Court Rules Section 147 Assessment Not 'Regular' for Penalties

The court held that an assessment made under section 147 of the Income-tax Act, 1961, cannot be considered a 'regular assessment' for the purpose of levying penalties under section 273(b). The Tribunal and Commissioner (Appeals) found that 'regular assessment' under section 2(40) refers to assessments made under sections 143 or 144, excluding assessments under section 147. The court emphasized that section 147 applies when assessments under sections 143 or 144 are not feasible, and such assessments do not fall under the definition of 'regular assessment.' The decision favored the assessee, with no costs awarded.

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Issues Involved:
1. Whether an assessment framed u/s 143(3)/147(a) of the Income-tax Act, 1961, constitutes 'regular assessment' for the purpose of levying penalty u/s 273(b).

Summary:

Issue 1: Definition and Scope of 'Regular Assessment'
The Tribunal referred the question of whether an assessment framed u/s 143(3)/147(a) of the Income-tax Act, 1961, constitutes 'regular assessment' in the course of which penalty u/s 273(b) can be levied. The facts revealed that the deceased did not file any return of income, leading to proceedings initiated u/s 147(a) read with section 148. The Income-tax Officer completed assessments u/s 143(3)/147(a) and imposed penalties for not filing estimates of advance tax u/s 212(3).

Issue 2: Tribunal and Commissioner (Appeals) Findings
The Commissioner (Appeals) canceled the penalty orders, noting that 'regular assessment' as per section 2(40) meant assessments made u/s 143 or 144, which did not cover assessments u/s 147(a). The Tribunal upheld this view, stating that an assessment or reassessment made u/s 147 cannot be considered a 'regular assessment' to which section 273(a) can be applied.

Issue 3: Arguments and Precedents
Mr. Mitra, representing the Revenue, argued that assessments made u/s 147 should be treated as 'regular assessments' under section 143, citing the Bombay High Court judgment in Deviprasad Kejriwal v. CIT. However, this case was decided under the 1922 Act, which did not define 'regular assessment'. The 1961 Act defines 'regular assessment' in section 2(40) as assessments made u/s 143 or 144.

Issue 4: Analysis of Section 147 and Related Provisions
The court analyzed that section 147 comes into play only when assessments cannot be made u/s 143 or 144 due to the expiration of the time limit for issuing notices u/s 139(2). Therefore, an assessment made u/s 147 cannot be described as an assessment made u/s 143 or 144. The court emphasized that the Income-tax Officer's jurisdiction to assess escaped income is acquired through a notice u/s 148, and the assessment made pursuant to such notice is treated as an assessment under section 147.

Issue 5: Judicial Consensus and Interpretation
The court referred to several judgments from various High Courts, including Kerala, Punjab and Haryana, Allahabad, Patna, and Orissa, which supported the view that 'regular assessment' does not include reassessments u/s 147. The court also noted that the statutory language and procedural distinctions between sections 143, 144, and 147 support this interpretation.

Conclusion:
The court concluded that an assessment made u/s 147 cannot be equated to an assessment made u/s 143 or 144 and cannot be brought within the definition of 'regular assessment' in section 2(40). The question was answered in the negative and in favor of the assessee, with no order as to costs.

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