TaxTMI 
TaxTMI 
2000 (5) TMI 163
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....t as HUF (Specified). He took cognizance of a statement which was procured by the Income-tax Officer after the conclusion of the assessment proceedings and appeal proceedings and that too, no opportunity was ever given to the appellant for rebutting the same, thus denying elementary principle of Income-tax (Appeals) is bad in law. 3. Without prejudice to above, it is submitted that expenses allowed by the Commissioner of Income-tax (Appeals) are very much on the lower side. These should be enhanced suitably." 2. The Revenue has also filed appeals for the assessment years 1985-86 and 1986-87 against the order of the CIT(A) dated 12-11-1992 and the assessee has filed cross objections for the assessment years 1985-86 and 1986-87. The grounds taken by the Revenue in their appeals are as under: ITA No. 129/93 "1. That on the facts and in the circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 6,70,895 made on account of capital gain on enhanced compensation. 2. That on the facts and in the circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 27,940 made on account of income from undisclosed sources." ITA No. ....
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....; 1979-80 1,18,139 1980-81 1,18,139 1981-82 1,18,139 1982-83 1,18,139 1983....
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.... Officer discussed this issue in para-3 of the order which is reproduced as follows: "3. Assessee's objection in toto has been mentioned in the foregoing paras and needs not to be reproduced again. The assessee has stated that his case falls under section 147(b) of the Income-tax Act, 1961. It may be mentioned that every case is an independent case. So, no cognizance can be taken whether any information disclosed in the individual status (Asst. file) or not. The relevant point is whether the omission was on the part of the assessee or on the part of the Assessing Officer owing to which the income of the assessee escaped assessment. The assessee never furnished the return of his income for the assessment year 1979-80 under section 139. The information came to the notice of the Assessing Officer that income chargeable to tax has escaped asst. The asst. of income occurred only due to non-furnishing of return of income by the assessee. The omission will, therefore, always fall on the part of the assessee in such cases within the meaning of section 147(a). The assessee has wrongly stated that the case fell under section 147(b). Time limit for making assessment under section 148 where....
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....llant had received interest in the status of HUF would not absolve the assessee from the omission or failure as mentioned in section 147(a) i.e. omission on the part of the assessee to make returns under section 139. No assessment could have been framed on the basis of letter of the assessee which was filed much after the time for filing the return under section 139 had expired. The Assessing Officer was therefore, justified in stating that proceedings were started under section 147(a) and not 147(b). In view of the foregoing discussion, the ground of appeal is rejected." Aggrieved against the finding given by the Ld. CIT(A), the appellant is in appeal before us. 4.4 The Learned Counsel of the appellant repeated similar arguments and pleaded that the information was already filed in the "individual return of the appellant, therefore, the assessment proceedings were initiated under section 147(b) and not under section 147(a). The Ld. Counsel pleaded that the appellant disclosed all primary and relevant facts much before the initiation of the assessment proceedings under section 147 vide his letter dated 26-7-1989 while submitting returns for the assessment years 1987-88 to 198....
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...., the section 147 which was having two different situations like section 147(a) and section 147(b) got replaced by different procedural sections. The Ld. D.R. pleaded that the assessment order itself is very clear and that the action was taken under the amended provisions because notice under section 148 was served on 9-3-1990 and to reopen the case, the Assessing Officer has taken permission from the Deputy Commissioner of Income-tax, Range-I, Jalandhar. The Ld. D.R. pleaded that the facts being so, then amended provisions of section 153 are to be applied to work out limitations for completing the assessment. He pleaded that according to the amended provisions, time limit for completion of assessment, reassessment or recomputation under section 147 is to be completed within two years from the end of the financial year in which notice under section 148 is served upon the assessee. The Ld. DR pleaded that the assessment has been completed within a period of two years, therefore, there is no infirmity and assessment has been passed well within the time provided under section 153. 4.7 We have heard both the sides and perused the records available before us. From the assessment orde....
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....t relates to Explanation-2 to section 147. Explanation-2(a) deals with the situation of the appellant-where no return of income has been furnished by the assessee although his total income under the Act during the previous year exceeded the maximum amount which is not chargeable to Income-tax, is deemed to be income escaped assessment. The appellant received enhanced compensation and that included the element of interest and in accordance with the decision of the Hon'ble Supreme Court, in case of Smt. Rama Bai, the income is to be taxed in the year when such interest accrued to the assessee. It is immaterial that the interest accrued to the assessee subsequent to the relevant assessment year. But the decision of the Hon'ble Supreme Court makes such income as taxable income of the previous year to which such accrued income relates. 4.9 The amendment to sections 147 to 153 made w.e.f. 1-4-1989 are procedural law and will have retrospective effect. Therefore, they will relate to all matters which were pending on 1st April, 1989 and afterwards. But will give power to Assessing Officer for opening or reopening earlier assessment years and after 1st April, 1989, earlier assessment yea....
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....s escaped assessment. Undoubtedly, under the new section, power to reopen assessment is much wider and can be exercised even if an assessee had disclosed fully and truly all material facts." The Hon'ble Rajasthan High Court in the case of Chandi Ram v. ITO [1997] 225 ITR 611 has held that decision of the Hon'ble Supreme Court would constitute information. While dealing with the issue whether the amended provisions of section 147 will be termed as procedural or substantive. The Hon'ble High Court has held as follows: "On the basis of the changes which have been brought by the Amendment Act of 1987, it is-evident that there are substantial changes. The question, therefore, arises as to whether such changes could be considered to be procedural or substantive. In accordance with law as it was in existence, the assessment on the same change of opinion was not possible and the assumption of jurisdiction was based on the information coming in possession of the Income-tax Officer, on the basis of which he could have reason to believe that the income chargeable to tax has escaped assessment to tax to it could have been on account of not fully and truly disclosing the material facts ne....
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....ken in accordance with the amended provisions. For making matters very clear, 7.14 is reproduced as follows: "7.14 Thus, from 1-4-1989, onwards, any action for opening or re-opening an assessment for the assessment year 1988-89 and earlier assessment years will have to be taken in accordance with the amended provisions. The following examples will clarify the position: (i) No notice under section 148 can now be issued for the assessment years 1973-74 to 1978-79 even if the escaped income is Rs. 50,000 or more in each year, although under the old provisions this could have been done with the Board's approval. (ii) Notice under section 148 can now be issued for any of the assessment years 1979-80 to 1981-82 if the following conditions are fulfilled:-- (a) In a scrutiny case i.e. where an assessment order had been passed under section 143(3) or 147], if the escaped income is Rs. 1 lakh or more in each year and approval of the Chief Commissioner of Income-tax or Commission has been obtained. (b) In a non-scrutiny case, if the escaped income is Rs. 50,000 or more in each year, and approval Of the Deputy Commissioner has been obtained. (Under the old provisions, there w....
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....rovisions is that it included both the options provided in 147(a) as well as in 147(b). The amended provisions have wider scope regarding reason to believe as well as escapement of income. The section provides Assessing Officer with the powers to frame a belief from the examination of record and information which he receives and if prima facie he satisfies himself that the taxable income has escaped assessment then he can take action under section 147. This view has been held by the Hon'ble Gujarat High Court in the case of Praful Chunilal Patel v. M.J. Makwana, Asstt CIT [1999] 236 ITR 832. In the case of the appellant not only there was information available with the Assessing Officer but also Explanation 2(a) to section 147 is clearly attracted. With the amendment to section 147, section 153 has also been amended and according to the amended provisions section 153(2) speaks as follows: "No order of assessment, reassessment or recomputation shall be made under section 147 after expiry of two years from the end of the financial year in which notice under section 148 was served." These amended provisions are effective from 1-4-1989. In accordance with these amended provisions....