HIRA LAL vs. THE COMMR. OF INCOME TAX PATIALA

ITR/58/1994HC Punjab & HaryanaPHHC01024716199418 October 2006Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE RAJESH BINDAL3 pages
AI SummaryPartly Allowed

What were the facts?

The assessee, Hiralal Vermani, is challenging an order of the Income Tax Appellate Tribunal (ITAT) for the assessment year 1980-81. The original assessment was completed on March 10, 1983. Subsequently, the Assessing Officer (AO) initiated reassessment proceedings under Section 147(b) of the Income Tax Act, 1961, based on a reference made to the Valuation Officer. The AO found a difference in valuation and believed income had escaped assessment. The assessee's appeals before the appellate authority and the ITAT were unsuccessful. The ITAT relied on the Gujarat High Court's decision in Sakarlal Balabhai v. ITO (1975) 100 ITR 97, holding that the Valuation Officer's report constituted 'information' for initiating reassessment. The assessee contended that this was a mere change of opinion and not valid grounds for reassessment, citing the jurisdictional High Court's decision in Smt. Amala Das v. CIT (1984) 146 ITR 216.

What did the High Court hold?

The High Court answered the first question in favour of the assessee and against the revenue. It relied on its own prior judgment in CIT v. Suresh Kumar (2005) 275 ITR 253, which in turn followed the Supreme Court's decision in Indian and Eastern Newspaper Society v. CIT (1979) 119 ITR 996 and other High Court judgments. The Court held that the report of a Departmental Valuation Officer, being merely an estimate, cannot be treated as fresh or new information for the purposes of Section 147(b) of the Act. Therefore, the initiation of reassessment proceedings solely on the basis of such a report was not valid. As the first question was answered in favour of the assessee, the second question, which was contingent on the first, was deemed to no longer survive and was returned unanswered. The reference was disposed of accordingly.

What were the issues?

1. Whether on the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the ratio of the judgment of the jurisdictional High Court in the case of Smt. Amala Das v. CIT (1984) 146 ITR 216 did not apply to the facts of the present case and in holding that the proceedings under section 147(b) of the Income Tax Act, 1961 had validly been initiated by the Assessing Officer? - Assessee's contention: The reassessment proceedings were invalid as they were initiated solely on the basis of the Valuation Officer's report, which amounted to a mere change of opinion, contrary to the High Court's ruling in Smt. Amala Das v. CIT. - Revenue's contention: The Tribunal was correct in its findings. It was not a case of a mere change of opinion, but rather income escaping assessment, and the material on record justified the AO's "reason to believe" that income had escaped assessment, thereby entitling the AO to initiate reassessment proceedings. 2. There being no existing proceedings under the Income Tax Act against the assessee in respect of the assessment year 1980-81 at the relevant time, whether the Tribunal was right in law in not having held that the commission issued by the Assessing Officer under section 131(1)(d) was not valid? - The judgment does not explicitly record arguments from either side on this specific issue, but it is framed as a question of law.

Which sections of the Income-tax Act were involved?

Section 147(b),Section 131(1)(d)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
ITR No.58 of 1994 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITR No.58 of 1994 Date of decision:18.10.2006 Hiralal Vermani, Chandigarh ....Petitioner versus The Commissioner of Income Tax, Patiala. ....Respondent CORAM: HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE RAJESH BINDAL Present: Mr. Akshay Bhan, Advocate, for the petitioner. Mr. SK Garg Narwana, Advocate, for the respondent.

JUDGMENT:

1.

Following questions of law have been referred for opinion of this Court by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh, arising out of its order dated 9.11.1993 in ITA No.257/Chandigarh/89, in respect of assessment year 1980-81:- “1. Whether on the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the ratio of the judgment of the juri ictional High Court in the case of Smt.Amala Das v. CIT (1984) 146 ITR 216 did not apply to the facts of the present case and in holding that the proceedings under section 147(b) of the Income Tax Act, 1961 had validly been initiated by the Assessing Officer?

2.

There being no existing proceedings unde

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(b)

All 27 judgments and leading authorities on Section 147(b) →

Recent GST High Court judgments

Search GST case law →