Punjab-Haryana High Court
Commissioner Of Income Tax vs Smt. Binda Devi on 15 February, 2005
Equivalent citations: (2005)197CTR(P&H)447
Author: Viney Mittal
Bench: Viney Mittal
JUDGMENT
1. On an application filed by CIT, Rohtak, under Section 256(1) of the IT Act, 1961 (for short, 'the Act'), the Income-tax Appellate Tribunal (for short, 'the Tribunal') has referred the following question of law for the opinion of this Court :
"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in confirming the order of the learned Dy. CIT(A), who cancelled the assessment made by the AO after reopening the case under Section 147 of the IT Act, 1961 ?"
2. The original assessment in the assessee's case for the year 1985--86 was completed by the AO under Section 143(1) of the Act. After some time, notice dt. 8th May, 1987, was issued under Section 148 for reopening the assessment. This was done because the AO was of the opinion that the investment in the purchase of National Saving Certificates has been made after raising loans and not out of the income chargeable to tax, as was thought earlier. The assessee filed reply stating therein that the original return may be treated as a response to the notice. On 25th May, 1987, the AO referred the issue regarding valuation of the building constructed by the assessee to the Departmental Valuation Officer. After considering the report of Departmental Valuation Officer, the AO vide his order dt. 30th March, 1988, reassessed the income of the assessee at Rs. 94,670. The Dy. CIT(A), Rohtak, set aside the reassessment on the ground that mere change of opinion by the AO was not sufficient for invoking the provisions of Section 147 read with Section 148 of the Act. The appellate order (was) confirmed by the Tribunal and the appeal filed by the Revenue was dismissed.
3. We have heard Shri Rajesh Bindal, learned counsel for the Revenue, and Shri Avneesh Jhingan, learned counsel for the assessee, and perused the record.
4. The question whether mere change of opinion by the AO could be made a ground for reassessment by invoking the provisions of Section 147 of the Act is no longer res integra and must be treated as settled by the judgments of the Supreme Court in Calcutta Discount. Company Ltd. v. ITO and Anr. and Ganga Saran & Sons (P) Ltd. v. ITO and Ors. . In CIT v. Kalvinator of India Ltd. (2002) 256 ITR 1 (Del)(FB), a Full Bench of Delhi High Court after considering the various judgments of the Supreme Court and different High Courts laid down the following propositions :
"The scope and effect of Section 147 as substituted w.e.f. 1st April, 1989, by the Direct Tax Laws (Amendment) Act, 1987, and subsequently amended by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1st April, 1989, as also of Sections 148 to 152 have been elaborated in Circular No. 549, dt. 31st Oct., 1989. A perusal of Clause 7,2 of the said circular makes it clear that the amendments had been carried out only with a view to allay fears that the omission of the expression "reason to believe" from Section 147 would give arbitrary powers to the AO to reopen past assessments on a mere change of opinion. It is, therefore, evident that even according to the CBDT a mere change of opinion cannot form the basis for reopening a completed assessment.
An order of assessment can be passed either in terms of Sub-section (1) of Section 143 or Sub-section (3) of Section 143. When a regular order of assessment is passed in terms of the Sub-section (3) of Section 143, a presumption can be raised that such an order has been passed on application of mind. It is well known that a presumption can also be raised to the effect that in terms of Clause (e) of Section 114 of the Indian Evidence Act, 1872, judicial and official acts have been regularly performed. If it be held that an order which has been passed purportedly without application of mind would itself confer jurisdiction upon the AO to reopen the proceeding without anything further, the same would amount to giving a premium to an authority exercising quasi judicial function to take benefit of its own wrong. Hence, it is clear that Section 147 of the Act does not postulate conferment of power upon the AO to initiate reassessment proceedings upon a mere change of opinion."
5. In CIT v. Atlas Cycle Industries , a Division Bench of this Court confirmed the order passed by the Tribunal cancelling the order of reassessment on the premise that the grounds on which the proceedings for reassessment were initiated were non-existent.
6. Following the law laid down in the aforementioned cases, we answer the question referred by the Tribunal in the affirmative, i.e., in favour of the assessee and against the Revenue.