Income-tax Appeals Nos. 19, 20, 31, 32, 37, 70 of 2007
Decided on September 21, 2007
JUDGMENT
1. All these appeals have been preferred by the Revenue under section 260A of the Income-tax Act, 1961. Appeals Nos. 19/2007, 20/2007, 31/2007 and 32/2007 pertaining to the assessment years 1991-92, 1993-94, 1994-95 and 1995-96, respectively, have been filed against the consolidated judgment dated June 9, 2006, of the Income-tax Appellate Tribunal, New Delhi (for short, the HAT) passed in I.T.A Nos. 1710 to 1713.D/D/2004. Appeal No. 70/2007 pertaining to the assessment year 1992-93 has been filed against the judgment dated November 2, 2006, of the Income-tax Appellate Tribunal passed in I.T.A No. 1577.Del of 2004 and Appeal No. 37/2007 pertaining to the assessment year 1993-94 has been preferred against the judgment dated March 9, 2006, of the Income-tax Appellate Tribunal passed in I.T.A No. 1399(Del)03. Vide the impugned judgment the Income-tax Appellate Tribunal has confirmed the order the Commissioner of Income-tax (Appeals) and dismissed the grounds taken by the Revenue. Since these appeals are based on common set of facts involving common question of law, therefore, they are being decided by one and common judgment. We will refer to the facts in I.T.A No. 20 of 2007 for brevity.
2. Briefly stated the facts of the case are that the assessee is a non-resident company engaged in the business of activities related to oil and gas exploration. The original assessments for the above assessment years were completed as under:
Assessment year
Assessment made under section
Date of order
Total income assessed Rs.
1991-92
143(3)
4-3-1994
2,72,96,943
1993-94
143(3)
21-2-1995
3,09,59,540
1994-95
143(3)
19-2-1997
1,77,00,620
1995-96
143(3)
19-2-1997
2,47,06,410
3. The said assessments were revised under section 154 and a tax rate of 65 per cent. (tax 50 per cent. + surcharge 15 per cent.) was applied for the assessment years 1991-92,1993-94 and 1994-95. Later on it was noticed by the Assessing Officer that since the assessee is a foreign company, therefore, rate of tax at 65 per cent. is applicable for the assessment years 1991-92,1993-94 and 1994-95 and 55 per cent. is applicable for the assessment year 1995-96. He, therefore, issued notices under section 148 on May 29, 2001, for the assessment years 1991-92, 1993-94 and 1994-95 and for the assessment year 1995-96 notice under section 148 was issued on February 8, 2002. In response, it was submitted by the assessee that the original return be treated as return filed in response to notice under section 148 of the Income-tax Act. The Assessing Officer after considering the assessee's submissions submitted in response to notice under section 143(2) completed the assessments on the same income as was assessed under section 143(3)/154 for the assessment years 1991-92, 1993-94 and 1994-95 and under section 143(3) for the assessment year 1995-96. However, he charged tax at the rate of 65 per cent. for the assessment years 1991-92,1993-94 and 1994-95 and at the rate of 55 per cent. for the assessment year 1995-96.
4. Appeals preferred against the order of the Assessing Officer were allowed by the Commissioner of Income-tax (Appeals) by holding that the conditions prescribed in the proviso to section 147 were not fulfilled by the Assessing Officer for initiating the proceedings under section 147/148 of the Income-tax Act. The Income-tax Appellate Tribunal also affirmed the order of the Commissioner of Income-tax (Appeals).
5. The Income-tax Appellate Tribunal having rejected the contentions of the Department in this regard, the Revenue has come up in appeal before us.
6. We have heard Sri Arvind Vashistha, learned standing counsel for the Department, and perused the record. Affidavit of service has been filed in each appeal except I.T.A No. 19/2007, but despite service none turned up on behalf of the respondents to contest the appeal.
7. The question which arises before us is as to whether, in the facts and circumstances of the case, the Income-tax Appellate Tribunal was justified in not affirming the order of assessment and confirming the order of the Commissioner of Income-tax (Appeals) by dismissing the appeal before it?
8. From the perusal of the facts it is clear that there was no fault of the assessee. Therefore, the Income-tax Appellate Tribunal and the Commissioner of Income-tax (Appeals) were right on the application of Explanation 2(c)(ii) of section 147 of the Income-tax Act. Even if it is deemed to be the escaped assessment within the meaning of Explanation 2(c)(ii) of section 147, then in view of the undisputed fact that there was no fault of the assessee, the delay could not be condoned. Limitation comes to an end even under the proviso appended to section 147. Limitation of four years had already been expired. Therefore, the amendment in the original assessment order was time-barred. We agree with the view taken by the Income-tax Appellate Tribunal.
9. Learned counsel for the Revenue vehemently argued that the limitation provided under the proviso is attracted in case of failure on the part of the assessee and the reassessment is required on that failure then limitation is only of four years, otherwise excluding the proviso there is no limitation for reopening of the assessment where such income has escaped assessment made at too low a rate. In other words, the submission of the Assistant Solicitor General is that reopening of assessment on account of failure on the part of the assessee is open only for reassessment within four years.
10. It is settled law that the proviso does not restrict the application of the main provision but are used to provide explanation or exception. Here the application of section is subjected to the proviso as the proviso is qualified by the words “provided that”. Therefore, by virtue of the proviso, the whole application of section 147 is dependent on the failure on the part of the assessee for the escaped assessment. It is not available where the fault is of the Assessing Officer. That could be corrected under section 154 where also limitation of four years is provided for its application. Therefore, even the correction, if not termed as reassessment, is also barred by time. It has been settled by the hon'ble apex court in the case of Ishikawajima-Harima Heavy Industries Ltd. v. DIT reported in [2007] 288 ITR 408 (SC); [2007] 8 RC 149; (2007) 3 SCC 481, that consideration of deeming provision depends on the object sought to be achieved by such legal fiction and here the escaped assessment made at too low a rate and for which failure is there on the part of the assessee, only then deeming provision will be attracted.
11. In view of our foregoing discussion, all these appeals preferred by the Revenue are dismissed. The judgment of the Income-tax Appellate Tribunal is affirmed. The question is answered against the Revenue and in favour of the assessee.