Madhya Pradesh High Court
Dr. Ravishanker Tapa vs Commissioner Of Income-Tax on 29 November, 1985
Equivalent citations: [1987]165ITR81(MP)
Author: J.S. Verma
Bench: J.S. Verma
JUDGMENT J.S. Verma, Actg, C.J.
1. This is a reference at the instance of the assessee, on a direction given by this court, under Section 256(2) of the Income-tax Act, 1961, to answer the following question of law, namely :
"Whether, on the facts and in the circumstances of the case, it was open to the assessee to agitate in reassessment proceedings under Section 147 of the Income-tax Act, that the share income from M/s. Motilal Dhannilal Tapa was the income of the joint family and was wrongly included in his individual income in the original assessment ?"
2. The material facts are these. The assessee is a medical practitioner. During the assessment year 1967-68, he was also a partner in a firm styled as M/s. Motilal Dhannilal Tapa, Mandla. The original assessment for this assessment year of the assessee was completed on March 7, 1968, on an income of Rs. 12,770 out of which Rs. 1,500 was his professional income. Thereafter, the Income-tax Officer reopened the proceedings under Section 147(a) of the Act on the basis of information received by him by issuing a notice under Section 148 of the Act. As a result of the reassessment made by the Income-tax Officer, the assessee's total income was raised to Rs. 22,160 out of which his professional income was assessed at Rs. 10,000. In the assessee's appeal to the Appellate Assistant Commissioner, the assessee contended that he had wrongly included the share income obtained as a partner of the firm, M/s. Motilal Dhannilal Tapa, Mandla, in his return as his income of an individual, and that it should have been excluded from the assessment on account of the fact that on his marriage in May, 1965, this income became the investment in the firm of the joint family consisting of himself and his wife. The Appellate Assistant Commissioner rejected the appeal. On further appeal, the Tribunal has upheld the conclusion reached by the Appellate Assistant Commissioner. The Tribunal has held that this matter not having been agitated by the assessee during the proceedings for the original assessment, the same could not be agitated at the time of reassessment under Section 147(a) of the Act.
3. Aggrieved by the above view taken by the Tribunal, the assessee applied for a reference under Section 256(1) of the Act and the same having been refused by the Tribunal, an application was made under Section 256(2) of the Act to this court and it is as a result of the direction of this court in Dr. Ravishanker Tapa v. CIT [1983] 139 ITR 862--Misc. Civil Case No. 652 of 1977 decided on April 4, 1980--that the Tribunal stated the case and referred the above question of law, arising out of the Tribunal's order.
4. The contention of the 'assessee is that in the proceedings for reassessment under Section 147(a), it is open to the assessee to point out the mistakes in the original assessment which were made to his detriment even though he did not make any grievance about it either in the proceedings for original assessment or thereafter in appeal. It is argued on this basis that the assessee is entitled to show, even though no such point was urged during the course of the original assessment, that the assessee's income as a partner of the firm should have been excluded from his income notwithstanding the fact that he included it in the income shown in the return and had also not advanced this argument in the original assessment proceedings. The question is whether the assessee has such a right in the reassessment proceedings under Section 147(a) of the Act ?
5. In our opinion, the expression "such income" used in Section 147 refers only to items of escaped income which are to be assessed or reassessed and this meaning equally applies to cases falling under Clause (a) as well as Clause (b) thereof. The indication, therefore, is that in the reassessment proceedings, the assessment or reassessment made of "such income" is of items of escaped income and not of the entire income afresh including the items for which the assessment was concluded and against which no grievance was made by the assessee either in the proceedings for original assessment or in an appeal. As earlier stated, this applies equally to cases both under Clause (a) and Clause (b) of Section 147. Similarly, to cases falling under both these clauses, the expression "subject to the provisions of Sections 148 to 153" equally applies. This means that the assessment or reassessment of "such income", i.e., the items of escaped income is subject to the provisions of Sections 148 to 153 under both these clauses.
6. The provision contained in Section 152(2) also has a significance in this connection. It applies only to cases where assessment is reopened in the circumstances falling under Clause (b) of Section 147 and not to cases falling under Clause (a) thereof. By Section 152(2), the assessee is given a right in the case of reassessment under Section 147(b) where no appeal, etc., has been filed by the assessee to claim that the proceedings for reassessment be dropped on the ground that he had been assessed on an amount or to a sum not lower than what he would be rightly liable for even if the income alleged to have escaped assessment had been taken into account, or the assessment or computation had been properly made. This is a clear indication that the assessee is given such a right only in cases falling under Section 147(b). It follows that, but for the provision contained in Section 152(2), the assessee would not have such a right even in cases falling under Section 147(b), and no such right having been given in cases of reassessment under Section 147(a), it is not permissible to read this right for the assessee much less the larger right claimed in this case by the assessee in a case falling under Section 147(a). The contrary view urged on behalf of the assessee would result in not only rendering Section 152(2) nugatory, but it would also result in a conflict with the provision for the simple reason that the common words used in Section 147 for Clauses (a) and (b) will mean differently in their application to the two clauses without any such indication by the Legislature. Obviously, the same words used to qualify and to apply to cases covered both under Clauses (a) and (b) cannot have a different meaning in application to the two clauses contained in Section 147.
7. It follows from the above discussion that not only the plain meaning of Section 147 negatives the assessee's contention but that result follows also from the specific provision made in Section 152(2) and the harmonious construction made giving full and proper effect to all these provisions.
8. Reference may now be made to some of the cases which were cited at the bar. The first case of the Supreme Court is V. Jaganmohan Rao v. CIT [1970] 75 ITR 373. In this case, the question was whether the entire escaped income could be taken into account after the assessment was reopened for a limited purpose only. It was held that reopening of the assessment results in the whole assessment proceedings starting afresh for the purpose of taking into account all items of escaped income. These observations were made in the context of items of escaped income alone and not in respect of any item not falling in that category.
9. The next decision is in Sun Engineering Works (P) Ltd. v. CIT [1978] 111 ITR 166 (Cal). This decision is based on V. Jaganmohan Rao's case [1970] 75 ITR 373 (SC). The facts of this case are clearly distinguishable. The original assessment proceedings initiated had ended by tiling; the case. On reopening the assessment by setting aside the previous underassessment, it was held that the whole assessment proceedings started afresh and there was no reason why the admitted loss left undetermined should not be recomputed. This decision cannot, therefore, be treated as an authority for the contrary view inasmuch as it was based on the reason that the item of loss having remained undetermined could be recomputed when the whole assessment proceedings had started afresh.
10. In our opinion, there is no escape from the above conclusion in view of the plain meaning of Section 147 which does not admit of any ambiguity and the provision contained in Section 152(2) which clearly indicates that Section 147 is subject only to this right of the assessee given by Section 152(2) to have the proceedings dropped incases of reassessment under Section 147(b) by showing that he had been assessed on an amount or to a sum not lower than what he would be rightly liable for even if the income alleged to have escaped assessment had been taken into account or the original assessment, etc., had been properly made. Except to this extent, in a case under Section 147(b), the assessee has not been given a right to reopen any concluded matter much less a matter in respect of which he had made no grievance even in the original assessment proceedings and where, like the present case, the original assessment on that point was based on the particulars given in the assessee's return itself. We are, therefore, unable to accept the assessee's contention.
11. Consequently, the reference is answered against the assessee and in favour of the Revenue, as under :
"The Tribunal was justified in taking the view that it was not open to the assessee to agitate in reassessment proceedings under Section 147(a) of the Income-tax Act, 1961, that his share income from M/s. Motilal Dhannilal Tapa, Mandla, was the income of the joint family and was wrongly included in his individual income in the original assessment."
12 There will be no order as to costs of this reference.