THE COMMISSIONER OF INCOMETAX, vs. G.OOMMEN,

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ITA/301/2002HC KeralaKLHC01021124200204 December 2018Bench: HONOURABLE MR.JUSTICE K.VINOD CHANDRAN,HONOURABLE MR. JUSTICE ASHOK MENON9 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the amended ten-year limitation period under Section 147 of the Income Tax Act, 1961, applies to assessment proceedings initiated for an assessment year prior to the amendment, reversing the assessee's contention and favoring the Revenue on this point. This decision was based on a Division Bench judgment of the High Court in Income Tax Officer v. Nilofer Hameed & another, [2003] 262 ITR 281, which overturned the Single Judge ruling relied upon by the ITAT. Regarding the unexplained credits from M.J. Philip and K.A. Thomas, the Court found that the Tribunal failed to consider the Explanation to Section 147 concerning information coming to the AO's notice during reassessment. The Court also noted that the deletion of the credit from K.A. Thomas was not adequately addressed. Consequently, the Court decided to remand the matters concerning the unexplained credits from M.J. Philip and K.A. Thomas for fresh consideration. Furthermore, the Court opined that the unexplained credit from Annamma Thomas should also be left open for reconsideration by the Tribunal, despite the First Appellate Authority's confirmation and the Tribunal's initial finding. The appeal before the Tribunal and the cross-objection filed by the Revenue were restored.

What were the facts?

The Revenue filed two appeals before the High Court of Kerala against orders of the Income Tax Appellate Tribunal (ITAT) concerning assessment year 1986-87. The core issue involved additions made by the Assessing Officer (AO) under Section 147 of the Income Tax Act, 1961, for three unexplained credits totaling Rs. 7,76,502/- from Annamma Thomas, M.J. Philip, and K.A. Thomas. The assessee argued that the eight-year limitation period for Section 147 proceedings was applicable, not the amended ten-year period. The First Appellate Authority confirmed the addition from Annamma Thomas but deleted those from M.J. Philip and K.A. Thomas. The ITAT, initially relying on a High Court Single Judge judgment, ruled in favor of the assessee on limitation. However, a Division Bench later reversed this, favoring the Revenue on the limitation aspect.

What were the issues?

1. Whether the amended ten-year limitation period under Section 147 of the Income Tax Act, 1961, applies to assessment proceedings initiated for an assessment year prior to the amendment. (Question of law) Assessee's contention: The assessee argued that the eight-year limitation period, as it stood at the time of the assessment year 1986-87, should apply, and the amended ten-year period, introduced in 1989, should not be applied retrospectively to their case. They relied on a Single Judge judgment of the High Court. Revenue's contention: The Revenue contended that the extended ten-year period would apply due to a specific provision, implying retrospective application or that the amendment was procedural and thus applicable. They would have likely argued against the assessee's reliance on the Single Judge judgment, especially after a Division Bench ruling. 2. Whether the deletion of unexplained credits from M.J. Philip and K.A. Thomas by the First Appellate Authority was justified, considering the AO's findings and the Explanation to Section 147. (Question of mixed law and fact) Assessee's contention: Not recorded in the judgment. Revenue's contention: The Revenue challenged the deletion of these credits, arguing that the Tribunal failed to consider the Explanation to Section 147 regarding information coming to the AO's notice during reassessment proceedings. They also implicitly challenged the deletion of the credit from K.A. Thomas.

Which sections of the Income-tax Act were involved?

Section 147

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON TUESDAY ,THE 04TH DAY OF DECEMBER 2018 / 13TH AGRAHAYANA, 1940 ITA.No. 301 of 2002 AGAINST THE ORDER/JUDGMENT IN ITA 595/1995 of I.T.A.TRIBUNAL,COCHIN BENCH APPELLANT/S: THE COMMISSIONER OF INCOMETAX, THIRUVANANTHAPURAM. BY ADVS. SRI PKR MENON, SR.COUNSEL FOR GO TAXES SRI.GEORGE K. GEORGE, SC FOR IT SRI.JOSE JOSEPH SC FOR INCOME TAX RESPONDENT/S: 1 G.OOMMEN, PUTHOOR, KOTTARAKKARA. 2* BABU OOMMEN, M/S.ALPHONSE CASHEW INDUSTRIES, PUTHOOR P.O., KOTTARAKKARA. 3* JOHNSON G.OOMMEN, M/S.ST.GREGORIOUS CASHEW INDUSTRIES, PUTHOOR P.O., KOTTARAKKARA.

ITA 301 & 321 of 2002 2 4* JOSE G.OOMMEN, VAROOR MADATHILAZHIKATH VEEDU, PUTHOOR P.O., KOTTARAKKARA. 5* JOB G.OOMMEN, M/S.PENIEL CASHEW COMPANY, PUTHOOR P.O., KOTTARAKKARA. 6* JAMES G.OOMMEN, ST.PAUL'S CASHEW FACTORY, PUTHOOR P.O., KOTTARAKKARA. 7* JELSON G.OOMMEN, M/S.ST.MARY'S CASHEW FACTORY, PUTHOOR P.O., KOTTARAKKARA. 8* JESSY ABRAHAM, SANTHI BHAVAN, CHBIRATTAKONAM, THALACHIRA P.O., KOTTARAKKARA. *ADDL. R2 TO R8 ARE IMPLEADED AS PER ORDER DATED 04/12/2018 IN IA NO. 1906/11 IN ITA NO. 301/2002. BY ADVS. SRI.JOSON MANAVALAN SRI.K.JOHN MATHAI SRI.KURYAN THOMAS SRI.M.GOPIKRISHNAN NAMBIAR SRI.P.BENNY THOMAS SRI.P.GOPINATH SRI RAJA KANNAN OTHER PRESENT: THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 04.12.2018, ALONG WITH ITA.321/2002, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

ITA 301 & 321 of 2002 3 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON TUESDAY ,THE 04TH DAY OF DECEMBER 2018 / 13TH AGRAHAYANA, 1940 ITA.No. 321 of 2002 AGAINST THE ORDER/JUDGMENT IN ITA 611/1995 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 29-04-2002 APPELLANT/S: THE COMMISSIONER OF INCOME TAX,TVM. THIRUVANANTHAPURAM. BY ADVS. SRI.P.K.R.MENON,SENIOR COUNSEL, GOI(TAXES) SRI.GEORGE K. GEORGE SC FOR IT SRI.JOSE JOSEPH SC FOR INCOME TAX RESPONDENT/S: 1 G.OOMMEN,PUTHOOR, KOTTARAKKARA. 2* BABU OOMMEN, M/S. ALPHONSE CASHEW INDUSTRIES, PUTHOOR P.O., KOTTARAKKARA. 3* JOHNSON G. OOMMEN, M/S. GREGORIOUS CASHEW INDUSTRIES, PUTHOOR P.O., KOTTARAKKARA.

ITA 301 & 321 of 2002 4 4* SRI. JOSE G. OOMMEN, VAROOR MADATHILAZHIKATH VEEDU, PUTHOOR P.O., KOTTARAKKARA. 5* JOB G. OOMMEN, M/S. PENIEL CASHEW COMPANY, PUTHOOR P.O., KOTTARAKKARA. 6* JAMES G. OOMMEN, ST. PAUL'S CASHEW FACTORY, PUTHOOR P.O., KOTTARAKKARA. 7* JELSON G. OOMMEN, M/S. ST. MARY'S CASHEW FACTORY, PUTHOOR P.O., KOTTARAKKARA. 8* JESSY ABRAHAM, SANTHI BHAVAN, CHBIRATTAKONAM, THALACHIRA P.O., KOTTARAKKARA. --------------------------------------------------- *ADDITIONAL R2 TO R8 ARE IMPLEDADED AS PER ORDER DATED 04/12/2018 IN IA 1904/11 IN ITA 321/02. BY ADVS. SRI.JOSON MANAVALAN SRI.K.JOHN MATHAI SRI.KURYAN THOMAS SRI.M.GOPIKRISHNAN NAMBIAR SRI.P.BENNY THOMAS SRI.P.GOPINATH SRI.RAJA KANNAN THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 04.12.2018, ALONG WITH ITA.301/2002, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

ITA 301 & 321 of 2002 5 JUDGMENT [ITA 301/2002 ,ITA.321/2002] Vinod Chandran, J. Two appeals filed by the Revenue arising from the very same assessment year being 1986-87. The issue relates to the additions made of three unexplained credits, respectively from Annamma Thomas, M.J.Philip and K.A.Thomas, totaling Rs.7,76,502/-. The Assessing Officer added on the same in a re-assessment proceedings under Section 147 of the Income Tax Act, 1961 (for short “the Act”). The assessee contended that during the assessment year as the provisions stood, there was only eight years available for the Department to take out proceedings under Section 147. The same stood amended in the year 1989 as ten years. The First Appellate Authority refused to accept the contention and held that the ten year period would apply insofar as the limitation having stood extended by the specific provision. On the additions made, that claimed from Annamma Thomas was confirmed. However,

ITA 301 & 321 of 2002 6 the additions with respect to M.J.Philip and K.A.Thomas were deleted. 2. The assessee approached the Tribunal. The Tribunal relying on a Single Judge judgment of this Court, allowed the appeal finding that the extended limitation cannot apply to an year previous to the amendment. However, later a Division Bench of this Court reversed the judgment of the learned Single Judge in Income Tax Officer v. Nilofer Hameed & another, [2003] 262 ITR 281. Hence, on the aspect of limitation, we have to hold against the assessee and in favour of the Revenue. 3. The First Appellate Authority, considered the unexplained credit as claimed against Annamma Thomas and found that the assessee is assessed to wealth tax assessment, in which also the very same credit was held to be unexplained. Hence, there was no cause to interfere with the same. On the question of unexplained credit from Annamma Thomas, we notice that the Tribunal noticed the wealth tax assessment, but however found that the tax liability insofar as wealth tax is

ITA 301 & 321 of 2002 7 negligible and hence there could be no estoppel against the assessee on that count alone. We do not think that the same is a reasonable ground, when the wealth tax assessment has acquired finality as against the assessee on the very same ground. 4. On the unexplained credit as against M.J.Philip, it was found that this was not an information available to the Assessing Officer at the time the proceedings were initiated. The information as to the said unexplained credit came to the notice of the Assessing Officer in the course of the re-assessment proceedings. The Tribunal failed to notice the Explanation to Section 147 on that aspect. Further, we also notice that there was nothing stated about the deletion of unexplained credit from K.A.Thomas. In such circumstances, there has to be necessarily a remand insofar as the appeal and the cross-objection filed by the Revenue only on the question of the unexplained credits. With respect to M.J.Philip and K.A.Thomas, the addition deleted by the First Appellate Authority, was challenged in

ITA 301 & 321 of 2002 8 cross-appeal by the Revenue. We notice that as far as the appeal of the assessee on the question of limitation, we have already answered the question against the assessee and in favour of the Revenue. Considering the fact that we are remanding two other unexplained credits for fresh consideration, we are also of the opinion that; that of Smt Annamma also should be left open to be considered by the Tribunal. Hence, answering the question of limitation in favour of the Revenue and against the assessee, the appeal before the Tribunal is restored and so is the cross-objection restored. No order as to costs. Sd/- K.VINOD CHANDRAN JUDGE Sd/- ASHOK MENON dkr JUDGE

ITA 301 & 321 of 2002 9 APPENDIX OF ITA 301/2002 PETITIONER'S/S EXHIBITS: ANNEXURE-A TRUE COPY OF THE ORDER OF THE ASSESSING OFFICER DATED 26/2/1993. ANNEXURE-B TRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) DATED 28/4/1995. ANNEXURE-C TRUE COPY OF THE ORDER F THE APPELLATE TRIBUNAL DATED 29/4/2002. APPENDIX OF ITA 321/2002 PETITIONER'S/S EXHIBITS: ANNEXURE-A TRUE COPY OF THE ORDER OF THE ASSESSING OFFICER DATED 26/02/1993. ANNEXURE-B TRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) DATED 28/04/1995. ANNEXURE-C TRUE COPY OF THE ORDER OF THE APPELLATE TRIBUNAL DATED 29/04/2002.

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