Smt. Gowri Rajes and Others vs Commissioner of Income Tax

N.V. Balasubramanian, J.—The above tax case references are at the instance of the assessees and they relate to the assessment years

1971-72 and 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

dated July 31, 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 Income Tax Officer u/s 147{b) of the Income Tax 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, , merely for the

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

?

The assessees are individuals and they are co-owners of two estates, viz., Mohan and 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 seemed to have paid interest on its own borrowing. The assessees'' shares from the agricultural income were

not admitted in the Income Tax returns on the ground that debits of interest exceeded the credits and that net payment of interest alone came to be

considered. The Income Tax Officer, originally accepted the claim of each of the assessees for the assessment year 1973-74, but he later

reopened the assessment invoking the provisions of Section 147(b) of the Income Tax Act. The assessees preferred separate appeals against the

orders of reassessment on the ground that the Income Tax Officer 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 Income Tax Officer 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 Income Tax

Appellate Tribunal. The Appellate Tribunal rejected the contention of the assessee on the question of jurisdiction of the Income Tax Officer to

reopen the assessment u/s 147(b) of the Act relying on the decision of the apex court in R.K. Malhotra, ITO, Group Circle II(1), Ahmedabad Vs.

Kasturbhai Lalbhai (Huf), , but, however, remitted the matter to the Income Tax Officer to make a fresh assessment in accordance with certain

directions given by it. The Income tax Officer completed the assessments in pursuance of the directions of the Appellate Tribunal. There were

appeals preferred by the assessees before the first appellate authority. The assessees once again questioned the powers of the Income Tax Officer

to reopen the assessment on the basis of the later decision of the Supreme Court in Indian and Eastern Newspaper Society, New Delhi Vs.

Commissioner of Income Tax, New Delhi, , and contended that the reopening of the assessments by the Income tax Officer was invalid and the

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

assessees which was confirmed by the Appellate Tribunal. The assessees have challenged the order of the Appellate 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 a 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 Appellate

Tribunal. We have set out the facts in detail and the facts are clear that by the earlier order, the Appellate Tribunal had upheld the jurisdiction of the

Income Tax Officer to reopen the assessment u/s 147(b) of the Act and that order of the Appellate Tribunal has become final, since the assessee

has not filed any application either for reference or for rectification under Sections 254(2) or 256(1) of the Act and by the assessees'' own conduct

the earlier order of the Appellate Tribunal upholding the jurisdiction of the Income Tax Officer 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 subsequent

proceedings initiated on the basis of its earlier direction. This court in T. C. Nos. 1805 and 1806 of 1986-- M.S.P. Senthil Kumar Vs.

Commissioner of Income Tax, , by judgment dated February 20, 1988, has taken a 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

proceeding. 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 Income Tax Officer 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 refrained 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.