COMMISSIONER OF INCOME TAX, SHILLONG vs. TARAJAN TEA CO. (P) LTD.

CIVIL APPEAL No. 1941/1993Supreme Court[1999] 1 S.C.R. 39604 February 1999Bench: 2 JudgesAuthor: M. SRINIVASAN, U.C. BANERJEE A COMMISSIONER OF4 pages
AI SummaryDismissed

What were the facts?

The Income Tax Officer (ITO) reopened the assessment of the respondent-assessee, Tarajan Tea Co. (P) Ltd., for an assessment year not specified, by issuing a notice under Section 147(a) of the Income Tax Act, 1961. The basis for reopening was an order by the Appellate Assistant Commissioner (AAC) in another tea company's case, which held that the sale of standing trees constituted revenue receipts. The ITO considered this AAC order as 'information' under Section 147(a). Subsequently, the ITO converted the proceedings to Section 147(b) without issuing a fresh notice. The AAC set aside the ITO's reassessment order. The Tribunal modified the AAC's order, allowing the ITO to proceed afresh under Section 144B. The High Court, however, ruled in favour of the assessee, setting aside the reassessment order and observing that the conversion of proceedings under Section 147(b) should have been quashed.

What did the Supreme Court hold?

The Supreme Court held that neither Section 147(a) nor Section 147(b) of the Income Tax Act, 1961, as they stood before April 1, 1989, applied to the case. The Court found that there was no omission or failure on the part of the assessee to make a return under Section 139, nor was there any information obtained by the Assessing Officer subsequent to the assessment order that would justify reopening. The order passed by the AAC in another case was not considered 'information' within the meaning of Section 147. Therefore, the Court concluded that the Assessing Officer's order reopening the earlier assessment and passing a fresh assessment order was unsustainable. The High Court's view in setting aside the reassessment order was upheld. The Court found it unnecessary to decide the question of whether proceedings under Section 147(a) could be converted into proceedings under Section 147(b) without a fresh notice, as the initial reopening itself was found to be invalid. The appeal filed by the revenue was dismissed.

What were the issues?

1. Whether, on the facts and in the circumstances, the Tribunal was justified in law in sustaining the reopening of assessment under Section 147(b) of the Income Tax Act, 1961, when it had held that there was no case for reopening under Section 147(a) on the recorded reasons, nor any cause for reopening under Section 147(b) on the reasons recorded on 31.3.77. 2. Whether, on the facts and in the circumstances, the Tribunal was justified in law in holding that reassessment proceedings initiated under Section 147(a) by issuing a notice dated 31.12.76 under Section 148 could be validly converted into proceedings under Section 147(b) subsequently. 3. Whether, on the facts and in the circumstances, the Tribunal was justified in law in setting aside the AAC's order cancelling the reassessment orders passed by the ITO, and directing the ITO to resort to Section 144B afresh, without annulling/cancelling the reassessment orders and without considering the legal bar of limitation under Section 153. Assessee's contentions: The assessee argued that the AAC's order in another case did not constitute 'information' under Section 147(a) or (b). The conversion of proceedings from 147(a) to 147(b) was invalid without a fresh notice. The High Court's decision in favour of the assessee was correct. Revenue's contentions: The revenue contended that the AAC's order in another case was valid 'information' for reopening the assessment. They also argued for the validity of converting proceedings from 147(a) to 147(b) and for the Tribunal's direction to proceed under Section 144B.

Which sections of the Income-tax Act were involved?

Section 147(a),Section 147(b),Section 139,Section 148,Section 144-B,Section 153

AI-generated summary — verify with the full judgment below

' A COMMISSIONER OF INCOME TAX, SHILLONG v. TARAJAN '!'EA CO. (P) LTD. FEBRUARY 4, 1999 B [M. SRINIVASAN AND U.C. BANERJEE, JJ.] ..

Income Tax Act, 1961: Sectio11s 147(a) a11d (b) (As they stood before -.. 1.4.1989) and 139. C Income Tax-Reassessment-Respondent-assessee-Assessment of-- No omission or failure on the part of the assessee to make a return under Section 139 as contemplated in Sectio11 147(a}-No information obtained by the assessing officer subsequent to Assessme11t Order-Assessment re-opened by ITO a11d notice issued under Section 147(aj-Ground that in the case of another Tea Company, the Appellate Assistant Commissioner had take11 the D view that sale' of standing trees constituted revenue receipts a111i, therefore, liable to tax-Held, neither clause (a) nor clause (b) of the Section 147would apply in this case-The order passed by the AA.C. in another case is not ,,, ~- 'i11formation' within the mea11ing of the sectio11 147-The order of the Assess- ing Officer re- opening the earlier order and passing a fresh assessment order E held unsustainable.

Income T~roceedings under Section 147(a)--Conversio11 into proceedings under Section 147(b) witho

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 147(a)

All 33 judgments and leading authorities on Section 147(a) →

Recent GST High Court judgments

Search GST case law →