Case: Commissioner of Income Tax, Shillong Vs. Tarajan Tea Co. (P) Ltd

The three questions referred to the High Court for answer in this matter are as followsWhether on the facts and in the circumstances of the case, the tribunal having held that there was no case forthe assessment under Section 147(a) of the Income Tax Act, 1961 on the reason recorded, nor any cause forof the assessment under section 147(b) of the Act on the reasons recorded on 31.3.1977 was justified in law in sustaining theof assessment under Section 147(b) of the Act on the reasons and grounds given in the order passed an appealWhether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that theproceeding initiated under Section 147(a) of the Act by issue of notice dated 31.12.1976 under Section 148 of the Act on the reasons recorded, could be validly converted into a proceeding under Section 147(b) of the Act subsequentlyWhether on the facts and in the circumstances of the case the tribunal was justified in law in setting aside the order of the Appellate Assistant Commissioner of Income Tax cancelling theorders passed by the Income Tax Officer in ignorance of Section144B of the Actand in directing the Income Tax Officer to resort to the provisions of Sectionafresh instead of annuling and/or cancelling theorders and without also taking into consideration the legal bar of limitation for the passing oforders under Section 153 of the ActThe short facts which gave rise to that reference were that thewas dully assessed by the Income Tax Officer (ITO) for the relevant period on the basis of the information supplied by the assessee. No particulars were left out by the assessee for enabling the completion of his assessment. However, the ITOthe assessment and issued a notice under Section 147(a) of the Income Tax Act on the basis that in the case of another Tea Company, the Appellate Court Commissioner had taken the view that sale of standing trees constituted revenue receipts and, therefore, liable to tax. The ITO was of the opinion that the decision of the Appellate Assistant Commissioner in the other case would amount to `information within the meaning of Section 147(a) of the Act in so far as the3. In the course of the proceedings under Section 147(a), the ITO found that it could not be sustained under thatand converted the same into a proceeding under Section 147(b) and concluded the matter. The order of the ITO was challenged before the Appellate Assistant Commissioner (AAC) who set aside the same. But on further appeal by the Revenue, the Tribunal modified the order of the AAC and permitted the ITO to proceed afresh under Section144B of theWhen the matter came before the High Court, the reference was answered in favour of the assessee and the order passed by the ITO onwas set aside. In fact, the High Court observed that the Tribunal ought to have quashed the order converting the proceedings under Section 147(b) from that under Section 147(a).

Reasoning:
5. A perusal of the record in this case shows that there was no omission or failure on the part of the assessee to make a return under Section 139 as contemplated in clause (a); nor was there any information in the possession of the Assessing Officer obtained by him subsequent to the assessment order. Whatever information was necessary was already available to the Assessing Officer when the first assessment was made. The order passed by the AAC in another case is not `information within the meaning of the Section. Hence, neither clause (a) nor clause (b) of the Section would apply in this case.In the circumstances, it is unnecessary for us to consider the question whether a proceeding under Section 147(a) could be converted into a proceeding under Section 147(b) in the course of the proceedings without issuing a fresh notice and initiation of a fresh proceeding.