C.I.T. PATIALA vs. M/S ROADMASTER INDS. OF INDIA

ITR/14/1996HC Punjab & HaryanaPHHC01034943199621 November 2006Author: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE ADARSH KUMAR GOEL3 pages
AI SummaryAllowed

What were the facts?

The assessee, M/s Roadmaster Industries of India, Rajpura, had its assessment for the assessment year 1987-88 completed on March 23, 1988, with a deduction allowed under section 80HH of the Income Tax Act, 1961. Subsequently, the Assessing Officer (AO) issued a notice under section 148, alleging that excessive relief was granted and the deduction needed reduction. Following this, the deduction was reduced by an order dated April 12, 1989. The assessee appealed, arguing that the initiation of reassessment proceedings under section 147(b) was impermissible. The appellate authority dismissed the appeal. The Income Tax Appellate Tribunal (ITAT) upheld the assessee's plea, finding that the reassessment was based on a re-appraisal of information already available, not on new information. The revenue has referred a question of law to the High Court.

What did the High Court hold?

The High Court held that the Tribunal was correct in its finding that the initiation of reassessment proceedings under section 147(b) was not permissible. The Court referred to the Supreme Court's decision in Phool Chand Bajrang Lal v. ITO, (1993) 203 ITR 456, which stated that an AO acquires jurisdiction to reopen an assessment under section 147(a) read with section 148 only if, based on specific, reliable, and relevant information coming into possession subsequently, the AO has reasons to believe that income chargeable to tax has escaped assessment due to omission or failure by the assessee to make a true and full disclosure. This belief must stem from fresh facts or information that exposes the untruthfulness of previously disclosed facts. The Court noted that the reassessment order in this case only mentioned that it came to notice that the deduction had not been correctly allowed, without specifying any new information. The Court concluded that a mere change of opinion or drawing a different inference from the same facts available earlier cannot be a ground for reassessment. Therefore, the question referred is answered against the revenue and in favour of the assessee.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that section 147(b) was not applicable, inasmuch as the information available at the time of original assessment could not be re-appraised by the Assessing Officer on the ground that excessive relief had been allowed to the assessee under section 80HH of the Act? (Question of law) Assessee's Contention: The assessee contended that the initiation of reassessment proceedings under section 147(b) was not legally permissible. The Tribunal relied on the Supreme Court judgment in Indian and Eastern Newspaper Society v. CIT, New Delhi, (1979) 119 ITR 996(SC), and High Court judgments in Air India v. V.K.Srivastava, CIT and others, (1995) 213 ITR 739 and Hotel Appolo v. P.S.Rashtrapal, Income Tax Officer, (1995) 213 ITR 762, to hold that the reassessment was based on a re-appraisal of existing information, not new facts. Revenue's Contention: The revenue's argument is implicit in the question referred, suggesting that the AO was justified in re-appraising information under section 147(b) due to excessive relief granted under section 80HH. The judgment does not explicitly record separate arguments for the revenue beyond the referred question.

Which sections of the Income-tax Act were involved?

Section 147(b),Section 148,Section 80HH

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
ITR No.14 of 1996 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITR No.14 of 1996 Date of decision:21.11.2006 The Commissioner of Income Tax,Patiala ....Petitioner versus M/s Roadmaster Industries of India, Rajpura ....Respondent CORAM: HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE RAJESH BINDAL Present: Dr. N.L.Sharda, Advocate, for the revenue. Mr. Sanjay Bansal, Advocate, for the respondent.

JUDGMENT: Following question of law has been referred for the opinion of this Court by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh, arising out of its order dated 18.7.1995 in ITA No.438/Chandi/90, for the assessment year 1987-88:- “Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that section 147 (b) was not applicable, inasmuch as the information available at the time of original assessment could not be re-appraised by the Assessing Officer on the ground that excessive relief had been allowed to the assessee under section 80HH of the Act?”

Assessment in the case of the assessee was made on 23.3.1988 allowing deduction under section 80HH of the Income Tax

The order continues below.

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