Smt. Harbans Kaur vs Income Tax Officer

The short question that arises in this writ petition is about the legality of the order passed by the Income Tax Officer while framing the assessment of the petitioner in her individual capacity on June 15, 1992 (annexure P-3). The Income Tax return was filed by the petitioner after a notice was issued to her to do so u/s 148 of the Income Tax Act, 1961 (for short, "the Act"). In that return, the petitioner showed her income as 25 per cent. of her share in the firm, Messrs. Bharat Rice and General Mills, Budhlada, at Rs. 15,320. While passing the order (annexure P-3), the Income Tax Officer took the figure of income of 25 per cent. share of the petitioner from Messrs. Bharat Rice and General Mills, Budhlada, as Rs. 1,16,980. That figure was taken as per order dated March 31, 1992, passed by the Commissioner of Income Tax in the case of the firm aforesaid on appeal, and thus assessment was framed accordingly in the case of the petitioner purporting to act u/s 143(1) of the Act. The allegation of the petitioner in the writ petition is that no fresh notice as required u/s 143(2) of the Act was issued to the petitioner for raising the income as shown in the Income Tax return and the assessment, as framed, was thus violative of the provisions of Section 143 (2) and (3) of the Act

On a notice of motion having been issued, written statement has been filed on behalf of the Revenue, inter alia, alleging that the assessment framed was in accordance with law. It is not specifically denied that fresh notice u/s 143(2) of the Act was not issued.

It is in the premises aforesaid that the question for consideration is as to whether the order of assessment can be sustained in law or not. The fact that the firm, Messrs. Bharat Rice and General Mills, Budhlada, was assessed and on appeal, the Commissioner had passed the order on March 31, 1992, partly allowing the same, is not being disputed, The contention of learned counsel for the petitioner, as already stated above, is that if the Income Tax Officer were to accept the figure of income shown in the Income Tax return and frame the assessment, the order would fall u/s 143(1) of the Act and if, for any reason, the Income Tax Officer was to change that figure or raise it, a fresh notice was required to be issued to the assessee, as required u/s 143(2) of the Act and it was thereafter that an assessment was to be framed u/s 143(3) of the Act. On the other hand, Mr. R.P. Sawhney, Advocate, learned counsel for the Revenue, states that it was only a matter of record that the figure was taken by the Income Tax Officer, as determined in the case of the firm in appeal, and if the petitioner was aggrieved, the figure could be rectified u/s 154 of the Act. The order passed on the basis of record was valid u/s 143(1) of the Act, as it purports to have been passed.

After hearing learned counsel for the parties, we are of the view that the approach of the Revenue in framing the assessment in the present case is not correct. So far as an assessment to be framed on the basis of record is concerned, u/s 143(1) of the Act, the record would be the Income Tax return filed and the documents accompanying it. Records of other assessees, in the present case, the firm, cannot be treated as a record of the case to attract the applicability of Section 143(1) of the Act. The moment the Income Tax Officer came to the conclusion that the figure of income as shown in the Income Tax return was not acceptable for any reason, a fresh notice u/s 143(2) of the Act was required to be issued to the assessee. It was thereafter that the order of the Commissioner passed in the firm''s case could have been put to the assessee and the figure of income as given in the Income Tax return changed. This procedure was required to be followed to finalise the assessment u/s 143(3) of the Act.

It will not be a case of rectification, as is argued on behalf of the Revenue. No such plea in the written statement in this respect has been taken. As already stated above, the record of the firm cannot be treated as record of the case of the petitioner in her individual capacity, unless fresh notice had been issued u/s 143(2) of the Act, and such record made part of the record of the assessee''s case.

For the reasons recorded above, this writ petition is allowed, the order of the Income Tax Officer (annexure P-3) is quashed with the consequential relief that the orders, annexures P-5 and P-6 (the recovery proceedings) pursuant thereto are also quashed. It is left to the Income Tax Officer to proceed according to law in finalising the assessment of the petitioner.