Income Tax Appellate Tribunal - Jodhpur
Om Prakash Pandya vs Income Tax Officer on 19 April, 2007
Equivalent citations: (2007)110TTJ(JODH)135
ORDER
R.S. Syal, A.M.
1. These four appeals by the assessee arise out of the common order passed by the learned CIT(A) on 20th Dec, 2006 in relation to the asst. yrs. 1986-87, 1987-88, 1988-89 and 1989-90. Since all these appeals are based on similar facts, I am, therefore, proceeding to dispose them of by this consolidated order for the sake of convenience.
Asst. yr. 1986-87
2. Briefly stated, the facts of this case are that the order passed by the learned CIT(A) on an earlier occasion was set aside by the Tribunal and the matter of examining the validity of reassessment proceedings was restored to his file. Pursuant to that, the learned CIT(A) took up the hearing only against the validity of the initiation of reassessment as directed by the Tribunal vide its order dt. 31st March, 2005. In the fresh proceedings, he took note of the fact that the AO has recorded reasons for reopening on 16th July, 1990, which read as under:
Since the assessee did not file his return of income for the year under consideration, notice under Section 148 of the IT Act, 1961 issued to the assessee. The escaped income exceeds Rs. 50,000.
It was claimed on behalf of the assessee that he had furnished return under the Amnesty Scheme prior to the issuance of notice under Section 148 and hence notice was not valid. The learned CIT(A) did not accept the assessee's contention on the ground that the return filed under Amnesty Scheme cannot be treated at par with the regular return filed in the normal course. He noted that this scheme was brought out by the Finance Ministry for unearthing black money by way of giving exemption to interest and penalty provisions. He, therefore, did not accept the assessee's contention and upheld the initiation of reassessment proceedings.
3. The learned Counsel for the assessee contended that the learned CIT(A) erred in ignoring the return filed by the assessee on 31st March, 1987. My attention was drawn towards paper book pp. 10 and 11, being copy of acknowledgement of the return under Amnesty Scheme and also computation of total income at Rs. 11,489. While referring to Circular No. 423 and other circulars relevant to the Amnesty Scheme, copies placed at p. 53 onwards of the paper book, it was contended that there was nothing in the scheme to suggest the return filed under it should be viewed any differently from the normal return filed. It was, therefore, contended that the reassessment proceedings be quashed. In the opposition, the learned Departmental Representative relied on the impugned order. He could not draw my attention towards any material/literature qua the Amnesty Scheme, which differentiated the regular return filed voluntarily vis-a-vis that filed under Amnesty Scheme.
4. After considering the rival submissions and perusing the relevant material on record, it is observed from p. 17 of the paper book, being copy of the order-sheet entry of the AO for the year under question that the notice under Section 148 was issued on the ground that the assessee had not filed his return of income for the year in question. The said reasons have been extracted above verbatim. From here, it becomes clear that the only reason for issuance of notice under Section 148 was that the assessee had not filed his return of income for the relevant assessment year. As against this, it is found that the return was filed by the assessee for the relevant year under Amnesty Scheme on 31st March, 1987 declaring net taxable income at Rs. 11,489. Copy of acknowledgement of this return leaves nothing to doubt that the said return was filed more than three years prior to the date of issuance of notice. The learned CIT(A) has not accepted the assessee's claim on the ground that the return filed under Amnesty Scheme cannot be equated at par with the return voluntarily filed. I am unable to appreciate the view point of the learned first appellate authority on the ground that the return filed and acted upon under Amnesty Scheme, is a valid return under law. How it can be treated as non est is anybody's guess. Once it is proved that the return filed by the assessee for the year under question was already available with the Revenue, then the initiation of reassessment proceedings on the ground that the assessee had not filed his return of income for the year, cannot be upheld. As this was the sole reason for initiation of reassessment proceedings, in my considered opinion, such proceedings are to be annulled on the ground of non-existence of such reasons. The natural corollary that follows from the quashing of reassessment is that the proceedings flowing from such an invalid initiation cannot stand.
5. In the result, the appeal is allowed.
Asstt. yr. 1987-88
6. In this year also, the learned CIT(A) took up the matter of initiation of reassessment proceedings on the direction of the Tribunal as discussed above. Facts of this year and subsequent two years are different from asst. yr. 1986-87 discussed above inasmuch as the assessee had not furnished any return prior to the issuance of notice under Section 148 for these three years. In the same manner, the AO issued notice under Section 148 after recording similar reasons on 16th July, 1990. The learned CIT(A) upheld the initiation of reassessment proceedings on the ground that the assessee had not furnished return of income for this year and the asst. yr. 1985-86 was already reopened and on the belief that the income of the assessee for these years exceeded the total income chargeable to tax and for asst. yr. 1984-85 return showing income of Rs. 17,880 plus agricultural income exempt to the tune of Rs. 10,000 was already filed and assessed also under Section 143(1).
7. I have heard the rival submissions and perused the relevant material on record. Explanation 2(a) to Section 147 provides that where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax, shall be deemed to be cases where income chargeable to tax has escaped assessment. From here, it follows that in order to attract notice under Section 148, it is necessary that the assessee should not have furnished his return of income and such income including that of any other person in respect of which the assessee is assessable should exceed maximum amount which is not chargeable to tax. Thus, if the amount of income exceeds maximum amount which is not chargeable to tax and no return of income has been filed, it would be a case of income escaping assessment which would call for issuance of notice under Section 148 and consequentially passing of order under Section 147 would be valid. Admittedly, the first condition as stipulated in Clause (a) of Explanation to 147 stands satisfied inasmuch as no return of income was furnished by the assessee prior to the notice. However, the second condition remains to be examined as per which income in respect of which the assessee is taxable should exceed maximum amount, which is not chargeable to tax. Admittedly, for asst. yrs. 1986-87 to 1989-90, the exemption limit is Rs. 18,000 and if income of the assessee is below such limit, then there is no need to file the return. Now, it is to be seen that what evidence was available with the Revenue to draw a conclusion or even infer that the income of the assessee was above the stipulated limit. The learned CIT(A) has noticed a fact that the income of the asst. yr. 1984-85 was shown by the assessee at Rs. 17,880 by way of regular return of income. The learned Authorised Representative has brought to my notice that the determination of income at this level was inaccurate and the proceedings under Section 154 were taken by which the arrears of salary not earlier bifurcated were divided and relief under Section 89(1), was claimed and allowed. Copy of the order under Section 154 is available at p. 5 of the assessment order in which it is mentioned that after grant of relief under Section 89(1) no tax demand will stand in assessee's account. It is further mentioned, "after proper verification it is found that relief under Section 89(1) has not been allowed. Now, it is allowed resulting in nil demand. Interest under Sections 139(8) and 217 also reduced to nil". Thus, it is clear that income for asst. yr. 1984-85 was below taxable limit. Return for next asst. yr. 1985-86 was filed by the assessee at an income of Rs. 8,130 and for asst. yr. 1986-87 at Rs. 11,489 in respect of which assessments were made under Section 143(1) accordingly. From the above material it becomes patently clear that income of the assessee for all the earlier years was below taxable limit. There is no other material on record from which the AO could gather that the income of the assessee for the year in question was above the taxable limit of Rs. 18,000. The learned CIT(A) has dealt with the income for asst. yr. 1984-85 at Rs. 17,880 and ignored the rectification proceedings carried out for this year which resulted into nil income for this year. In the like manner, he has also referred to the reopening of assessment for asst. yr. 1985-86. Here again, it is found that the facts have not been properly recorded inasmuch as reasons were recorded for asst. yr. 1985-86 as on 21st Dec, 1992, a copy of which is available at pp. 14 and 15 of the paper book and the sanction was given by the Addl. CIT vide order dt. 4th Jan., 1993. Thus, it is manifest that notice for asst. yr. 1985-86 was issued for the first time in the year 1993, whereas the notice for the instant year was issued on 16th July, 1990 on the ground that escaped income exceeds Rs. 50,000 and the assessee has not furnished return of income. The issuance of notice for asst. yr. 1985-86 after gap of around three years from the date of notice in the year in question cannot be considered to be a valid ground. What is material to be seen is the validity of reasons recorded as on the relevant date. The subsequent events after recording reasons, which give strength to the reasons already recorded, are of no avail. Thus, in my considered opinion, the learned CIT(A) was not justified in upholding the validity of the initiation of reassessment for this year on the basis of reopening of the assessment for asst. yr. 1985-86 which event took place after a gap of around three years from the date of notice for this year. As admittedly for all the years prior to the instant year the income of the assessee was below the taxable income, in my considered opinion, there is absolutely no justification in reaching the conclusion that the income of the assessee exceeded the maximum amount, which was not chargeable to tax. I, therefore, hold that the condition laid down in Clause (a) of Expln. (2) to Section 147 is found lacking and hence the initiation of reassessment proceedings cannot be sustained. Resultantly, I order for quashing of the resulting order passed pursuant to such illegal initiation of reassessment.
8. In the result, this appeal is allowed.
Asst. yr. 1988-89
9. Here also, the facts are similar to asst. yr. 1987-88 inasmuch as same reasons were recorded by the AO on 16th July, 1990. The assessee filed his return of income for this year at Rs. 11,360, which is again below the taxable limit. Both the sides are agreeable that the facts and circumstances of this year are identical to asst. yr. 1987-88 discussed above. Following the view taken above, I quash the reassessment for this year also.
10. In the result, this appeal is allowed.
Asst. yr. 1989-90
11. Here also, both the sides are in agreement that the facts and circumstances for this year are also similar to those of earlier two years. Similar reasons were recorded by the AO on 16th July, 1990 and the income of the assessee returned for this year is again below the taxable limit. Following the view taken above, I quash the reassessment for this year also.
12. In the result, the appeal is allowed.