MRS.NAHID SHAFFI V. INCOME TAXOFFICER

ITA/1350/2009

AI Insights

The case involves two appeals by Mrs. Nahid Shaffi and Mrs. Nilofer Hameed, partners in a firm, against the orders of the Income Tax Appellate Tribunal, Cochin Bench, which were dated 30.10.2006. The appeals arose from the assessment years 1986-1987 and 1988-1999. The core issue was the appropriate procedure for re-assessing the income of the partners after the Settlement Commission enhanced their income. The Tribunal had found that the Assessing Officer correctly used Section 148 of the Income Tax Act for re-assessment, as opposed to Section 155(1)(C), which was argued by the appellants. The High Court agreed with the Tribunal's interpretation and application of the law, citing a precedent from the Supreme Court in Commissioner of Income Tax v. Dalmia Manganese Corporation.

• Counselvise Citation: [2019] 140 COUNSELVISE.COM (IT) 771566 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 18-01-2019
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax v. Dalmia Manganese Corporation [236 ITR 46 (SC)]
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: P K MENON; JOSE JOSEPH
• Assessee Lawyers: PREETHA NAIR; ANIL NAIR; E K NANDAKUMAR
• Keywords: Assessment; Income tax appeal; Limitation; Rectification; Settlement commission
• Section: 148; 144; 154; 151; 245D; 155(1)(C)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON FRIDAY, THE 18TH DAY OF JANUARY 2019 / 28TH POUSHA, 1940 ITA. No.1349 of 2009 AGAINST THE ORDER IN ITA NO.1310/2004 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH DATED 30.10.2006 APPELLANT/RESPONDENT: MRS.NAHID SHAFFI, NO.15, SARASWATHY, IST FLOOR,, DENA BANK COLONY, GANGA NAGAR, BANGALORE-560 032. BY ADVS. SMT.PREETHA S.NAIR SRI.ANIL D. NAIR SRI.E.K.NANDAKUMAR (SR.) RESPONDENTS/APPELLANT: 1 INCOME TAX OFFICER KOCHI. WARD-1(3), RNAGE-2, KOCHI. 2 COMMISSIONER OF INCOME-TAX KOCHI. BY ADVS. SRI.P.K.RAVINDRANATHA MENON (SR.) SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 18.01.2019, ALONG WITH ITA.1350/2009, ITA.1351/2009, ITA.1353/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA. No.1349 of 2009 etc. 2 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON FRIDAY, THE 18TH DAY OF JANUARY 2019 / 28TH POUSHA, 1940 ITA. No.1350 of 2009 AGAINST THE ORDER IN ITA NO.1311/2004 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH DATED 30.10.2006 APPELLANT/RESPONDENT: MRS.NAHID SHAFFI, NO.15, SARASWATHY, IST FLOOR,, DENA BANK COLONY, GANGA NAGAR, BANGALORE-560 032. BY ADVS. SRI.E.K.NANDAKUMAR SMT.PREETHA S.NAIR RESPONDENTS/APPELLANT: 1 INCOME TAX OFFICER KOCHI. WARD-1(3), RNAGE-2, KOCHI. 2 COMMISSIONER OF INCOME-TAX KOCHI. BY ADVS. SRI.P.K.RAVINDRANATHA MENON (SR.) SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 18.01.2019, ALONG WITH ITA.1349/2009, ITA.1351/2009 & ITA.1353/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA. No.1349 of 2009 etc. 3 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON FRIDAY, THE 18TH DAY OF JANUARY 2019 / 28TH POUSHA, 1940 ITA. No.1351 of 2009 AGAINST THE ORDER IN ITA NO.154/2005 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH DATED 30.10.2006 APPELLANT/RESPONDENT: MRS. NILOFER HAMEED S-4, MONARCH RESIDENCE, ST.JOHN'S CHURCH ROAD, BANGALORE. BY ADVS. SMT.PREETHA S.NAIR SRI.ANIL D. NAIR SRI.E.K.NANDAKUMAR (SR.) SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENTS/APPELLANT: 1 INCOME TAX KOCHI WARD-2(3), RANGE-2, KOCHI. 2 COMMISSIONER OF INCOME-TAX KOCHI. BY ADV. SRI.P.K.RAVINDRANATHA MENON (SR.) THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 18.01.2019, ALONG WITH ITA.1349/2009, ITA.1350/2009 & ITA.1353/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA. No.1349 of 2009 etc. 4 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON FRIDAY, THE 18TH DAY OF JANUARY 2019 / 28TH POUSHA, 1940 ITA. No.1353 of 2009 AGAINST THE ORDER IN ITA NO.153/2005 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH DATED 30.10.2006 APPELLANT/APPELLANT: MRS. NILOFER HAMEED S-4, MONARCH RESIDENCE, ST.JOHN'S CHURCH ROAD, BANGALORE. BY ADVS. SMT.PREETHA S.NAIR SRI.ANIL D. NAIR SRI.E.K.NANDAKUMAR (SR.) RESPONDENTS/RESPONDENTS: 1 INCOME TAX OFFICER WARD-2(3), RANGE-2, KOCHI. 2 COMMISSIONER OF INCOME-TAX KOCHI. BY ADVS. SRI.P.K.RAVINDRANATHA MENON (SR.) SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 18.01.2019, ALONG WITH ITA.1349/2009, ITA.1350/2009 & ITA.1351/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA. No.1349 of 2009 etc. 5 JUDGMENT K. Vinod Chandran, J. Two assessees, who are partners of a firm, are before us in the above two appeals arising from the assessment years 1986-1987 and 1988- 1999. The short facts required for consideration of the appeals are that the firm, in which the appellants were partners, was before the Settlement Commission, who had passed an order under Section 245D of the Income Tax Act, 1961 [for brevity, 'the Act']. The order passed by the Settlement Commission resulted in enhancement of the income of the partners. The partners did not file any return pursuant to the order passed by the Settlement Commission. In such circumstances, the Assessing Officer issued notice to the partners under Section 148 of the Act, with sanction obtained under Section 151 and assessment completed under Section 144. 2. The proceedings were completed after affording the assessee with an opportunity, ITA. No.1349 of 2009 etc. 6 which was not availed of. We find from the assessment order that the assessee's had appeared before the Assessing Officer and sought adjournment, but then did not subsequently appear. The Assessing Officer took the income of the assessee as found by the Settlement Commission and completed the assessment. The ground raised in first appeal was that there were two notices issued under Section 148 and the assessment was barred by limitation. However, before the First Appellate Authority, this was not urged and an additional ground was raised. The ground so raised was that the Assessing Officer ought to have proceeded under Section 155(1)(C) of the Act and not under Section 148. The First Appellate Authority found in favour of the assessee relying on a decision of the Hon'ble Supreme Court in Commissioner of Income Tax v. Dalmia Manganese Corporation [236 ITR 46 (SC)]. 3. The Tribunal found that the subject ITA. No.1349 of 2009 etc. 7 matter in Dalmia Manganese Corporation [supra] was relating to the withdrawal of development rebate allowed by the Assessing Officer in the regular assessment order. Subsequently, proceedings were taken under Section 154 of the Act for rectification of the assessment. The Hon'ble Supreme Court found that when there is a specific provision in so far as re-opening of assessment, there could be no resort made to a general provision for rectification. 4. The Tribunal found that the dictum does not apply in the present case, when there was no regular assessment made. Resort could only be had to Section 148, since Section 155 applies only in the case of a completed assessment of a partner and the share of the income of the firm as found in an order passed under Section 245D(4)[clause (c) of Section 155(1)] is not included in the partners completed assessment. We do not think any interference can be made to the order of the Tribunal, since the question ITA. No.1349 of 2009 etc. 8 has been answered perfectly in tune with the law. We hence answer the questions of law raised here against the assessee and in favour of the Revenue and reject the appeals. However, we make it clear that the remand order in so far as the limitation is concerned, would be left open for consideration by the First Appellate Authority. Sd/- K. VINOD CHANDRAN JUDGE Sd/- ASHOK MENON JUDGE sp/22/01/19 ITA. No.1349 of 2009 etc. 9 APPENDIX OF ITA 1349/2009 PETITIONER'S EXHIBITS: ANNEXURE A-A TRUE COPY OF THE ASSESSMENT ORDER DATED 07.10.1997. ANNEXURE B-A TRUE COPY OF THE ORDER OF THE CIT (APPEALS). DATED 21.09.2004. ANNEXURE C-A TRUE COPY OF THE COMMON ORDER OF THE INCOME TAX APPELLATE TRIBUNAL DATED 30.10.2006. ITA. No.1349 of 2009 etc. 10 APPENDIX OF ITA 1350/2009 PETITIONER'S EXHIBITS: ANNEXURE A A TRUE COPY OF THE ASSESSMENT ORDER DATED 07.10.1997. ANNEXURE B A TRUE COPY OF THE ORDER OF THE CIT (APPEALS) DATED 21.09.2004. ANNEXURE C A TRUE COPY OF THE COMMON ORDER OF THE INCOME TAX APPELLATE TRIBUNAL DATED 30.10.2006. ITA. No.1349 of 2009 etc. 11 APPENDIX OF ITA 1351/2009 PETITIONER'S EXHIBITS: ANNEXURE-A A TRUE COPY OF THE ASSESSMENT ORDER. ANNEXURE-B A TRUE COPY OF ORDER OF THE CIT (APPEALS) DATED 15/10/2004. ANNEXURE-C TRUE COPY OF THE COMMON ORDER OF INCOME TAX APPELLATE TRIBUNAL DATED 30/10/2006 ITA. No.1349 of 2009 etc. 12 APPENDIX OF ITA 1353/2009 PETITIONER'S EXHIBITS: ANNEXURE A A TRUE COPY OF THE ASSESSMENT ORDER DATED 07.10.1997. ANNEXURE B A TRUE COPY OF THE ORDER OF THE CIT (APPEALS) DATED 15.10.2004. ANNEXURE C A TRUE COPY OF THE COMMON ORDER OF THE INCOME TAX APPELLATE TRIBUNAL DATED 30.10.06 "