SMT. GOWRI RAJES and Others vs COMMISSIONER OF INCOME TAX

M. V. BALASUBRAMANW1V, J.

The above tax case references are at the instance of the assessees and they relate to the asst. yrs. 1971-72 to 1973-74. The following questions of

law have been referred to us for our consideration:

Whether, on the facts and circumstances of the case, the Tribunal was right in law in holding that notwithstanding the decision of the Supreme

Court in the case of Indian and Eastern Newspaper Society, New Delhi Vs. Commissioner of Income Tax, New Delhi, , disapproving its earlier

decision in R.K. Malhotra, ITO, Group Circle II(1), Ahmedabad Vs. Kasturbhai Lalbhai (Huf), , the authorities below were bound by the order

dt. 31st July, 1978 of the Tribunal rendered on the basis of the earlier decision of the Supreme Court?

Whether the Tribunal ought not to have held that the law laid down by the Supreme Court in R.K. Malhotra, ITO, Group Circle II(1),

Ahmedabad Vs. Kasturbhai Lalbhai (Huf), having been disapproved in Indian and Eastern Newspaper Society, New Delhi Vs. Commissioner of

Income Tax, New Delhi, , is not the law to be applied whatever the stage of the proceedings?

Whether the Tribunal was right in its conclusion that it was information to the ITO under s. 147(b) of IT Act when the audit party merely

informed him that there was no nexus between the borrowals and advances?

Whether the Tribunal was right in rejecting the contention of the assessee challenging the validity of the reassessments in the light of the decision

of the Supreme Court in Indian and Eastern Newspaper Society, New Delhi Vs. Commissioner of Income Tax, New Delhi, , (supra) for the

reason that the assessee had not agitated against the order of the Tribunal upholding the reassessments on the basis of the view which prevailed

then ?''

The assessees are individuals and they are co-owners of two estates, viz., Mohanand Peak Estate and Karapara Estate and admittedly, the

income derived from the estate was Agriculture income. There were certain credits by way of interest received on money advanced to certain

business concerns and the estate also seem to have paid interest on its own borrowing. The assessees'' share from the Agriculture income were not

admitted in the IT returns on the ground that debits of interest exceeded the credits and that net payment of interest alone came to be considered.

The ITO, originally accepted the claim of each of the assessee for the asst. yr. 1973-74, but he later reopened the assessment invoking the

provisions of s. 147(b) of the IT Act. The assessee preferred separate appeals against the orders of reassessment on the ground that the ITO had

no jurisdiction to reopen the assessment and also on the merits of the case. The first appellate authority did not agree with the contentions of the

assessees and upheld the jurisdiction of the ITO to reopen the assessment. He also upheld the inclusion of interest on the merits of the case. The

assessees carried the matter in appeal before the Tribunal. The Tribunal rejected the contention of the assessee on the question of jurisdiction of

the ITO to reopen the assessments under s. 147(b) of the Act relying on the decision of the apex Court in RX. Malhotra vs. Kasthuribhai Lazbhai

(supra) but, however, remitted the matter to the ITO to make a fresh assessment in accordance with certain directions given by it. The ITO

completed the assessments in pursuance of the directions of the Tribunal. There were appeals preferred by the assessees before the first appellate

authority. The assessee once again questioned the powers of the ITO to reopen the assessment on the basis of the later decision of the Supreme

Court in Indian & Eastem Newpaper Society Ltd. vs. C1T (supra) and contended that reopening of the assessments by the ITO was invalid and

the officer lacked jurisdiction to invoke the provisions of s. 147(b) of the Act. The first appellate authority rejected the contention urged by the

assessees: which was confirmed by the Tribunal. The assessees have challenged the order of the Tribunal and the questions of law, earlier set out,

have been referred to us.

We are of the opinion that the Tribunal has come to correct conclusion in not permitting the assessee to reagitate the question regarding the

jurisdiction of the officer to reopen the assessments which was already concluded against the assessee by an earlier order of the Tribunal. We have

set out the facts in detail and the facts are clear that in the earlier order, the Tribunal upheld the jurisdiction of the ITO to reopen the assessment

under s. 147(b) of the Act and that order of the Tribunal has become final since the assessee has not filed any application either for reference or for

rectification under ss. 254(2) and 256(1) of the Act and by the assessees'' own conduct, the earlier order of the Tribunal upholding the jurisdiction

of the ITO to reopen the assessment has become final. Therefore, it is neither permissible nor possible for the assessee to reagitate the question

once again before the same forum in a subsequent proceedings initiated on the basis of its earlier direction. This Court in TC Nos. 1805 and 1806

of 1996 by judgment dt. 20th Feb., 1998 [reported as M.P.S. Senmar vs. CIT (1999) 151 CTR (Mad) 2661 has taken the view that once the

order has become final and unless its finality is disturbed by a manner known to law or permitted by the law, it is not open to the assessee to

question the order of the Tribunal in a subsequent proceedings. We are of the opinion that the decision of this Court rendered in the above tax case

would apply to the facts of this case and it is not open to the assessees once again to challenge the jurisdiction of the ITO to reopen the assessment

before the Tribunal. There are four questions and the first question of law referred to us would suffice and that would cover all the aspects raised in

all the four questions. Accordingly, we are of the opinion that all the four questions should be reframed and only the first question of law which is

comprehensive and takes in all the aspects of the case is taken as the question referred to us in all the tax cases and we answer the question of law

as reframed by us in all the tax cases in the affirmative and against the assessee.

No costs.