9911796707
TMI Blog1993 (11) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 147(b) of the Income-tax Act, 1961? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the provisions of section 40A(7) were not attracted in a case where no provision for gratuity liability was made in the books of account maintained by the assessee?" The principal question which arises for consideration of the court in this reference is as to whether the Income-tax Officer had jurisdiction to initiate reassessment proceedings invoking section 147(b) of the Income-tax Act, 1961, relying on section 40A(7) of the Act inserted therein with retrospective effect, i.e., from April 1, 1973, even though the same very provision was specifically invoked on behalf of the Reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal. The Appellate Tribunal decided the appeal arising from the original assessment proceedings by its order dated December 15, 1975. During pendency of the appeal before the Tribunal, section 40A(7) was inserted in the Act with retrospective effect. On May 12, 1975, the Finance Act of 1975 came into force. Section 40A(7) was introduced in the Income-tax Act, 1961, with effect from April 1, 1973. At the hearing of the second appeal before the Tribunal arising from the original assessment proceedings, it was in terms argued on behalf of the Revenue that no deduction could be allowed in respect of the claim made by the assessee for deduction in respect of the abovereferred amount of Rs. 37,36,928 in view of the provisions contained in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erted provision in respect of the claim of the assessee referred to hereinabove. The Revenue did not seek any reference against the order dated December 15, 1975. The said order of the Tribunal thus acquired finality. It is irrelevant for the purpose of this reference to ascertain as to whether the view taken by the Tribunal in respect of the interpretation of section 40A(7) was correct or not. The only question arising for the consideration of the court in this reference is as to whether reassessment proceedings could be validly initiated by the Income-tax Officer on the same ground, i.e., on the ground already adjudicated upon by the Tribunal, rightly or wrongly, by invoking section 147(b) of the Income-tax Act, 1961. In the above backdro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecting all the contentions of the assessee. Being aggrieved by the said order, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals). By his order dated January 18, 1979, the Commissioner of Income-tax (Appeals) allowed the appeal preferred by the assessee. The Commissioner of Income-tax (Appeals) did not go into the correctness or otherwise of the Income-tax Officer's action in invoking section 147(b) of the Act but decided the appeal of the assessee in its favour on the merits of the controversy. By an order dated April 25, 1980, the Income-tax Appellate Tribunal dismissed the Department's appeal and allowed the cross-objection filed by the assessee. The first question which arises for consideration of the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edings. In the said decision, the apex court further observed that the Income-tax Officer was not entitled to circumvent the order passed by the appellate authority which had become final. The findings of the Tribunal recorded in the appeal arising from the original proceedings (whether the same were right or wrong) were binding on the Income-tax Officer and in such a situation the Income-tax Officer could not reopen the original assessment and seek to adjudicate on the ground which was already adjudicated upon by the Tribunal or other appellate authority. It is not the case of the Revenue that the Income-tax Officer acquired any new information after the decision of the Income-tax Appellate Tribunal. The retrospective amendment of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eve that income chargeable to tax had escaped assessment. Therefore, the reopening of the assessment for the assessment year 1975-76 was not valid." The principles laid down in the abovereferred decisions completely support the case of the assessee. Learned counsel for the assessee is justified in his submission that the reassessment proceedings were initiated without jurisdiction and in view of the admitted facts of the case, section 147(b) of the Act could not be invoked by the Income-tax Officer at the stage at which he invoked the same. We accept the abovereferred submission of learned counsel for the assessee. Learned counsel for the Revenue has submitted that the Income-tax Officer was entitled to invoke section 147(b) of the Act re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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