Commissioner Of Income-Tax v. Dr. Devendra Gupta

1. These five appeals arise out of the common judgment of the learned Tribunal dated September 8, 2005. The appeals relate to different assessment years, starting from 1994-95 to 1998-99. The appeals were admitted on different dates, by framing the common questions of law being:

“(i) Whether on the facts and circumstances of the'case, the Tribunal was justified in adjudicating the validity of reasons recorded by the Assessing Officer at the time of assuming jurisdiction under section 147 with reference to the ultimate finding reached by the Assessing Officer notwithstanding holding that the information received from the DDI constitutes valid material on the basis of which required satisfaction can be reached by the Assessing Officer for assuming jurisdiction under section 147?

(ii) Whether on the facts and in the circumstances of the case the learned Tribunal was justified in quashing the reassessment and the consequential additions made therein holding that the passing of the order under section 143(3) read with section 147 assessing the other income based on the assessee's alleged statement before the DDIT because it did not form part of reasons recorded under section 148?”

2. Though two separate questions have been framed, in substance they comprehend the common question. The precise controversy is that reasons were recorded for assuming certain income to have escaped assessment, however during reassessment proceedings, that income was not found to have escaped assessment, but then on the basis of certain other material, certain other incomes were found to have escaped from assessment to tax, and therefore, reassessment had been made.

3. As such, the question precisely is as to whether in a case where despite existence of material on record to arrive at a conclusion about escapement of certain income from assessment, in the reassessment proceedings where such income is not found to have escaped assessment, it is open to the Assessing Officer to complete the reassessment proceedings, by finding some other income, to be liable to be subjected to tax, which is found by the Assessing Officer, in the reassessment proceedings, to have been required to be taxed in the original assessment.

4. In our view, this question cannot be said to be any more resintegra, in view of the judgment of this court dated May 20, 2008, rendered in Income-tax Appeal No. 65 of 2006, Commissioner Of Income-Tax v. Ram Singh Garg, [2008] 306 ITR 343 (Raj), wherein the judgment of the Punjab and Haryana High Court, in Atlas Cycle's case (CIT v. Atlas Cycle Industries, [1989] 180 ITR 319 (P&H)) was considered and followed. Various aspects of the language of section 147 were examined in detail, and it was held as under (page 353):

“If considered on that principle, leaving apart for the moment, the aspect of interpretation of the word ‘and’ as ‘or’, the existence of the word ‘also’ is of a great significance, being of conjunctive nature, and leaves no manner of doubt in our opinion, that it is only when, in proceedings under section 147 the Assessing Officer, assesses or reassesses any income chargeable to tax, which has escaped assessment for any assessment year, with respect to which he had ‘reason to believe’ to be so, then only, in addition, he can also put to tax, the other income, chargeable to tax, which has escaped assessment, and which has come to his notice subsequently, in the course of proceedings under section 147.

To clarify it further, or to put it in other words, in our opinion, if in the course of proceedings under section 147, the Assessing Officer were to come to the conclusion, that any income chargeable to tax, which, according to his ‘reason to believe’, had escaped assessment for any assessment year, did not escape assessment, then, the mere fact, that the Assessing Officer entertained a reason to believe, albeit even a genuine reason to believe, would not continue to vest him with the jurisdiction, to subject to tax, any other income, chargeable to tax, which the Assessing Officer may find to have escaped assessment, and which may come to his notice subsequently, in the course of proceedings under section 147.”

5. We have not been shown any contrary view to have been taken, whether by the hon'ble Supreme Court or by any other High Court, so far.

6. In that view of the matter, following the aforesaid judgment in Ram Singh's case, [2008] 306 ITR 343 (Raj), the questions are answered against the Revenue, and in favour of the assessee.

7. Consequently, the appeals are dismissed.