Law: Income Tax Act, 1961

Section: 147,148

Income-tax----Reassessment---Income escaping assessment, meaning of---Assessee filing revised return showing loss on ground of receipt shown in original return taxable in preceding year---Receipt taxed in year in question---Reassessment for earlier year to bring receipt to tax---Not permissible---Receipt in question did not escape assessment---Indian Income Tax Act, 1961, Ss, 147 & 148. For the assessment year 1984-85, the petitioner filed its original return on June 27, 1984, declaring a total income of Rs.8,22,400. Subsequently, however, it filed a revised return showing a loss of Rs.55,660 on the ground that a sum of Rs.8,52,000 had been received on cash basis for engineering services and was to be included in the assessment year 1983-84, and excluded for 19.$4-85. The Assessing Officer held that the income of Rs.8,52,000 was to be included in the assessment year 1984-85 and accordingly passed an appropriate order. By an order under section 147 of the Income Tax Act, 1961, the income of Rs.8,52,000 was brought to tax in the assessment year 1983-84. On a writ petition: Held, allowing the petition, that the order of reassessment was patently illegal. The question of income escaping assessment did not arise at all at any point of time, because the petitioner had all along been informing and requesting the Assessing Officer and other authorities of the Income-tax Department that its income of Rs.8,52,000 should be included in the assessment year 1983-84. In fact, the Assessing Officer after taking into consideration this aspect of the matter and pursuant to the direction of the Tribunal to decide the issue with reference to documents available, assessed this income for the assessment year 1984-85. Once the income was subjected to assessment for any particular year, it cannot be said to have escaped assessment, thus, permitting the Assessing Officer to invoke section 147 of the Act. JUDGMENT It is on account of a palpable illegal action on the part of the respondents that the petitioners have been driven to this avoidable litigation. The facts in brief are that for the assessment year 1984-85, the petitioners filed their original return on June 27, 1984,…

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