CIT Vs. CHANDRASEKHAR BALAGOPAL

JUDGEMENT

(1.) REVENUE is in appeal before us challenging the order of the Tribunal whereunder they have cancelled the income escaping assessment completed on the respondent under Section 147 of the Income Tax Act on the ground that the officer has no jurisdiction to make the assessment. We have heard senior standing counsel appearing for the appellant -Revenue and senior counsel Sri. Aravind P. Dattar appearing for the respondent -assessee.

(2.) DURING the previous year, relevant for the assessment year 2000 -01, the respondent -assessee received an income of Rs. 3.9 crores under restrictive covenant from a Japanese company which took over the business of an Indian company of which respondent was the managing director. The assessee initially treated the receipt from the foreign company as his income and paid advance tax of Rs. 63,94,000. Later, the assessee remitted an amount of Rs. 5 lakhs towards self -assessed tax. The taxes so paid are in addition to the payment of TDS in the assessee's account that is Rs. 63,347. Even though huge amount towards advance tax and self -assessed tax was paid by the assessee, while filing the return for the assessment year 2000 -01 on 31st Aug., 2000 the assessee returned an income of only Rs. 17,79,580 and claimed refund of the tax paid on the receipt from the foreign company that is Rs. 3.9 crores. The assessing officer, however, while scrutinising the return noticed an anomalous situation whereby the assessee who, initially conceded income by paying advance tax, has claimed exemption on the same while filing return. The assessing officer issued intimation under Section 143(1)(a) and thereafter reopened the assessment, and completed income escaping assessment under Section 147 including the amount received from the foreign company as income. According to the assessee, the proceedings stated to have been completed by the assessing officer under Section 143(1)(a) was not served on him. Even though the assessee challenged the revised assessment in first appeal, the assessee did not take the contention that reassessment was without jurisdiction. On merits, the Commissioner (Appeals) dismissed the appeal. The assessee filed second appeal before the Tribunal and in the appeal, the assessee raised additional ground on jurisdiction of the officer to make income escaping assessing under Section 147 of the Act. Since additional ground raised in appeal was only on pure question of law, the Tribunal entertained the additional ground so raised and considered the same and held that assessing officer had not issued intimation to the assessee under Section 143(1)(a) of the Act. The Tribunal further noticed that since the assessee had a claim for refund, the officer was bound to issue intimation under Section 143(1)(ii) of the Act, which was not done in this case. According to the Tribunal, since there was no processing of return under Section 143(1)(a) the officer was barred from making an income escaping assessment under Section 147 of the Act. The Tribunal while deciding the case in favour of the assessee relied on the decision of the Supreme Court in CIT v. Ranchhoddas Karsondas : (1959) 36 ITR 569 (SC) and that of the Special Bench of the Tribunal in Motorola Inc. v. Dy. CIT : (2005) 96 TTJ (Del)(SB) 1 : (2005) 95 ITD 269 (Delhi)(SB).

(3.) SINCE counsel appearing for the revenue sought to rely on the income escaping assessment under Section 147 based on amended provision, we extract hereunder Section 147 after the amendment which is the provision applicable to the relevant assessment year: