TaxTMI 
TaxTMI 
2003 (4) TMI 90
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....ection 147 for the assessment years 1984-85 to 1989-90 and 1985-86 to 1989-90, respectively, in the two cases. Dr. Pal has contended that there was an embargo of a period of four years in reopening the assessment in respect of cases falling under clause (b) of section 147 as it stood prior to April 1, 1989, where the assessment is sought to be reopened on the ground other than failure or omission on the part of the assessee to disclose fully and truly all material facts necessary for assessment (read with clause (b) of sub-section (1) of section 149). After the amendment, the proviso to section 147 provides similar four years embargo on grounds other than the assessee's default. He has also contended that the provisions being procedural law, it would be governed by the amended provision, since in 1994, the amended provisions were in force. But if it is done under the unamended provision, then he stands on a better footing. According to him, these four years' embargo is not dependent on section 151 where the period of four years had expired in respect of cases sought to be reopened on the basis of information other than the assessee's default. Therefore, the notices should be quash....
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....h Mr. Ghosh and Mr. Som have attempted to show that this case would be governed by the unamended provisions since the relevant assessment years were decided on the basis of unamended provisions. Both of them have dealt with the unamended provisions at length in order to bring home their case. At the same time, they have also dealt with the amended provision alternatively to support their contention and have contended that their case stands on a better footing under the amended provision. This is also supported by Dr. Pal that if the case is to be governed under the unamended provision, then he would stand on a better position; but, however, he cannot take advantage of the old position because it is a procedural matter and needs to be governed by the amended provision. But still then, according to him, four years' embargo cannot be overlooked and cannot be stretched beyond four years with the aid of section 151 of the Act or otherwise. Both Mr. Ghosh and Mr. Som and Dr. Pal have relied on various decisions to which we shall be making reference at the appropriate stage. So far as the present question is concerned, a comparison of the amended and unamended provisions makes it clear ....
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....ion 148 to section 153. Section 151(1) prescribed that no notice under section 148 after the expiry of eight years could be issued unless the Board was satisfied on the reasons recorded by the Income-tax Officer (the ITO) that it was a fit case for issue of such notice. Under section 151(2) if four years had expired from the relevant assessment year then no notice under section 148 could be issued unless the Commissioner was satisfied on the reasons recorded by the Income-tax Officer that it was a fit case for issuing such notice. Mr. Som has contended that since section 147 was subject to sections 148 to 153, therefore, all these provisions were to be read together for the purpose of interpreting the same after giving a reconciled meaning. Whereas, Mr. Ghosh has contended that in view of section 151, the embargo of clause (b) of section 149(1) was subject to section 151(1) and (2) and, therefore, cases under clause (b) of section 147 could be reopened after the expiry of four years with prior sanction of the Commissioner and after the expiry of eight years with prior approval of the Board. This proposition of Mr. Ghosh and Mr. Som does not cut any ice. Inasmuch as, the provision....
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....rcised by the Revenue after four years, it required the sanction of the Commissioner even though reopening could be made up to eight years. If it was done after the expiry of eight years and even though it could be done for a period of sixteen years after the expiry of eight years in cases coming under clause (ii), it could be done only with the approval of the Board and not otherwise. Therefore, the scheme of these provisions clearly indicated to have been provided for protecting the interest of the assessee when reopening after four years under section 149(1)(a)(i) and (ii), respectively, and not empowering the Revenue to overcome the embargo provided under clause (b) of section 149(1). Now, so far as the amended provision is concerned, on a comparison between these two provisions, it does not appear that there has been any substantial change in the principle or the scheme envisaged either under the 1922 Act or the 1961 Act before April 1, 1989, and thereafter under the amended provision. The power to reopen is prescribed under section 147 with effect from April 1, 1989, in a little different manner from the earlier provisions. It has provided that reopening can be done in case ....
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....e (b) deals with cases other than those falling under section 143(3) or section 147 with which we are not concerned. By reason of sub-section (2) of section 149, section 149(1) is subject to section 151. Under section 151(1), no notice under section 148 for reopening of assessment under section 147 shall be issued by an Assessing Officer below the rank of the Assistant Commissioner unless the Deputy Commissioner is satisfied on the reasons recorded by such Assessing Officer that it is a fit case for issue of such notice. By a proviso added to sub-section (1) of section 151, it is prescribed that no notice shall be issued after the expiry of four years from the end of the relevant assessment year unless the Chief Commissioner or Commissioner is satisfied on the reasons recorded by the Assessing Officer that it is a fit case for the issue of such notice. Whereas sub-section (2) deals with cases other than those falling under sub-section (1), we are not concerned with such cases. Thus, we note that in substance and principle there seems to be no change in the scheme as it stood prior to April 1, 1989. The cosmetic changes introduced on April 1, 1989, have not effected any substantial....
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.... be taken. If no action can be taken, no notices can be issued. If after the expiry of four years on certain conditions action can be taken, then only notices can be issued. When notices can be issued, then only section 149 can become operative. When the action is permissible, notice can be issued under section 148. But when action cannot be taken but for the exceptional conditions, then the restriction for issuing notice under section 148, as provided in section 149(1)(a) shall come into play. It also forbids issuing of notice after four years unless it comes under sub-clauses (ii) and (iii) to bring an end period of seven years and ten years, respectively. The distinction between sub-clauses (ii) and (iii) itself makes the scheme clear that it would not be useful to reopen a case under sub-clause (ii) after the expiry of four years unless the income escaped amounts to Rs. 50,000 or more. Similarly, it would not be useful to reopen a case under sub-clause (iii) after the expiry of seven years unless the amount of escaped income is Rs. 1 lakh or more. Thus, section 149(1)(a)(i) restricts the application of the second part of the proviso to section 147 to the extent as indicated in ....
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....viso, which qualifies the principal section, The qualification is expressed in mandatory form. It has used the expression "no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year". Therefore, it is a question of action. The decision to issue notice and recording of reasons before issuing the notice are actions within the meaning of the proviso to section 147 for the purpose of exercising jurisdiction under section 147. Therefore, such action cannot be taken after the expiry of four years unless the four contingencies in the proviso to section are in existence. Whereas section 149 is a provision relating to issue of notice which provides for mode or manner for exercising the power under section 147. Section 147 is the provision, which provides the power or authority on the Assessing Officer to reopen the assessment or reassess. The time stipulated under section 149 is not the time for reopening an assessment. That is the time for issuing the notices. The proviso prescribes limit of four years in respect of cases other than those covered under the four contingencies and no period of limitation has been provided for cases....
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....tead it had come before this court to challenge the same in the writ proceedings. Therefore, this case attracts the mischief excepted in the proviso to section 147. Therefore, the writ petition should fail. This proposition does not carry any substance. Here the very jurisdiction or authority to issue the notices under section 148 has since been challenged. We are to deal with a situation at the threshold of issuing of the notices, viz., at a stage prior to the issuance of the notices or a stage leading to the decision to issue the such notices, or, in other words, to a situation that empowers the authority to assume the jurisdiction to issue the notices under section 148. It is a stage before the situation to respond arises. Therefore, a stage after the issuance of the notices would not be relevant for the purpose of section 147 if there is failure to respond to such notices. There is no allegation of the assessees' failure to respond to any notice issued earlier. That apart, the question of failure to respond to a notice under section 148 arises only after a notice is validly issued under section 148. A notice under section 148 is a prelude to the reopening of an assessment wit....
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.... on the materials produced that is relevant for the Assessing Officer. Such inference is not dependent on the understanding of the law of the assessee or the claim made by it. Therefore, there is no scope for bringing this case within the scope and ambit of non-disclosure of materials fully and truly. The very statement made in the affidavit by the Revenue discloses that it had proposed to reopen the assessment only on the basis of the information derived by it from the decision in N.C. Budharaja's case [1993] 204 ITR 412 (SC), not on the basis of anything else. As such the question of four years embargo cannot be overcome by the Revenue in respect of Simplex Concrete Piles (India) Ltd. In respect of Geo Miller and Co., Ltd., the assessment was sought to be reopened for the years 1985-86 to 1989-90 by the notice issued under section 147 on July 29, 1994, on the same ground, namely, the information derived from N.C. Budharaja's case [1993] 204 ITR 412 (SC), to the extent that the assessee cannot be termed as an industrial undertaking entitling it to the benefit of deduction under section 32AB and section 80HH. In N.C. Budharaja's case [1993] 204 ITR 412 (SC), it has been held afte....
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....facts or law, should be drawn. Indeed, when it is remembered that people often differ as regards what inferences should be drawn from given facts, it will be meaningless to demand that the assessee must disclose what inferences-whether of facts or law-he would draw from the primary facts." Dr. Pal has relied on the decision in Raj Kumar Bapna v. Union of India [2001] 251 ITR 802 of the Rajasthan High Court. Dr. Pal then relies on the decision in Tantia Construction Co. Ltd. v. Deputy CIT [2002] 257 ITR 84 (Cal), which had followed the decision in N.C. Budharaja's case [1993] 204 ITR 412 (SC) and had held that unless there is any failure on the part of the petitioner to disclose fully and truly any material facts there is no scope for reopening a case after the expiry of four years. Dr. Pal then relies on the decision in Mahanagar Telephone Nigam Ltd. v. Chairman, CBDT [2000] 246 ITR 173 (Delhi) which also proceeded on the same basis that it cannot be done after four years except on the assessee's default. Dr. Pal then relies on the decision in Raymond Woollen Mills Ltd. v. ITO [1999] 236 ITR 34 (SC), where a similar view was taken. Then Dr. Pal relies on the decision in N. Mangath....
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.... ITR 174 (Nag); D.R. Dhanwatay v. CIT [1956] 29 ITR 257 (Nag) and Asghar Ali Mohammad Ali v. CIT [1964] 52 ITR 962 (All), or that a statute had been passed after he made the original assessment. The decision of a higher authority under this Act,--e.g., on the question as to which an assessable entity is chargeable in respect of a particular income, or whether the income is chargeable for a particular year, or what is the correct method of computing income, or whether a receipt is income or capital gain, or whether an expenditure is on revenue or capital account, or whether a firm is genuine, may also constitute 'information'. On the strength of such "information", action may be taken under this section". This proposition is an accepted proposition of law. There is no quarrel with the same. It is the question as to how the same has to be applied in the present case. The decision of N.C. Budharaja and Co.'s case [1993] 204 ITR 412 (SC), is definitely an information on the basis whereof the assessment can be reopened within four years from the end of the assessment year and not after without the assessee's default. We have already discussed the legal proposition having regard to the ....
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.... the Income-tax Officer may proceed under clause (b),... The basic assumption in the cases reported in P.R. Mukherjee v. CIT [1956] 30 ITR 535 (Cal); Kantamani Venkata Narayana and Sons v First Addl. ITO [1967] 63 ITR 638 (SC) and Mriganka Mohan Sur v. CIT [1974] 95 ITR 503 (Cal) is that it is possible to form alternative beliefs...He may believe that the escapement was due to omission or failure of the assessee to disclose fully or truly all material facts. He may also believe that even if there was no failure or omission on the part of the assessee, the new facts compose information in his possession which call for reassessment of escaped wealth or income." In the facts and circumstances of this case, there is nothing on record to attract the assessee's default ground. Therefore, this case also does not help Mr. Som. For all these reasons, we agree with the contention of Dr. Pal and are unable to persuade ourselves to accede the proposition advanced by Mr. Som and Mr. Ghosh. In our view, the order of the learned single judge has not reflected in the admitted facts and circumstances as discussed above. Though the proposition of law has been correctly laid down. But the law does....