Gokul Chand Rattan Chand (HUF) vs Commissioner of Income Tax

In this reference which pertains to the assessment year 1946-47, the following two questions of law have been framed for our opinion:

Whether, on the facts and in circumstances of the case, Tribunal was right in upholding reopening of the assessment u/s 147(a) for the assessment year 1946-47?

Whether on the facts and in the circumstances of the case, Tribunal was justified in holding that the proceedings initiated by issue of notice u/s 148 dated 25-3-1963 and served upon the assessee on 23-4-1963 were valid in the eyes of law and not barred by limitation?

As far as the second question is concerned, learned Counsel for the assessee does not press this question for opinion. We are, therefore, concerned only with the first question.

As is apparent, the assessment order itself is about more than 60 years old.

The issue really is about the correctness of a donation of Rs. 5,00,000 made by Shri Gokul Chand to Ratan Trust. It is submitted by the learned Counsel that the assessee does not at all come into the picture.

Be that as it may, the assessment was framed on 6-9-1946. Much later, the Income Tax Officer found that an amount of Rs. 5,00,000 was donated to Ratan Trust in the name of Shri Gokul Chand, father of Shri Ratan Chand.

On 23-5-1963 a notice was issued to the assessee seeking to reopen its completed assessment. The reassessment was completed on 31-10-1966 after which the matter went to the Appellate Assistant Commissioner and then to the Tribunal. On 16-10-1968, the Tribunal rejected the appeal of the revenue. Thereafter, at the instance of the revenue, the following question of law was referred to this court for opinion:

Whether on the facts and circumstances of the case, the Tribunal was right in deleting the amount of Rs. 5,00,000 (rupees five lacs) from the assessment year 1946-47?

The High Court decided the issue against the assessee and in favour of the revenue and the matter was remitted to the Tribunal for passing a fresh appellate order. When the matter was taken up before the Tribunal, the assessee challenged the addition made by the assessing officer on two grounds. One of the grounds was of course on merits and the second ground was that reopening the assessment was contrary to law.

The contention of the assessee before the Tribunal was that there was no material on record, on the basis of which the assessment could be reopened, and that the reassessment was sought to be reopened after a gap of 16 years which was not permissible in law.

During the course of hearing, the Tribunal required the revenue to produce the record containing the reasons for issuing the notice for reopening the assessment as well as the sanction given pay CBDT. The record was not produced before the Tribunal by the revenue. However, by letter dated 1-3-1983 the departmental Representative explained the reasons for not being able to produce the record.

The Tribunal passed an order dated 11-4-1983 allowing the revenue''s appeal. It is in these circumstances, that the two questions have been referred for our opinion.

We required the revenue to produce the record to show that the notice could have been issued to the assessee to reopen the assessment after a gap of sixteen years. We had also wanted to see the reasons on record on the basis of which the Income Tax Officer initiated proceedings for reopening the assessment and also to determine whether the correct procedure had been adopted in this regard.

From 27-2-2007 when the matter was first taken up until today, we have been adjourning the matter either because learned Counsel for the petitioner was not available or learned Counsel for revenue was not able to obtain instructions.

On 26-2-2008 we had noted that the case is very old pertaining to the assessment year 1946-47 and on request of learned Counsel for the revenue, we granted 2-1/2 months time to the revenue to produce the reasons for reopening the assessment and we had made it clear that we would not extend the time. Almost three months have gone by, but learned Counsel for the revenue is unable to produce the record of the case indicating the reasons for reopening the assessment after a gap of 16 years.

In our opinion, since the assessment is of more than 60 years vintage, no useful purpose would be served by keeping the matter pending. We also find that it would not be possible for us to apply our mind to the case in the absence of the relevant record particularly why the Income Tax Officer sought to reopen the completed assessment, keeping in mind the contention of the petitioner that there was no material before the Income Tax Officer to reopen the assessment.

There is nothing to suggest that approval was granted by the CBDT to the Income Tax Officer to issue notice to the assessee for reassessment after a gap of 16 years while this has not been directly challenged by the assessee, we have nevertheless to be satisfied that the revenue has acted in accordance with law, particularly since there is an argument to the contrary. In the absence of relevant material being produced before us, we are left with no option but to draw an adverse inference against the revenue without going into merits of the case. We have taken into consideration that the matter is 60 years old and we need to bring the litigation to an end sometime.

Under these circumstances, we answer the question referred to us in favour of assessee and against the revenue.

The reference is disposed of accordingly.