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1985 Supreme(Cal) 198
High Court Of Calcutta
Dipak Kumar Sen, Ajit Kumar Sengupta
SUNROLLING MILLS P.LTD - Appellant
Versus
INCOME-TAX OFFICER - Respondent
Appeal Nil And Matter No. 456 Of 1985
Decided On : 05/16/1985
A.K.ROY, M.L.BHATTACHARJI
The Income-tax Officer cannot invoke jurisdiction under Section 147(b) if he has information in his possession to form the belief that income has escaped assessment. Section 147 postulates that information must have come to the possession of the Income-tax Officer after he had passed the original assessment order and it is only on such information that the Income-tax Officer is entitled to act.
Headnote:
INCOME TAX - Section 147 - Reassessment - Jurisdiction - Conditions precedent - Information must have come to the possession of the Income-tax Officer after he had passed the original assessment order - Income-tax Officer cannot act on the basis of a change of opinion.
Fact of the Case:
The assessee challenged the notices issued under Section 148 of the Income-tax Act, 1961, for the assessment years 1978-79 to 1981-82, on the ground that they were without jurisdiction. The Income-tax Officer had reopened the assessments under Section 147(b), but the reasons recorded for the issuance of notices under Section 148 were that the assessee had not accounted properly for recovery out of waste materials.
Finding of the Court:
The court held that the impugned notices were without jurisdiction and must be set aside and quashed. The court found that the Income-tax Officer had not acted on the basis of any new information or facts that had come to his possession after the original assessment orders were passed. The court also found that the Income-tax Officer had sought to justify the reopening of the assessments under Section 147(a), but the reasons recorded under Section 148(2) did not satisfy the conditions precedent for assumption of jurisdiction under Section 147(a).
Issues: Whether the impugned notices under Section 148 were without jurisdiction.
Ratio Decidendi: The court held that the Income-tax Officer cannot invoke jurisdiction under Section 147(b) if he has information in his possession to form the belief that income has escaped assessment. Section 147 postulates that information must have come to the possession of the Income-tax Officer after he had passed the original assessment order and it is only on such information that the Income-tax Officer is entitled to act. If the information was already with him and he did not act on the basis of such information before the assessment was completed, then Section 147(b) would not permit him to apply his mind to the same assessment with a view to correct his own mistake. The Income-tax Officer cannot act on the basis of a change of opinion.
Final Decision: The court quashed the impugned notices under Section 148 for the assessment years 1978-79 to 1981-82 and the assessment orders and demand notices issued in pursuance thereof.
( 1 ) THIS appeal is directed against the judgment and order dated April 2, 1985, passed by Padma Khastgir J. in an application made under Article 226 of the Constitution by the appellant challenging the notices under Section 148 of the Income-tax Act, 1961, for the assessment years 1978-79 to 1981-82. The impugned notices under Section 148 were issued on October 13, 1982. The assessment proceedings pursuant to the said notices had been completed. Before the demand notices and assessment orders pursuant to the said reassessments for the said assessment years could be served upon the assessee, the assessee moved an application under Article 226 of the Constitution. The learned judge dismissed the writ application on the ground that the writ petitioner has adequate alternative remedy under the Income-tax Act, 1961, and as such the petitioner should not be allowed to invoke the writ jurisdiction.
( 2 ) AT the hearing before us, it has been contended by Mr. Anil Kumar Roy Chowdhury, learned counsel on behalf of the appellant that since the notices are without jurisdiction, the learned judge was not justified in dismissing the writ application in limine. The learned judge should have first considered whether the impugned notices under Section 148 were without jurisdiction or not. He had further submitted that no demand notice or assessment order has been served upon the appellant and as such the appellant cannot prefer any appeal against such assessments.
( 3 ) MR. M. L. Bhattacharjee, learned advocate on behalf of the respondents, has submitted that the reassessments had been completed after hearing the assessee on March 27, 1985. Thereafter, demand notices, challans and assessment orders were sent to the assessee on March 27, 1985, and the assessee moved this court on March 29, 1985. He had submitted that the appellant should prefer appeals against the assessments, if it is aggrieved and the appellate authority under the Income-tax Act is competent to go into the question relating to the jurisdiction of the Income-tax Officer to initiate the proceedings.
( 4 ) THE learned advocates appearing for the parties have suggested that this matter can be disposed of finally by us after looking into the records. At the suggestion of the parties, the records have been produced and we have perused the records.
( 5 ) THE assessments have been reopened in this case under Section 147 (b ). The reasons which have been recorded for the issuance of notice under Section 148 for each of the assessment years in question are in the following terms :"october 13, 1982 : As the assessee has not accounted for properly for recovery out of waste materials, I have reasons to believe that income arising out of that has escaped assessment. Hence, proceedings under Section 147 (b) are initiated. Issue notice under Section 148. (Sd.) Illegible. "
( 6 ) IT is now well-settled that the Income-tax Officer can invoke jurisdiction under Section 147 (b) if he has information in his possession to form the belief that income has escaped assessment. Section 147 postulates that information must have come to the possession of the Income-tax Officer after he had passed the original assessment order and it is only on such information that the Income-tax Officer is entitled to act. If the information was already with him and he did not act on the basis of such information before the assessment was completed, then Section 147 (b) would not permit him to apply his mind to the same assessment with a view to correct his own mistake. The Income-tax Officer cannot act on the basis of a change of opinion. The Income-tax Officer must have knowledge of any fact or law coming to his possession subsequent to the completion of the original assessment. The recorded reasons have been reproduced hereinabove. It has not been stated what is the source of information.
( 7 ) IN the original assessment order for the assessment year 1978-79, the assessing Income-tax Offic
