The Deputy Commissioner Of Income-tax, Central Circle-4, Patna v. Takshila Educational Society
[Citation -2015-LL-0406-34]

Citation 2015-LL-0406-34
Appellant Name The Deputy Commissioner Of Income-tax, Central Circle-4, Patna
Respondent Name Takshila Educational Society
Court HIGH COURT OF PATNA
Relevant Act Income-tax
Date of Order 06/04/2015
Judgment View Judgment
Keyword Tags depreciation allowance • undisclosed investment • recording of reasons • cost of construction • educational society • reason to believe
Bot Summary: If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of Sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned. For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect Patna High Court MA No.277 of 2010 dt.06-04-2015 4 of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub- section of Section 148. Before making the assessment, reassessment or recomputation under Section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be Patna High Court MA No.277 of 2010 dt.06-04-2015 5 prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under Section 139. The precise question, thus requiring to be considered is, as to whether, the conjunctive word used, being and , used between the expression such income and also any other income chargeable to tax, which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under Section 147 is required to be given its due, or is required to be ignored, or is required to be interpreted as or. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income or also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the Patna High Court MA No.277 of 2010 dt.06-04-2015 8 assessment year concerned. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of Sections 148 to 153, assess or reassess such income or any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the deprecation allowance or any other allowance, as the case may be, for the assessment year concerned. If considered on that principle, leaving apart for the moment, the aspect of interpretation of the word and as or , the existence of the word also is of a great significance, being of conjunctive nature, and leaves no manner of doubt, in our opinion, that it is only when, in proceedings under section 147 the Assessing Officer, assesses or reassess any income chargeable to tax, which has escaped assessment for any assessment year, with respect to which he had reason to believe to be so, then only, in addition, he can also put to tax, the other income, chargeable to tax, which has escaped assessment, and which has come to his notice subsequently, in the course of proceedings under Section 147.


IN HIGH COURT OF JUDICATURE AT PATNA Miscellaneous Appeal No.277 of 2010 ====================================================== Deputy Commissioner Of Income Tax, Central Circle-4, Patna .... .... Appellant/s Versus Takshila Educational Society, Patna .... .... Respondent/s ====================================================== with Miscellaneous Appeal No.278 of 2010 ====================================================== Deputy Commissioner Of Income Tax, Central Circle-4, Patna .... .... Appellant/s Versus Takshila Educational Society, Patna .... .... Respondent/s ====================================================== Appearance : (In MA No.277 of 2010) For Appellant/s : Mr. Rishi Raj Sinha Mrs. Archana Sinha For Respondent/s : Mr. (In MA No.278 of 2010) For Appellant/s : Mr. Rishi Raj Sinha Mrs. Archana Sinha For Respondent/s : Mr. ====================================================== CORAM: HONOURABLE MR. JUSTICE RAMESH KUMAR DATTA and HONOURABLE JUSTICE SMT. ANJANA MISHRA ORAL ORDER (Per: HONOURABLE MR. JUSTICE RAMESH KUMAR DATTA) 2 06-04-2015 Heard learned counsel for appellant. Both appeals arise out of common order and therefore, they have been heard together and are being disposed of by this common order. These appeals have been preferred against order dated 30.11.2009 passed by Income Tax Appellate Tribunal, Patna Bench, Patna, by which Tribunal has dismissed appeal of Revenue. Patna High Court MA No.277 of 2010 (2) dt.06-04-2015 2 matter arose out of reopening of assessment of assessee under Section 147 of Income Tax Act, 1961. Assessing Officer after recording reasons issued notice under Section 147 of Act to assessee. Upon assessee appearing, assessment order has been passed. In assessment ultimately made by Assessing Officer, findings have been recorded with regard to escaped assessment relating to cost of construction on basis of report of DVO; but there is no adverse finding on any of reasons that A.O. had recorded while issuing notice as no addition was made by Assessing Officer on account of alleged undisclosed investment of funds or payment made to various parties which he had considered to have escaped assessment in reasons recorded by him while initiating proceedings under Section 147 of Act nor any benefit was denied under Section 11 of Act on basis of violation of Section 13 of Act which was another ground for initiation of proceedings; rather finding of escaped assessment was made for entirely different reasons. Thus, it was contended on behalf of assessee before Tribunal that Assessing Officer had no jurisdiction as recording of reasons to believe are preconditions for exercise of jurisdiction under Section 147 of Act. If he had no valid grounds or reasons to believe, then solely on other grounds it Patna High Court MA No.277 of 2010 (2) dt.06-04-2015 3 was not open to him to come to findings of escaped assessment, in view of provisions of Section 147 of Income Tax Act. said submission on behalf of assessee was accepted by Tribunal. main part of Section 147 along with Explanation- 3 on which appellant relies is quoted below:- 147. If Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to provisions of Sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in course of proceedings under this section, or recompute loss or depreciation allowance or any other allowance, as case may be, for assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as relevant assessment year). Explanation 3. For purpose of assessment or reassessment under this section, Assessing Officer may assess or reassess income in respect Patna High Court MA No.277 of 2010 (2) dt.06-04-2015 4 of any issue, which has escaped assessment, and such issue comes to his notice subsequently in course of proceedings under this section, notwithstanding that reasons for such issue have not been included in reasons recorded under sub- section (2) of Section 148. From consideration of aforesaid provision, it is evident that power to assess or re-assess any escaped assessment can be exercised not only with regard to reasons to believe on which notice had been issued under Section 148 (1) of Act but also additional grounds. relevant part of Section 148 (1) and (2) is quoted below:- 148. (1) Before making assessment, reassessment or recomputation under Section 147, Assessing Officer shall serve on assessee notice requiring him to furnish within such period as may be specified in notice, return of his income or income of any other person in respect of which he is assessable under this Act during previous year corresponding to relevant assessment year, in prescribed form and verified in prescribed manner and setting forth such other particulars as may be Patna High Court MA No.277 of 2010 (2) dt.06-04-2015 5 prescribed; and provisions of this Act shall, so far as may be, apply accordingly as if such return were return required to be furnished under Section 139. (2) Assessing Officer shall, before issuing any notice under this section, record his reasons for doing so. It is evident from consideration of aforesaid provisions that before issuing notice under Section 147 of Act for initiating proceedings, Assessing Officer is required to record his reasons for doing so. Thus, assumption of jurisdiction by him is reason to believe that certain income of assessee has escaped assessment or re-assessment, which reasons have to be recorded by him in writing. It is true that under provisions of Section 147 of Act, it has been further clarified in Explanation-3 that assessment can be made not only with respect to grounds for which reasons have been recorded under Section 148 (2) of Act but on any other issue which comes to his notice subsequently in course of proceedings under this section, notwithstanding that reasons for such issue had not been included in reasons recorded. Tribunal has relied upon decision of Patna High Court MA No.277 of 2010 (2) dt.06-04-2015 6 Rajasthan High Court in case of Commissioner of Income-Tax vs. Sri Ram Singh : (2008) 306 ITR 343 (Raj), in paragraph No.23 to 29 of which it has been held as follows:- 23. Reverting back to language of Section 147, this much is clear, that sine qua non for conferment of jurisdiction on Assessing Officer to initiate proeedings under that section is that he should have reason to believe that any income chargeable to tax has escaped assessment for any assessment year and that situation being available, i.e., Assessing Officer having entertained reason to believe , obviously on valid grounds, he acquires jurisdiction to assess or reassess such income , which obviously means, income, which was chargeable to tax and had escaped assessment for any assessment year, according to his reason to believe , and while so assessing or reassessing, he can also, in addition, assess or reassess any other income chargeable to tax which has escaped assessment and which may come to his notice subsequently in course of proceedings under Section 147. Patna High Court MA No.277 of 2010 (2) dt.06-04-2015 7 24. precise question, thus requiring to be considered is, as to whether, conjunctive word used, being and , used between expression such income and also any other income chargeable to tax, which has escaped assessment and which comes to his notice subsequently in course of proceedings under Section 147 is required to be given its due, or is required to be ignored, or is required to be interpreted as or . Obviously because, if it is to be interpreted as or , then language would read as under: 147. If Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to provisions of sections 148 to 153, assess or reassess such income or also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in course of proceedings under this section, or recompute loss or depreciation allowance or any other allowance, as case may be, for Patna High Court MA No.277 of 2010 (2) dt.06-04-2015 8 assessment year concerned (hereinafter in this section and in sections 148 to 153 referred to as relevant assessment year). 25. But then if it were to be so read, word also becomes redundant, and to make sense of sentence, section would be required to be read by ignoring words also , as well, in which event, section would read as under:- 147. If Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to provisions of Sections 148 to 153, assess or reassess such income or any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in course of proceedings under this section, or recompute loss or deprecation allowance or any other allowance, as case may be, for assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as relevant assessment year). 26. It is established principle of interpretation Patna High Court MA No.277 of 2010 (2) dt.06-04-2015 9 of statutes, that Parliament is presumed to be not extravagant, in using words, and, therefore, every word used in section is required to be given its due meaning. 27. If considered on that principle, leaving apart for moment, aspect of interpretation of word and as or , existence of word also is of great significance, being of conjunctive nature, and leaves no manner of doubt, in our opinion, that it is only when, in proceedings under section 147 Assessing Officer, assesses or reassess any income chargeable to tax, which has escaped assessment for any assessment year, with respect to which he had reason to believe to be so, then only, in addition, he can also put to tax, other income, chargeable to tax, which has escaped assessment, and which has come to his notice subsequently, in course of proceedings under Section 147. 28. To clarify it further, or to put it in other words, in our opinion, if in course of proceedings under section 147, Assessing Patna High Court MA No.277 of 2010 (2) dt.06-04-2015 10 Officer were to come to conclusion, that any income chargeable to tax, which, according to his reason to believe , had escaped assessment for any assessment year, did not escape assessment, then, mere fact that Assessing Officer entertained reason to believe, albeit even genuine reason to believe, would not continue to vest him with jurisdiction, to subject to tax, any other income, chargeable to tax, which Assessing Officer may find to have escaped assessment, and which may come to his notice subsequently, in course of proceedings under section 147. 29. It is different story that for such other income, Assessing Officer may have recourse to such other remedies, as may be available to him under law, but then, once it is found that income, regarding which he had reason to believe to have escaped assessment, is not found to have escaped assessment, Assessing Officer is required to withhold his hands, at that only. We are in respectful agreement with aforesaid Patna High Court MA No.277 of 2010 (2) dt.06-04-2015 11 decision of Rajasthan High Court. Once it is found that none of reasons recorded by Assessing Officer for initiating proceedings under Section 147 was germane to initiation of such proceedings, then it has to be held that he had no reason to believe that any income had escaped assessment and therefore any further proceeding would be without jurisdiction. findings recorded by Tribunal are unassailable. Thus, no substantial question of law arises in present appeals and they are, accordingly, dismissed. V.P.Sinha/- (Ramesh Kumar Datta, J) (Anjana Mishra, J) U Deputy Commissioner Of Income-tax, Central Circle-4, Patna v. Takshila Educational Society
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