TMI Blog2000 (11) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... of the carry forward of loss determined on the basis of a return filed in response to a notice under section 148 of the Income-tax Act ?" The material facts giving rise to this controversy, briefly stated, are as follows. The assessee, Agro Industries Corporation, was established for promotion of agro industries and improvement of agriculture in the State of Jammu and Kashmir. For the assessment year 1975-76, the assessee did not file its return of income under the Income-tax Act within the period allowed under section 139(1). No notice was issued under section 139(2) of the Act to the assessee by the Income-tax Officer. However, on February 27, 1978, a notice under section 148 of the Act was issued and served upon the assessee. In respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e held that the assessee had filed the return within the extended time. The appeal of the Revenue was dismissed by the Tribunal. Hence, this reference at the instance of the Revenue. We have heard Mr. Anil Bhan, learned counsel for the Revenue. The assessment in the present case was made by the Income-tax Officer in proceedings under section 147 of the Act initiated by issue of notice under section 148 of the Act. The question that arises for consideration is whether in such proceedings, initiated for the purpose of assessment of escaped income, the assessee is entitled to claim determination of loss to enable him to carry forward the same to be set off against the income of subsequent years to the detriment of the Revenue. The Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a case where the Income-tax Officer has reason to believe that the income of the assessee has escaped assessment. The power under this section can also be exercised in cases where excessive loss or depreciation allowance has been computed. In the instant case, reassessment proceedings were initiated by the Income-tax Officer for the assessment year 1975-76 by issue of notice under section 148 of the Act because he was satisfied that the income of the petitioner-Corporation for that year had escaped assessment by reason of the non-submission of the return by the assessee. In such a case, if at any stage of the proceedings, the Income-tax Officer finds that the income chargeable to tax has not escaped assessment, he is free not to take furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 297. Prior to that decision there was a sharp cleavage of opinion between different High Courts on the subject. The Supreme Court considered various decisions of different High Courts which had held that once valid proceedings under section 147 of the Act are started, the Income-tax Officer has the jurisdiction and duty to complete the whole assessment de novo. The Supreme Court also considered the observations in its earlier decision in V. Jaganmohan Rao v. CIT/EPT [1970] 75 ITR 373, to the effect that once an assessment is validly reopened by issuance of a notice under sub-section (2) of section 22 read with section 34 of the Indian Income-tax Act, 1922 (corresponding to section 148 of the Act), the previous under assessment is set aside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut the original assessment and that reassessment is not only confined to "escaped assessment" or "underassessment" but to the entire assessment for the year and starts the assessment proceedings de novo giving the right to an assessee to reagitate matters which he had lost during the original assessment proceedings, 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. Such an interpretation would be reading that judgment totally out of context in which the questions arose for decision in that case. The Supreme Court observed : "It is neither desirable nor permissible to pick out a word or a sentence from the judgment of this court, divorce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court that proceedings under section 147 of the Act are for the benefit of the Revenue and not of the assessee and the assessee cannot be permitted to convert the reassessment proceedings to his advantage. The assessee cannot claim that assessment should be completed and loss should be determined to enable him to claim the benefit of carry forward and set off against the income of the subsequent years. In such a case, the proper course for the Income-tax Officer would be to drop the proceedings under section 147 of the Act. In the instant case, by refusing to allow the assessee the benefit of carry forward of loss, the Income-tax Officer had, in effect, dropped the proceedings under section 148 of the Act. In our opinion, he was right in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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