Commissioner Of Income-Tax ... vs Industrial Finance Corporation ...
2000 Latest Caselaw 1017 Del

JUDGMENT

Arijit Pasayat, C.J.

1. Pursuant to the direction given by this court under Section 256(2) of the Income-tax Act, 1961 (in short the "Act"), the following question has been referred for the opinion of this court :

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the Income-tax Officer had no jurisdiction under Section 147(b) to reopen the assessment in this case ?"

2. The factual position as indicated in the statement of the case is as follows :

3. The assessed, a statutory corporation, was set up as a Government undertaking for providing medium and long-term finance to industries. For the assessment year 1962-63, to which the present dispute relates, the accounting period ended on June 30, 1961. After the original assessment was completed on January 14, 1974 (?), proceedings for reopening of the assessment were initiated under Section 147 of the Act. Such action was questioned by the assessed on the ground that all the relevant aspects were disclosed before the original assessment was completed, they were duly considered by the Assessing Officer and the subsequent proceeding was initiated only on mere change of opinion. The Assessing Officer did not accept the plea and made assessment under Section 143(3) read with Section 147(b) of the Act. The matter was challenged in appeal before the Appellate Assistant Commissioner of Income-tax (in short the "AAC"). The said authority was of the view that the provisions of Section 147 of the Act were not attracted and the subsequent assessment made by order dated January 22, 1968, was without jurisdiction. The Revenue carried the matter in appeal before the Tribunal. By its order dated July 19, 1973, the Appellate Assistant Commissioner's conclusions were affirmed. An application under Section 256(1) of the Act was not entertained. On being moved under Section 256(2) of the Act, this court by order dated April 6, 1974, directed the Tribunal to refer the above question along with the statement of the case and that is how the reference has been made.

4. Learned counsel for the Revenue submitted that the conclusions of the Tribunal to the effect that there must be existence of some information emanating from an external source after the original assessment was

completed is not the correct exposition of law. Further, it is submitted that there was no application of mind to the materials on record and, therefore, it cannot be said to be a case where there was change of opinion. Learned counsel for the assessed, on the other hand, submitted that the Assessing Officer on consideration of the materials on record, which were disclosed by the assessed, had come to a definite finding and, therefore, the Appellate Assistant Commissioner and the Tribunal were justified in holding that this was a case of mere change of opinion.

5. In order to appreciate the rival submissions, it is necessary to take note of the findings recorded by the Appellate Assistant Commissioner and the Tribunal. The Appellate Assistant Commissioner held with reference to the records that the Income-tax Officer had in his own hand written "capital gains" against the description of the profit as "profit on sale of investments". Further, the Assessing Officer himself had bifurcated the capital gains to be short-term capital gains and other gains. This itself, according to the Appellate Assistant Commissioner, was sufficient to show that the Assessing Officer at the time of the original assessment had considered the materials on record. The Tribunal recorded as one of its conclusions to the effect that the information must come from an external source. The same is not a correct position in law. But the factual position as was noted by the Appellate Assistant Commissioner as well as by the Tribunal, clearly goes to show that the assessed had not failed or omitted to disclose the primary facts and the Income-tax Officer had considered the entire material. That being the position, the Tribunal's conclusions are in order. Accordingly, we answer the question in the affirmative, in favor of the assessed and against the Revenue.