THEKKANATTU FIRMS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE appellant is an unregistered firm doing abkari business. THE appellant did not file any return for purposes of assessment under the Income-tax Act, 1961, inter alia, for the year 1973-74 until the search of the residential premises of the managing partner in September, 1974, after which the appellant filed its return for the year 1973-74. An assessment was completed on the basis of this return under Section 143(3) on March 31, 1976, on a total income of Rs. 1,14,000. This was reduced in appeal to Rs. 1,03,230. THE appellant had made a disclosure under the Voluntary Disclosure Scheme of the Income and Wealth Ordinance, 1975. In determining the amount of tax payable under the assessment, the amount of tax paid under this scheme was given credit. In the original assessment made on March 31, 1976, a copy of which is exhibit P-1, the Income-tax Officer did not levy any interest either under Section 159(8) or 217.

(2.) THE assessment was reopened under Section 147(a) to bring to tax an amount of Rs. 82,376 claimed as sales tax liability. THE reassessment was made on November 22, 1981 (exhibit P-2), and in completing it the Income-tax Officer levied interest of Rs. 43,628 under Section 139(8) and Rs. 49,816 under Section 217. This assessment was modified in appeal by the order, exhibit P-3, dated October 1, 1982, by which the Commissioner (Appeals) deleted the amount of sales tax liability to the extent of Rs. 79,688, sustaining the balance.

(3.) A large number of decisions were relied on by either side, the applicability of which, we feel, it is unnecessary to consider having regard to the view that we are taking. We shall, however, briefly refer to them in deference to the contentions raised on either side. We may state here that according to counsel for the Revenue an assessment under Section 147 is also a regular assessment as defined in Section 2(40), namely, an assessment made under Section 143 or 144. Counsel points out that once a notice is issued under Section 148 and the assessment is reopened, the further proceedings are under Section 143. He refers to the decision in Laxmi Narain Bhadani v. CIT [1948] 16 ITR 359 (Patna), which was confirmed on another point in Lakshminarain Bhadani v. CIT [1951] 20 ITR 594 (SC), where it was held that Section 34 of the 1922 Act requires issuance of notice for assessment and for that purpose the provisions of Section 23 also apply. Counsel also made reference to the decision of this court in Kerala Kaumudi (P.) Ltd. v. CIT [1990] 181 ITR 30, where it was held that once proceedings are initiated under Section 147, the assessment proceedings start afresh and the proceedings for assessment for that year will -be pending and will continue until a final order is rendered. When the assessment is reopened, Section 143(3) is attracted, bringing in its trail Section 144B as well, if the intended addition to the returned income is more than Rs. 1,00,000. The submission was that the reassessment being under Section 143, it was a regular assessment under Section 2(40), in the course of which interest under Section 139(8) could be levied.