Section 172 assessment and return filing under normal provisions can shift the tax treatment away from special assessment.

Special assessment under section 172(4) could not be sustained where the principal had filed a return of income and the record showed scrutiny under the normal assessment provisions, indicating that section 172(7) was attracted. The Tribunal relied on its earlier view that the special shipping assessment should be quashed in such circumstances, while preserving the Assessing Officer's ability to verify and proceed under the regular provisions so that voyage income does not escape assessment. On that basis, the challenge to annulment of the section 172(4) assessment failed, the Revenue's appeal was dismissed, and the assessee's cross-objections were dismissed as infructuous.

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Issues: Whether the assessment made under section 172(4) of the Income-tax Act, 1961 was liable to be annulled on the ground that the assessee had exercised the option under section 172(7) by filing a return of income.

Analysis: The Tribunal noted that on identical facts, its earlier decision had quashed an order under section 172(4) while permitting the Assessing Officer to verify and proceed in accordance with section 172(7) so that the income from voyages did not escape assessment under the normal provisions. It found that the principal had filed a return of income for the relevant assessment year and had already been subjected to scrutiny, which indicated acceptance of liability to be dealt with under section 172(7). The Tribunal therefore accepted the view that the special assessment under section 172(4) could not stand in the circumstances and that the Assessing Officer could examine the matter under the normal provisions.

Conclusion: The challenge to the order annulling the assessment under section 172(4) failed, and the Revenue's appeal was dismissed; the assessee's cross-objections, being supportive of that result, were also dismissed as infructuous.

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