R. DALMIA vs. COMMISSIONER OF INCOME TAX

CIVIL APPEAL No. 4913/1992Supreme Court[1999] 1 S.C.R. 45405 February 1999Bench: 2 JudgesAuthor: S.P. BHARUCHA, N. SANTOSH HEGDE R. DALMIA12 pages
AI SummaryDismissed

What did the Supreme Court hold?

The Supreme Court held that Section 144-B of the Income Tax Act, 1961, applies to assessments and reassessments made under Section 147. Consequently, the extended period of limitation of 180 days provided by Explanation 1(iv) to Section 153 is available for making such assessments and reassessments. The Court reasoned that Section 148 requires that procedures laid down in sections subsequent to Section 139 be followed, 'so far as may be'. Section 144-B is a procedural provision that fits within this scheme and is intended to safeguard the interests of the assessee by ensuring that substantial prejudicial variations to returned income are made only after consideration by Inspecting Assistant Commissioners. The Court found no incongruity in the sanction for reopening being from a higher authority while the assessment procedure involves an Inspecting Assistant Commissioner, as different considerations apply to the reopening of an assessment versus the process of making the assessment order itself. The appeals were dismissed.

What were the facts?

The assessee challenged assessments and reassessments made by the Revenue under Section 147 of the Income Tax Act, 1961. The Income Tax Appellate Tribunal (Tribunal) held these assessments to be time-barred, opining that Section 144-B applied only to assessments under Section 143(3) and not to those under Section 147. The Delhi High Court, in response to a reference, ruled that Section 144-B was applicable to assessments and reassessments under Section 147. The assessees appealed this decision to the Supreme Court. The dispute involved assessment years such as 1947-48 and 1948-49, with notices under Section 148 issued in the mid-1960s, followed by High Court stays and subsequent assessment orders made in the late 1970s.

What were the issues?

1. Whether Section 144-B of the Income Tax Act, 1961, applies to assessments and reassessments made under Section 147 of the Act, thereby making the extended period of limitation under Explanation 1(iv) to Section 153 available for such assessments. Assessee's contentions: - Section 144-B applies only to assessments made under Section 143(3) and not to assessments or reassessments under Section 147. - There is an incongruity in sanction for reopening an assessment being granted by higher authorities under Section 151, while the subsequent assessment is supervised by an Inspecting Assistant Commissioner under Section 144-B. - The procedure laid down in Section 144-B is not applicable to assessments and reassessments under Section 147. Revenue's contentions: - Section 144-B is a procedural provision that should be followed in assessments and reassessments under Section 147, as per the mandate of Section 148 that subsequent procedures should be followed 'so far as may be'. - Section 144-B provides a safeguard to assessees against substantial prejudicial variations in their returned income, and its applicability to Section 147 assessments is consistent with this protective intent.

Which sections of the Income-tax Act were involved?

Section 147,Section 144-B,Section 153,Section 143(3),Section 148,Section 139,Section 151

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A R. DALMIA .. - {_ v. COMMISSIONER OF INCOME TAX FEBRUARY 5, 1999 B (S.P. BHARUCHA AND N. SANTOSH HEGDE, JJ.] .....:: ;;."

Income Tax Act 1961, S. 147 r/w Ss. 144-B, S. 153 Explanation l(iv)-Whether S. 144-B applies to assessments and reas- c sessments under s. 147 and therefore the extended period of limitation of 180 days provided under Explanation 1 (iv) to s. 153 available to such assessments ~" and reassessments-Held, yes.

The appellant assessees challenged the assessments and reassess- ments of their returns made by the Revenue under s. 147 of the Income D Tax, Act 1961 ('Act') before the Income Tax Appellate Tribunal ('Tribunal'). The Tribunal held the assessments and reassessments to be barred by limitation as in its view s. 144-8 applied only to assessments made under s. 143(3) and not to" those under s. 147. In answering a reference made to it at the instance of both the assessees and the Revenue, E the Delhi High Court took the view that s. 144-8 of the Act was applicable to assessments and reassessments made under s. 147. The assessees appealed to this Court.

Dismissing the appeals, this Court F HELD : 1. 1. S. 144-8 of the Income Tax Act app

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