COMMISSIONER OF INCOME TAX Vs. GARDHARA SINGH

JUDGEMENT

(1.) FOLLOWING question of law has been referred for the opinion of this Court by the Tribunal, Amritsar Bench, Amritsar "Whether the Tribunal was legally right in holding that reassessment proceedings under s. 147(a) of the Act were invalid because in the consequential assessment no addition came to be made in respect of income which was stated to have had escaped assessment in the reasons recorded under s. 148(2) of the Act for the asst. yr. 1967 -68 - income of Rs. 31,700. After obtaining approval of the CIT, Jalandhar, the AO completed the assessment under s. 147(a) fresh reassessment was made at an income of Rs. 74,930 which included addition of Rs. 42,800. It was alleged that the aforementioned amount of Rs. 42,800 was unaccounted money belonging to the assessee which had been deposited with one Shri Daulat Singh. According to the AO, the assessee had deposited the aforementioned amount with one Daulat Singh which is shown from the material recovered from his (Daulat Singh) premises. The AAC while passing order under s. 250(6) of the Act categorically held that the reasons recorded for re -opening assessment under s. 147(a) of the Act were different and the assessment has been made on the basis of some other reasons. The Tribunal has placed reliance on para 4 of the order of the AAC, which reads as under :

(2.) "I have given a careful consideration to the facts and circumstances of the case. I have also scrutinised the reasons recorded for the re -opening of assessment under s. 147(a). From the reasons recorded I find that the original assessment was reopened because the appellant's share in the unaccounted income of the company called M/s New Samundri Transport Co. (P) Ltd., Ferozepur of which the appellant was a shareholder was required to be added which had escaped the assessment at the time of original assessment. There is no mention about the unaccounted deposit of Rs. 42,800 allegedly kept by the appellant with Shri Daulat Singh. It is not known as to how it struck the ITO after the notice under s. 148 had been issued that the amount of Rs. 42,800 was also required to be added to the income of the appellant. Interestingly enough, no addition on account of the appellant's share in the unaccounted income of the said company has been made to the income for which purpose the original assessment was re -opened under s. 147(a). In my opinion, the reassessment proceedings under s. 147(a) undertaken by the ITO was not valid in the eye of law and hence the order passed by the ITO making an addition at Rs. 42,800 is unsustainable. The order is therefore quashed."

(3.) IT is well -settled proposition of law that proceedings under s. 147(a) of the Act could be initiated on specific reasons which are required to be confronted to the assessee. It is further well -settled that reasons for framing the reassessment cannot be different than the one which constituted the basis for initiation of proceedings under s. 147(a) of the Act. In that regard, reliance may be placed on the observations of Hon'ble the Supreme Court in the case of CIT vs. Sun Engineering Works (P) Ltd. (1992) 107 CTR (SC) 209 : (1992) 198 ITR 297 (SC). The view of the Hon'ble Supreme Court emerges from the following observations : ".... in proceedings under s. 147 of the Act, the ITO may bring to charge items of income which had escaped assessment other than or in addition to that item or items which have led to the issuance of the notice under s. 148 and where reassessment is made under s. 147 in respect of income which has escaped tax, the ITO's jurisdiction is confined to only such income which has escaped tax or has been underassessed and does not extend to revising, reopening or reconsidering the whole assessment or permitting the assessee to reagitate questions which had been decided in the original assessment proceedings. It is only the underassessment which is set aside and not the entire assessment when reassessment proceedings are initiated. The ITO cannot make an order of reassessment inconsistent with the original order of assessment in respect of matters which are not the subject -matter of proceedings under s. 147...." (p. 320)