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The Commissioner of Income Tax, Patiala v. M/s. Jagdish Chand Gupta Construction Co - ITR-79-1995  RD-P&H 7932 (27 September 2006)
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
ITR No.79 of 1995
Date of decision:15.9.2006
The Commissioner of Income Tax, Patiala
M/s. Jagdish Chand Gupta Construction Co.(P) Limited,Chandigarh.
CORAM: HON'BLE MR. JUSTICE ADARSH KUMAR GOEL
HON'BLE MR. JUSTICE RAJESH BINDAL
Present: Mr. S.K.Garg Narwana, Advocate for the revenue.
Mr. PC Jain, Advocate for the assessee.
Following question of law has been referred for opinion of this Court by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh, arising out of its order 5.9.1994, in respect of assessment year 1989-90:-
"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that interest under section 234-B could not be charged as reassessment had been made after reopening the case under section 147 and so it was not a case of regular assessment within the meaning of Explanation 2 below section 234-B?"
The assessee failed to pay advance tax as required under Section 208 of the Income Tax Act, 1961 (for short, 'the Act). The Assessing Officer held that interest was payable under Section 234-B of the Act. The appellate authority set aside the charging of interest on the ground that in assessee's case, assessment had already been completed under ITR No.79 of 1995 2
Section 143(1) (a) of the Act but thereafter, case was re-opened and re- assessment was made and Section 234-B(1) of the Act could not apply where re-assessment was done, as this was confined to assessment applicability made for the first time. T The Tribunal affirmed the said view, rejecting the contention that under Explanation 2 to Section 234-B(1) of the Act, assessment made for the first time under Section 147 of the Act was also covered for purposes of assessment under section 234-B of the Act. Reliance was placed on judgment of this court in Smt. Kamla Vati v. Commissioner of Income Tax (Central), Patiala, (1978) 111 ITR 248 We find that the issue is covered against the assessee by judgment of the Hon'ble Supreme Court in M/s K.Govindan and Sons v.
Commissioner of Income Tax, Cochin, AIR 2001 SC 254, wherein it was observed:-
"14. That it is so, is clear on a fair reading of Section 147 in which provision is made for both assessment and re- assessment in a case where any income chargeable to tax has escaped assessment for any assessment year. The proviso treats at par the assessment under section 143(3) and under Section 147 and makes no distinction whether the escapement of income is by reason of the failure on the part of the assessee to make a return under Section 139 or in response to a notice issued under sub-section (1) of Section 142 or Section 148. Under Clauses (a) and (b) of Explanation 2 to Section 147 Cases where no return has been furnished by the assessee and where a return of income has been furnished by the assessee but no assessment has been made, have both been included in the expression 'escaped assessment'. Section 148 mandates the Assessing officer to serve a notice on the assessee before making the assessment, reassessment or re- computation under Section 147. From the aforementioned provisions it is manifest that an initial assessment made by the Assessing Officer either on the assessee voluntarily furnishing a return of the income or furnishing such a ITR No.79 of 1995 3
return on being served a notice under Section 148 is a 'regular assessment' under Section 2(40) of the Act but an order passed by the Assessing Officer making a re- assessment or revised assessment in a case where an assessment had been made, does not come within the meaning of the said expression. In both the cases the manner of making the assessment is similar. The position that follows is that while making the assessment under Section 147 in a case where the assessee furnishes a return in pursuance of the notice served on him under Section 148 of the Act the provision for charging interest under Section 139(8) is applicable and it is open to the Assessing Officer to charge interest on the assessee in such proceeding. This construction of the statutory provisions, in our view, is in accord with the intent and purpose for which the power to charge interest on a defaulting assessee has been vested in the Assessing Officer. To hold otherwise will mean that an assessee who files a delayed return will be liable to pay interest while an assessee who does not file any return is free from such a liability. Such an interpretation of statutory provisions which will result in an absurd situation, cannot be accepted."
xx xxx xxx xxx
"22. The decisions of the Madras High Court in K.Gopalaswami Mudaliar case (1963 (49 ITR 322) (supra), the Delhi High Court in National Agricultural Cooperative Marketing Federation of India case (1982 Tax LR 417) (supra) and Kerala High Court in Lally Jacob case (1992 (197) ITR 439) (supra) lay down the correct position in law and they have our approval. The decisions of the Gauhati High Court in CIT v. Triple Crown Agency case (1993 Tax LR 1080) (supra) and of Punjab and Haryana High Court in Commissioner of ITR No.79 of 1995 4
Income Tax v. Sushma Saxena (1997 (223) ITR 395) (supra) were not correct in law.
23. The view taken by us that a first or initial assessment under Section 147 of the Act is a 'regular assessment' within the meaning of Section 139(8) of the Act, has been the position of law even before the explanation in Section 139(8) was added by amendment. In that view of the matter the explanation merely clarified the position taking it beyond pale of doubt. The Parliament thought it necessary to add the explanation with a view to remove the doubt raised in certain decisions of different High Courts in which a contrary view was taken. Thus the explanation is merely a clarificatory provision and has application to the period of assessment in the case i.e., assessment year 1984-85."
In view of the above, the question is answered in favour of the revenue and against the assessee.
(Adarsh Kumar Goel)
Sept. 15, 2006 (Rajesh Bindal)
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