COMMISSIONER OF INCOME TAX JALANDHAR vs. MULKH RAJ SHARMA JALANDHAR

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ITR/5358/1992HC Punjab & HaryanaPHHC01022006199206 February 2007Author: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE M.M. KUMAR3 pages
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What did the High Court hold?

The High Court held that the Income-Tax Appellate Tribunal was right in cancelling the order passed by the CIT under Section 263 of the Income-Tax Act, 1961. The reasoning was that the ITAT, after considering the entire matter in detail for each assessment year, opined that the Commissioner was not justified in holding the Assessing Officer's orders as erroneous and prejudicial to the interest of the revenue. The Court noted that even the learned counsel for the Revenue could not make out a case for reopening the assessment under Section 263. The Tribunal's view was considered a possible view in the given facts and circumstances, and the High Court stated that it would not substitute its opinion merely because a second opinion was possible. Therefore, the question referred was answered against the Revenue and in favour of the assessee. The operative direction was to answer the reference accordingly.

What were the facts?

The assessee, Shri Mulkh Raj Sharma, is an individual. The Revenue is the Commissioner of Income-Tax, Jalandhar. The assessment years under consideration are 1966-67, 1967-68, 1969-70, 1971-72, 1972-73, and 1973-74. The order under challenge is the cancellation of orders passed by the Commissioner of Income-Tax (CIT) under Section 263 of the Income-Tax Act, 1961, by the Income-Tax Appellate Tribunal (ITAT). The procedural history involves multiple reopenings and fresh assessments for each assessment year, with the CIT subsequently setting aside these assessments under Section 263. The ITAT then cancelled the CIT's orders, leading to the present reference to the High Court.

What were the issues?

The High Court was asked to decide the following question of law: 1. Whether, on the facts and in the circumstances of the case, the Income-Tax Appellate Tribunal was right in cancelling the order passed by the CIT under Section 263 of the Income-Tax Act, 1961? Contentions: Assessee: The assessee's case is that the ITAT was justified in cancelling the CIT's orders. The judgment notes that even the learned counsel for the Revenue could not make out a case for reopening under Section 263, and the ITAT's view was a possible view in the facts and circumstances. Revenue: The Revenue's contention, implied by the reference of the question, is that the CIT was justified in passing the order under Section 263, and the ITAT erred in cancelling it. However, the judgment explicitly states that the Revenue's counsel could not establish a case for reopening.

Which sections of the Income-tax Act were involved?

Section 263,Section 144,Section 146

AI-generated summary — verify with the full judgment below

I.T.R.

-1- *** IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH I.T.R.

Date of decision: 6.2.2007 The Commission of Income-Tax, Jalandhar ...Petitioner Versus Shri Mulkh Raj Sharma, 170-171, Vijay Nagar, Jalandhar ...Respondent CORAM: HON'BLE MR.JUSTICE M.M.KUMAR HON'BLE MR.JUSTICE RAJESH BINDAL Present: Mr.Sanjiv Bansal, Advocate for the Revenue. **** RAJESH BINDAL, J. The Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (for short , ‘the Tribunal) has referred following question of law for opinion of this Court, emerging from its common order dated 18.5.1990 in ITA Nos. 532 to 537/ASR /1989 for the assessment years 1966-67, 1967- 68, 1969-70, 1971-72, 1972-73 and 1973-74:- “Whether on the facts and in the circumstances of the case, the Income-Tax Appellate Tribunal was right in cancelling the order passed by the CIT under Section 263 of the Income-Tax Act, 1961?”

Brief facts as noticed in the Statement of case are as under:- “3. Briefly, the facts are that the assessee is an individual. He was detained under COFEPOSA. On 8.10.1971, Indian Currency amounting to Rs. 6,50,000/- was seized from the possession of Sh.Vinod Kumar son of the assessee by the Enforcement Officers at Delhi and Sh.Vinod Kumar, in his statement stated that the amount of Rs. 6,50,000/- was entrusted to him by Sh. Mulakh Raj Sharma, the assessee at I.T.R.

-2- *** Jalandhar. As a result of this, the proceedings for the asstt. years under consideration were reopened and the ITO made the original assessment for the asstt. Year 1966-67 on 26.3.1979, which was set aside by the AAC on 2.1.1983. Fresh assessment was made on 24.3.1987, which has been set aside by the CIT u/s 263.

3.

2 For the asstt. year 1967-68, the original assessment was made by the ITO on 12.3.1980 which was set aside by the AAC on 20.1.1983. Fresh assessment was made on 24.3.1987, which has been set aside by the CIT under section 263.

3.

3 For the asstt. year 1969-70, original assessment was made on 24.3.1982 u/s 144, which was reopened by the ITO under Section 146 on 31.3.1982. Fresh assessment was made on 28.3.1984 which was again reopened by the ITO u/s 146 and fresh assessment was made on 24.3.1987, which has been set aside by the CIT u/s 263.

3.

4 For the asstt. year 1971-72 original assessment was made on 24.3.1982 u/s 144, which was reopened by the ITO u/s 146 on 25.3.1984 and fresh assessment made by the ITO on 24.3.1987, which has been set aside by the CIT u/s 263.

3.

5 For the assessment year 1972-73, original assessment was made on 28.1.1975, which was set aside by the AAC on 21.10.1976. Fresh assessment was made on 29.3.1975, which was set aside by the AAC on 7.6.1979. Assessment was again made on 22.3.1982 which was reopened u/s 146 on 28.3.1984. Fresh assessment was framed on 24.3.1987, which has been set aside by the CIT u/s 263.

3.

6 For the asstt. year 1973-74 original assessment was made on 22.3.1982, which was reopened by the ITO u/s 146 on 28.3.1984 and the fresh assessment made on 24.3.1987, which has been set aside by the CIT u/s 263.” Against the order passed under Section 263 of the Act, the assessee preferred appeals before the Tribunal. The Tribunal considering

I.T.R.

-3- *** the entire matter in detail, item wise for each assessment year, opined that the Commissioner was not justified in holding that the orders passed by the Assessing Officer for the assessment years under appeal were erroneous and prejudicial to the interest of revenue. While referring to findings recorded by the Tribunal in paras 11 to 17 of the order, as are extracted in the statement of case, even learned counsel for the revenue could not make out a case for reopening of the assessment under Section 263 of the Act. The view expressed by the Tribunal is a possible view in the facts and circumstances of the case. Merely because second opinion is possible this court would not like to substitute the same. Accordingly the question referred is answered against the revenue and in favour of the assessee. The reference is disposed of accordingly. (Rajesh Bindal) Judge February 06 ,2007 (M.M.Kumar) Pka Judge

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