TMI Blog1989 (1) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... cer initiated proceedings under section 147(a) read with section 148 of the Act for making the assessments of the assessee for the years under consideration. The Income-tax Officer completed the assessments under section 143(3)/ 147(a) of the Act against the deceased for the assessment years under consideration determining the total income at Rs. 22,36,716 for the assessment year 1961-62, Rs. 2,01,920 for the assessment year 1962-63, Rs. 5,17,070 for the assessment year 1963-64 and Rs. 1,75,730 for the assessment year 1964-65. As the assessee had not filed any estimates of advance tax under section 212(3) of the Act, the Income-tax Officer held that the assessee came within the mischief of section 273(b) of the Act and, on that basis, he imposed a penalty of Rs. 13,500 for the assessment year 1961-62, Rs. 11,000 for the assessment year 1962-63, Rs. 32,000 for the assessment year 1963-64 and Rs. 2,500 for the assessment year 1964-65. The assessee filed appeals before the Commissioner (Appeals). The Commissioner (appeals) cancelled the penalty orders by observing as under : "The definition of 'regular assessment' as per section 2(40) of the Act meant the assessment made under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a material bearing. It is well settled that the proceedings under section 34(1) can be undertaken only if the conditions precedent mentioned either in clause (a) or clause (b) of that section are satisfied and it is only after such conditions are satisfied that the operative part of section 34(1) comes into play." Tulzapurkar J. went on to hold that the notice issued under section 34(1) was deemed to be a notice issued under section 22(2) of the Act, and thereafter, further proceedings undertaken by the Income-tax Officer were proceedings to which the provisions of the Act would apply. Ultimately, it was held in that case that (at page 184) : ". . . Looked at from this angle, it seems to us very clear that the expression 'regular assessment' occurring in section 18A(9) of the Act would cover reassessment proceedings undertaken by the Income-tax Officer under section 34(1) of the Act, if the provisions of section 18A(9) are read in the context of the last portion of section 34 (1)." That case was decided under the 1922 Act which had not defined the term 'regular assessment'. The 1961 Act has provided a definition in section 2(40) which is as follows : "2(40) 'regular assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r by issuing a notice under section 148. The condition precedent for issue of a notice under section 148 is that the Income-tax Officer must have reason to believe that "income chargeable to tax had escaped assessment for that year". If the escapement of income chargeable to tax takes place by reason of omission or failure on the part of an assessee to make a return under section 139 for any assessment year or to disclose fully and truly all material facts necessary for the assessment of any particular year, then it will be a case under clause (a) of section 147. But in a case where there has been no such omission or failure on the part of the assessee, the Income-tax Officer has reason to believe in consequence of information in his possession that income chargeable to tax has escaped assessment or reassessment in any assessment year, he may still have jurisdiction to proceed under clause (b) of section 147. The jurisdiction conferred upon the Income-tax, Officer to assess escaped income under section 147 can be exercised in accordance with the provisions of sections 148 to 153 of the Act. What is important to note for the purpose of this case is that as long as an assessment pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -section." The assessment that is to be made pursuant to a notice under section 148 has been specifically mentioned "as the assessment, reassessment or recomputation under section 147". Even though the Income-tax Officer can make use of the procedure laid down in sections 143 and 144 for the purpose of making assessment, reassessment or recomputation of income pursuant to a notice under section 148, such assessment, reassessment or recomputation has been treated by the statute as having been made under section 147. Mr. Mitra has contended that any assessment which has been made by taking recourse to section 143 or section 144 must be treated as a regular assessment. This contention is devoid of any merit. Sections 143 and 144 are the only machinery sections in the Act available to the Income-tax Officer for the purpose of making assessment or computation of income. It cannot be said that whenever the provisions of these sections are utilised by the Income-tax Officer, the assessment will be a regular assessment. If such interpretation is accepted, the definition of "regular assessment" will become redundant and otiose and every assessment or computation of income will have to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of section 147, no distinction can be made between an assessment or a reassessment. If a "reassessment" made under section 147 cannot be regarded as a regular assessment as defined in section 2(40), 1 fail to see how an assessment made under section 147 can be treated as a "regular assessment". The language of section 147 is very clear. It enables an Income-tax Officer to "assess or reassess such income or recompute the loss or the depreciation allowance as the case may be". Therefore, an assessment that will have to be done under section 147 cannot be regarded as an assessment made under section 143 or section 144. It is true that the Income-tax Officer has to serve upon the assessee "a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 139" and the provisions of the Act, so far as may be, apply accordingly as if the notice were a notice under section 139(2), but that is a procedure to be followed for assessment as well as reassessment. The phrase "so far as may be" in section 148, makes it clear that the assessment will not be an assessment under section 143 or 144 and the provisions of section 143 or section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ambit of the definition of "regular assessment" in section 2(40). The Bombay High Court, in the case of D. Swarup, ITO v. Gammon India Ltd. [1983] 141 ITR 841, went into this controversy in depth. There it was observed by Chandurkar J. that there was clear indication in the Act itself that the reassessment under section 147 was not the same as an assessment under section 143 or section 144 and a simple grammatical construction of these provisions would also show that the assessments under section 143 or section 144 were not the same as those under section 147. It was further observed that when section 148 referred to the fact that the provisions of the Act should, so far as might be, apply to the reassessment under section 147, the effect was only that those provisions could be resorted to for the purpose of making reassessment under section 147, and the mere fact that the machinery which was availed of for the purpose of assessment under section 143 or section 144 could be availed of while making a reassessment under section 141 would not make the reassessment under section 147 the same as an assessment under section 143 or section 144. It was pointed out that section 153(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
