Shyam Sundar Gupta vs Commissioner of Income Tax

A.M. Sapre, J.—This is an IT reference made by the Tribunal (ITAT) u/s 256(1) of the IT Act at the instance of assessee in RA No. 117/Ind/1992 which arises out of the Order of Tribunal dt. 6th Oct., 1992, passed in ITA No. 640/Ind/l990 to answer the following question of law said to arise out of the aforementioned Order passed by the Tribunal in appeal, filed by the assessee :

"Whether assumption of jurisdiction for making fresh assessment by the AO was illegal because no reasons stood recorded for reopening of assessment u/s 143(2)(b) of the IT Act ?"

In Order to answer the question referred, few relevant facts need mention as are stated by the Tribunal in the statement of case drawn while referring the question to this Court,

The assessee is an individual for the year 1985-86, he filed his return. His returned income was accepted by framing an assessment Order u/s 143(1) on 9th Dec., 1986, at Rs. 13,630. Later, the AO served notice u/s 143(2)(b) on the assessee on 30th March, 1988, and since assessee did not co-operate despite notice, the AO determined the income at Rs. 3,35,000. The assessee filed an appeal to CIT(A) but did not succeed as his appeal was dismissed (Annex. B). He then filed second appeal to Tribunal which too was dismissed, giving rise to making of this reference to this Court on the question, referred supra.

None for the assessee despite service to him. Heard Shri R.L. Jain, learned senior counsel, with Ku. V. Mandlik for the Revenue,

Having perused record of the case and having heard the submission of learned counsel for the Revenue, we answer the question against the assessee and in favour of Revenue.

In our opinion, there lies a distinction between cases falling in Section 143(2)(b) and Section 147 of the Act. In the cases falling in later category of cases, namely, u/s 147, a reasonable belief must exist that income has escaped assessment, whereas no such ground must exist while exercising powers u/s 143(2)(b). In other words, the summary scheme envisaged u/s 143 is exception to the normal rule. In issuing such notice, no need to record reasons and hence, assessee cannot question the issuance of notice issued by AO u/s 143(2)(b) on the ground that no reasons were recorded prior to issuance of notice. The only requirement is obtaining of previous approval of Dy. CIT as provided in proviso to Sub-section (2). We are supported in our view by the decision of Karnataka High Court in the case of Om Trading Co. and others Vs. Second Income Tax Officer, .

In this view of the matter, we answer the question in favour of Revenue and against an assessed. No costs.