessment has come but it cannot be said that natural consequences of a provision would be different for assessee and Revenue. Both the par .....

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id 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 .....

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