Claggett Brachi Co. Ltd., London v. Commissioner Of Income-Tax, A.p

202 saan eqratara frrota afawt [1990]2 eA fro go dt deren at afaa az st agar we 1 Use at ae A faa area tt TAfraea feat fe usa at Saat ga ara at fear ¢ fe afagar at alaqaa whSEF TTATAT TTT Ta HTS Be set Paar, wat fee1 sar ag. dt wer FEaera Setee BT sera aE aT At afagaa & ard qatar 2a} fare ser aT |aa a alat al cara H tad gu aura faare 2 fe afe ga afagad a fag aeForen F ett TT Gael wah F Hrerata Hr eerea Fat az ges A Ma Fat‘Sate gata ar esreq 500 aaa a aaraz 20 SANT IY HLF Ale ara a aefree < fa afe gait at. waa gar ae dt ort&@ at gad a 18 GAIT VAT HYarta slat Ut S aaaeR araTH AAT HT AAT HLA H fare Fat welt& faar at eat are at cara & area ay ota a ort7 vt28. aaqart Tey eaTaraT sr fay Aare fat ara gs AK atte AGT arat ¢ gar wredta ee afar ay aver 306F aia afagad at aafasagra at aret ¢ fag cree cae g MT aT areara a safer ale 20 eaxeae & Gata H ytiafer Pear qrar 3 ate Gata ar dara wea a aafewr ataaqar H at ay H wate Braara ar eeree fear arate lafe gataat werHoSt at ois F at say18 gare eae Ht arufa 1978 at aifse adler 477 F attareal at a oraat freer saat ater wat & ga ag B aTate & fre fear arear| yaar rar wTfaq afagad at are & 0% AreBr aay feat wat &|Lo Ho [Fo Tarte Tat Brat fafats ara HRT AAI, Hie HBT |AA To MIXo THo WSF alt eato aay faa aia-et afafran, 1961 (1961 wt 43)—arer 147 ate 148 —ga-faateo —ariaat affraid siete gaat are wear fe safe cay fatfcet &age Beez a adfaa a ake Ha aa faa S areare ae aifaa agl a—zaqaat® aqaen 4 fair ga: feat mat aafaa g—afaaret faethe & eatig aral Ho fo Hea To Mawaaa,Ui VAN 203 mraiaaafasal at we fateag—rne —afasal afeartt % faeg Ma arta afaaadt wtad fretf gafzatcn & sarfgat fave ga-faaten srqarfgat arta at anat gt ara-at afafaaa, 1961 —are147, 148, 149 att 143 —faaiear—want afaret afaaral fratfed aaarsas afaaat at frater aeet faneq ater 2|| adrardt-fratfedt ca afaardt eefar aoat 2 ot ara aaa FH aHA AT Mea J ayer saat fear HLA HT HIG HVAT Zl ae Tay TTfaaifeat & aay Ba ocaie area aT sy are a Hala ge fae fea Sarmo8| faaten ay1962-63 % fac faaten argarfeat & aber ag sate start @fe qra-pe afrarel at araata A ag ata arg at fe sare aaa aT ATMA HUAwR Taal BT TE At| sa ay FH far faalfeat a are a Grga HY TE faazaiy|i ag afseqaa fear gat at fe waft eam faatfeat & ago aTeaI< FY AIT alaa frat ata afenatal 4 wa FT arcare oh aftafaa at at fe tam Tara,& wo alt fasa F preare aw i amar F faat qatari sal TaHTe a faagizoay 1960-61 % fag ara-az afeart a ag nega fear fe ya Frater aeqarz-y~ = PRA BT TOM| ea aT H agare fH Frater ag 1959-60, 1960-61 % farata fratoor & wend eti gat 18 aad, 1964 at rede ara-axt afufean,1961 at are 148 & aata erat afrnatat a qaar are a ay| afaanaiartTea yaaa wt fafraraat ar fade fat alt agavila at fa afafaay a.ater 149(3) at fee & gatrateor at ats quar gaa fate ag a anitaa a ays aaara H asa feel alaaret fraifedt & afanat oe ale aeat aT andlt ara-ae afaardt F areta ay gfe ay ate araaifeal et eared,art fearagian agra (adie) & aaer Fratfedl are Great al Te atte atheHt a ug fag fedla ada % aaa F ara-at atia fen 4 ag aT aTATaT7fe gafaaten arent fants at ate & aa gah na H ahada F arate Tzfea me y ate gafae afaniftarefer A alt gas afateaa aie faatwr qeeq a afanaiat ox feu av & afar aan afsardy wt ata faathedy Ffasg agar Bea ar fawed sta agt at agar atin afrawt y adewat Bt atx fratfeat ge Pee ay gafaaien at acred Hx feat)stead four% ATUG TAA ses eqraraa at faafod fa TT IX GAA TIA H aT Aag afafaatiea feat qar fe safe ora Fading afanatat & er A rar VTafeataa ara fe tae cary & wa-faHT HT HIATT| GAL TIT TT GEA eUTITATvag afafratfea fear fe am-net afaartt & ga fasag at gear F aaafe afanatat & faeg gafaaterarratfgat agi at ot andl aY, 3a ata—faaifedt& faarfea % axa faeg art ertardl at wea ara adi ate eft) a fratensea eorataa aah & fav & sak facia gafratco H fae adhe waySVqTA FAITTIAT HAT AR| Sraay eager grat adie arfesr TV ge, 204 gegen wraaa facta ofaar (1990] 2so foqo | CLAGGEIT BRACH! CO. ·LTD., LONDON v. COMMISSIONER OF INCOME-TAX, A.P. APRIL 26, 1989 [R.S. PATHAK, CJ, AND RANQANATH MISRA, J.] ) Indian Income Tax Act, 1922/lncome Tax Act 1961: Section 23(3)/Section 147-149-Reassessment consequent on change in m~thod of computation of profits-Whether permissible-Original assessment made on agents-Reassessment-Whether could be initiated .against r,i~sessee . .\ The appellant-assessee, a non-resident sterling company, carry· ing on business of purchase and sale of tobacco, on its own and for commission, effected purchases through its Indian agents. The agents filed returns of income on behalf of the assessee for the assessment years 1959·60 and 1960-61. The Income-tax Officer completed the assessment to tax under s. 23(3) of the Indian Income-tax Act, 1922. However, in the course of assessment proceedings for the assess· ment year 1962·63, the.Income-tax Officer noticed that there was a mistake in computing the overhead expenditure. Therefore, in the opinion that income had escaped assessment for the two assessment years he issued notices to the statutory agents, under s. 148 of the Income-tax Act, 1961, but dropped the proceedings, upon the agents' . objection to the issue of the notice of reassessment on the a~ent of a non-resident assessee after the expiry of two years from the end of the relevant assessment year. Thereupon the Income Tax Officer issued notice directly to the assessee. The assessee tiled returns for both the years under protest.· Rejecting the assessee's contention that it could not be served with the notices since its agentS had already been proceeded against, the Income Tax Officer made reassessments on the assessee for the two assessment · years. The appeals tiled by the assessee were dismissed by the Appellate Assistant Commissioner. In second appeal, the Income-Tax Appellate Tribunal held that the reassessments were without jurisdiction, as they were proceeded on a mere change of opinion of the Income Tax Officer and that the assessee could not be proceeded against ·directly as the 'H 732 assessments were made originally on the agents. A On a re~rence made at the instance of the Revenue, the High Court held that reassessments were not made due to a mere change of opinion of the Income Tax Officer, but pursuant to information ~eceived subsequent to the original assessments from the records of the B subsequent assessment year that the overhead expenses related to the \ entire business, including the business as commission agents, and no\ merely to the business of purchase and sale of tobacco, and that then: . was nothing to prevent the Income Tax Officer from proceeding directly against the assessee and re-assessing it for the two assessment years, when he found that reassessment proceedings could not be taken C against the agentS. In the appeal before this Court, on behalf of the assessee, it was -\ -contended that the Income Tax Officer had no jurisdiction to take proceedings under ss. 147 and 148 of the Income-tax Act because the conditions pre-requisite for making the reassessments were not satis-D fied, and it was not open to the Income Tax Officer to take assessment proceedings against the assessee when he had taken assessment pro-ceedings against the Indian agent. Dismissing the, appeals, 204 afafaaifza—sa ar-az afgard ua wataadt fratag & far faatiaBT TA aT Tat Gla: ag ama fear at fe at Frater aat at ana fatea oz we atge frat at aed aaaefaater & dafea cease & a agfrat aetaa ara gat at fe safe err agot areate & aafaa & fence %ee HF areare A afeafara 3, ate a aa ate fama F array aH a aifaa ae®t ag aa’, dar fe ea eaataa 8 aa afaeaae fat 2, fe ae GaAT araart afar grster al at aadt at afeag ead ga faate F aaa Itaera aeaTaT a HTH frat aati aarfa ag seta aeat tar g fe ara-ae afearatmT ema Saw amet al feat ara 8 ga ava at ate argc gat at fH watzeae ago BTRATT Saas Fl) aa afar Ere sca at ag ataaretafweqat eT & Ba va aaa feat faa ag qearqadt ad F fac faater waalfeat at tar ar) ga ofefeafaat H ea araa ale aee aet fear oT THAT & frye arma afafaan at are 147 Fas (@) Hadas aaa aa saz safe sea carmraaat fruifedt & faeg afafraifer wear ate tant afrards ay at al frat aftardt-fratfedt ar fasterae raatva afaardt fratfedt & afaaat ar frater aca ar fast set1 ea aTat arg faate vat 3 fe afe feet un at frat fear qar ga Zar SI aFrater vat Prat ar waar att aalfs ga arae A area afeaal ar fratfear qatar gafag faatfedt at fasten agt feat at aaa gt aaria aval &ge sae data fe afanatae site at ag gafaaten sraarfeat afafaae atarr 149(3) & aren sraatra TE TE at| gaat frater ay H aaa ea7ya ays aaa ac afanat a afafsaa at are 148 % adlt gaat arara feat star erat are sfafva1 aa araat afar at ga stata a.aqara RUAT TAI ay Baa HaAatfeat wear ae Hr faa ariafsaat F faeg,gam gre at 7§ fate argarfeat AY aaaaIT HAT slat ale Fats fratPeay ® fase ay aefaraten wraarfgat Faget F wr A gafaa aét ataaat1 (Tt 8)|:| fafaa atta afaarfeat:1975atfafat ata ao208ate 209(Go eto)._ «1968fase qa Ao 12 Hai sea sea eq F ade4 ameq, 1971 % fata alt wien % faeg acta|aaa at are aaft Ho Fto Weargaat BY aie aata at gar EA wo garfaot raTaTaAg BT FANT Jo To Ao Vato WER F fear aaMEata)Fo fo Fo fo fo aaa To aaBT argaa, HiT wea [Ao rato TER] 205 Yo to qaR—fang eT Ht F aha wae Hoe FH atxfaatfeal & faeg fafir & at farafafiga seat er saz a2 PUR Csrararay % fata % faag at 7§3— 1. aarafaaty ar ag afafratfca aca Ja arfae daa aratat aaoar at cafe & fata F oferrmeaed gaizator fae aRaren, fratir ag 1959-60 att 1960-61 Fa seta % fare arer 148% ada ardarigat arta ear earfaa ar ? 2. aT afara ar fafa & aqarx ag afafaatfea azar StH arfe rate ag F fag qa faater afanatert ox far a F are ga-faater araarfgat ata faatfeal & faeg area aal ar at aad ? 2. attartt-fratfeat cn afrardt eciaraoadte aT area a dara FA HT AT HIT F alart gaat fast Ha Hr arearye Heit fa aarH aT.ata fratfedt & act Be oe ate area aT aT aT A aaa ot faa fearatat 21 tata & aa fate efear arate fafaes TAT F Hreay a fay wsaR area area aff, 1922 at are 43 F ache faatfedt & afe-at fagat faq mq1 Frater ag 1959-60 atz 1960-61 % fag afaaatertt fratfeal st tz & ara ay faarfrat area at ah1 ara-Ht afaard aTfaaifedt & Taqwa Tat ara att aifa wal at adar Hw HVAT FATT,qdadt at, Hast TT 1958 ae 1959 % fae area ara-aet afafaay, 1922#Y are 23 (3) % aaa frateo go feu1 ay1958 & fae area cara& fase & ga ara frat alas at aftafaa at, grasa ate faaifedl F ary>, ate aff tar F 11,108 ote ef fear var ar1 fe fraihat at saa aaSt afegaa carat oe fh areat feat at gafaq ara-at afeare 4 dary Fga fant Bt 5,34,031 dis ate aredia dara % faa wt 4,48,590 ais alaegc fratfedt& zat area Faraz & faq aranfss sofas F wa F——-:16,760 ais faate &1 sra-at afaard & aft at AMAT 5,652 ais at “etAT SA THA HT ATAT wate 2,826 ats (37,680 eat) anratfaa afar a er¥ faat at A area F aa at afar F afeoraeaeq a ara areil sfamaatytgat amet az faatea ay 1960-61 % faa gaadi gifs at ama A a AaHw B avara Hat atfa 96,482 eg Te i E HELD: 1. The Income Tax Officer came to realise that income had escaped assessment for the two assessment years when he was in the process of making assessment for a subsequent assessment year. While making that assessment, he came to know from the documents per-taining to that assessment that the overhead expenses related to the entire business, including as commission agents, and not confined to the y F business of purchase and sale. The attention of the Income Tax Officer was not directed by anything before him at the time of original assess-,,..,... ment to the fact that the overhead expenses related to the entire business. In the circumstances, there is no doubt that the case falls within the terms of cl. (b) of s. 147 of that Act and there was justifica-tion for initiating the proceedings for reassessment for the two assess-G ment years in question. [736A-D] 2. It is open to an Income Tax Officer to assess either a non-resident assessee or the agent of such non-resident assessee. But if an assessment is made on one there can be no assessment on the other. [ 736E] CLAGGETT BRACH! v. C.!.T. [PATHAK, CJ! -1 Therefore, in the instant case, ifthe assessment had been made on · the Indian agent, thee assessment could not have been made on the assessee. However, the reassessment proceedings commenced on the agent were barred by time by reason of s. 149(3) of the Act. The issue of notice under s. 148 of the Act to the agent after the expiry of two years from the end of the relevant assessment year is prohibited by the statute. Hence, the assessment proceedings against the agent have to be ~ ignored, and cannot operate as a bar ~o assessment proceeding directly Jgainst the assessee. [736F-G] CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 208 and 209 (NT) of 1975. From the Judgment and Order dated 4th August, 1971 of the - f- Andhra Pradesh High Court in Reference Case No. 12 of 1968. K.B. Rohtagi for the Appellant. V. Gauri Shankar and Ms. A. Subhashini for the Respondent. The Judgment of the Court was delivered by PATHAK, CJ. These appeals by special leave are directed against the judgment of the High Court of Andhra Pradesh answering E the following two questions of law in favour of the Revenue and against the assessee: 1. Whether the Tribunal .was right in holding that the re-assess-ments being only consequent on a change as to the method.of computation of the profits the initiation of proceedings under F s. 148 for each of the assessment years 1959-1960 and 1960-61 was justified? 2. Whether the Tribunal was right in law in holding that the original assessment for each of the years having been made on the agents, the re-assessment proceedings could not be .G initiated against the assessee direct? The appellant assessee is a non-resident sterling company whose business consists in the purchase of tobacco from India and its sale outside. The tobacco is sold directly on the assessee's own account and for commiss.ion on behalf of others. The purchases of tobacco. were 3. acrvard fate ay 1962-63 % fay faater arianfedt& agara: ag sate dat & fe arene afeard a aramid Hag ara arg At fe safeara at amar Hat FH aaat gs ai va ays fay fratfedd a WHT A BSAat we faacolt & og sae etat at fe sake cag faaifedt & age Frat 4,faa arte afirnatelt & we H areare it afeafraar, geeaeT get ATATa aaa at a fe dae tary H mr ate fame H arcare at ey gama A fear 206 aay at| ara-ae afrardt Foe gaa Pe Ga Tee TA ATTA BY THT GT FATarat ait adtua & adda Hart ar Haare at area gf arqafas safeaat -dqumat eat are ft ate aa area fasat & sqyT Ml ater arial FX ATg-arf gafeean fraraar aifee atl Sa aTaTT IT Bat aE AaaTeT FRAT feqaratfarat art 160 aie (2,253 eae) eat ate Ga ya FraterA aah art37,680 Bae Ft alfa Beara 9z sfaearhas PRAT AAT | AT TTL a fratag 1960-61 & fare arnt arfraret 7 ag Tega frat fF ya frerteo aaqareafeada azar art| ga aa H aqare fH frat ag 1959-601960-61 %fac ara faater a aa 7g AH, GAT18 saad, 1964 at aieate ag-az*offre, 1961 at aren 148 % aeita areal afeactell at qaad ort ah)afanatat 3 ca qaatal a fafanraar ar fade feet ae ag acta at feafafsaa at are 149 (3) at afte F waa eu gafsater st ate qaar TATAFrater ay at anita & at ad R araara & gear feet afrarht fratfeit +afeaat ot arta vet at or waa1 area afin Fares aT gfte BY ATaraafeat BY aaa Bt fear| 4. aeqvard arene aifirardt & at frerteor aut & fry frertfeat at aagah daa 8 3 oz 29 Grad, 1964 a qaaT ary 148 Fada a!Fraifedt 3 29 amea, 1964 #1 dat faateo anf # faa faaefirat avaafamee BU Hee aT ATT ag cette oT fH GA TTqaae wale ave al wale ave al ave al al[[aT]]alte ara-at afaaret vas afaaatal & faeg qea at Haatel FI AAT AT |aia-6t afsard & eq mdiat at aetiare az feat ate sal frater aah %fa faatfedt ar gafaateo feat) qaae wale ave al wale ave al ave al al[[aT]]aay 5. faatfedt ara aga agaa (atta) & amet Bet FT TE ata|arfes wt at 78 oft fag feta atte F arrat adhe afaaeT Fy AT ATATATfir gafrater ara-at afaardt at ae 8 AIT Ga Aa a afeadt F aayqt fau au ¥ att gafag afaatfearciet & ate gaa afafeat cafe fateqa eq a afeaatal ac few ae & gafae staat afaard al aa faatfedtfang ardaral BTA Ft we al AaaqaTe adie afaseT A ANG AAT HLat atc fratfedt ox feo ae gataateort at aged He fear| 6. umea F AAT Ie ate afaan § g¢ sratna fafa ea satat ait yaa ea aaTaa at saat Usa s fag fadfad feat | 97a WITHgit ¥ yea cararaa § ag afafaaifes fear fe arr-ax afaare FT Me A WEara wa at ofeada vat at fra aacFH ge gafrarer FRAT at fag agPe qanz afrant & rearaadt faster aeafearat a qa fearon %qa Te TAA ATA ay at fe ago areas a aafaa safer aera aftematet & wr H areare A afenfad ara fH saa saryaH Ha AIX fara atHIATT| FAL sat[&][ art][ FH][ geq][ eqrgraT][ A][ ag][ afafratfes][ frat][ far][ arent][ :] TUTE Tat Fo fe AeA To gram HA, ATT Tam [Ao rato gram] 207 afaare % 3a frond gz qgak % Teald fe afewatst & fares gafaateon ard-atfeat tél at at aad at oe aa fraifedt & faeg arqatat ak aut etfraten ast & faq gar gafzatta aa a feof aa alt ale aavet at 1|: effected through the British India Corporation Ltd., Guntur, whot--' A were appointed agents of the assessee under s. 43 of the Indian Income-tax Act, 1922. For the assessment years 1959-60 and 1960-61, the agents filed returns of income on behalf of the assessee. The Income-tax Officer, Guntur, after examining the balance-sheet and profit and loss account of the assessee for the relevant previous years, B the calendar years 1958 and 1959, completed the assessments under s. \_, 23(3) of the Indian Income-tax Act, 1922. For ihe year 1958 the gross ""\ profit on the sale of Indian tobacco, including commission, was sho\"1 in the balance-sheet and profit and loss account of the assessee at £11, 108. As the assessee carried on business not only in India but in other places, the Income Tax Officer worked out the proportionate overhead expenses of the assesse for its business in India at £16,760 taking the total sales of tobacco at £534031 and the sales of Indian tobacco at £448590. The Income Tax Officer computed the loss at-\ -· £5652, and one-half of this amount namely £2826 (Rs.37680) was taken as the ad juste.d loss, being the percentage attributable to the purchas-ing operation in India. On the same basis for the assessment year D 1960-61, after setting off the income against the previous loss, the total loss was found to be Rs.96,482. Subsequently, in the course of assessment proceedings for the assessment year 1962-63, the Income Tax Officer appears to have j.._,, noticed that a mistake had been committed in the computation of the · over-head expenditure. The return filed on behalf of the assessee for E that year had disclosed that the over-head expenses were attributable to the entire business of the assessee, including the blJsiness as com-mission agents, and not merely for the business of purchase and sale of tobacco. The Income Tax Officer believed that he ought to have first computed the proportionate overhead expenses in relation to the total profits by taking the proportion which the profits bore to the total of Y F profits and commission, and then worked out the proportionate over- ( head expenses for the profits arising out of the Indian sales. On thaf"'°'· basis he determined that the adjusted profits would be £160 (Rs.2253), and this would have to be substituted in place of the loss of Rs.37 ,680 arrived in the original assessment. Similarly for the assessment year 1960-61 the Income Tax Officer realised that the original assessment would have to be varied accordingly. In the opinion that income had 1--escaped assessment for the two assessment years 1959-60 and 1960-61, he issued notices on 18 January, 1964 under s. 148 of the Income Tax Act, 1961 to the statutory agents. The agents contested the validity of the notices and contended that in view of s. 149(3) of the Act no notice H of re-assessment could be served on the agent of a non-resident asses-see after the expiry of two years from the end of the relevant assess- )- -1ment year. The Income-Tax Officer upheld the objection and dropped the proceedings. Thereupon the Income Tax Officer issued notice under s. 148 for the two assessment years directly to the assessee to their London address on 29 February, 1964. The assessee filed returns on 19 August; 1964 for both the years under protest, contending that it could not be -r.· served with those notices inasmuch as the Income Tax Officer had 'al.ready· p-roceeded against its agents. The Income Tax Officer rejected t~e objections and made re-assessments on the assessee for the two assessment years. @ 14g7, seit Reatfeetat 1s 8 fe & faarg aa-at arate afar arer gart. at ara-anz aera afyfian aray ax 34 AT ae fear war 147At 148 % ada sraarieat aa at aE afsarfrar mal S aaife gale feowet % fag qatthad wa get ad at we Ft gataatcor afafram st are 147eas (a) 8 ada F fae aed aegveea: a-axafyard TRH ATHIZqt Hsarat arta FT at fe saw ora wt Tad g sas afwnqeqeq gz: agfavarea Bt BT DTU aT fe HL THM ata at fraten auf ® fau fagtey &Be TE at| eae aaa BY areal & az ada alar @ fe qa aaa afyardfaatwa Teaqadl freien ag % fre fraier a< werar at gaa TE a: AAR at fH ay frat anf at ana frafzo & we TE M1 sa fagtwr a waaaa fraten & dafae ceaaat & gt ag are gar fe aafeera AQT FIAT Adafad & fora areare F alot afawateil & eg F arzarx et afeafea g, altzqr att fase F areare aa at aifaa mé G1 ag ae 3, dar fe geqrarer + aa afweqaa fear 2, fe az Qaq aTa-F afar grep yea atat aael at afe sat cag ge Prater & ang TAH TeITTAT H FIA fear sar |aaa ae sete vat lato fe ara-ax afaare at cata ga® aaa aT featara & sa ay sy ae ara gat at ff safteqa aqut areate dafira & 1 aryHX ara Bre oer BY TE qTARTA afaeaag eq F gh va ana fat ofqa ag TATA ae & fre faker artarfest we wer aT| at ofcheafaay Faa Tag He Hag at feat at amar & fe ae waa afataay at gre 147Sas (a) & fret F tae amar F atx eafae aq arate Br fareatfedtfava afafaattca wear dra 8. geet ara, fra ot gat amet ae feat aa &, 48 @ fe aa aramzafar + fratfedt & ada afasat & fees frat plaarfeat at at atag frathet % faeg frater artarfeat agt ax eat aT | ara-zz afeaaraat at at feat afrardt-fratfed? ar faafor <3 agar Ue afrarat freatfeet|% afawat ar fratcr eey ar fared sier 21 ce aaa vt erg faate wet 2|fa afe fait ce ar frater Pear srar a at gat ar faeizor wet frat a|apa ale athe ge ares H aredla afesat ar rato Peay Tat aTsafer|fratfcdt ar frateo adt feat at apar art aarti aeay a ag sae eat a feafaratat ta at 7e gafraten aetafeat afta at ape 149 (3)|aaren erratawe 7s At gana Prater ag % Taca ela & at ah B arpaqa I aaa afaaat at afafaam at are 148 & asta qaat ar ora Pear sar,art arer sfafeg &| TT HT-He afaard at ga whrteg Q-HaATT UAT TAT| 408. Zeaan waAaTAT favia afast [1990] 2 Be foqe ay gax ardatfgat wear da ae Feat | afaaat & fase Sam are at ag Frater at aaeearse BRAT SN aca Ha fratfedt % fava st 7 faaten. aaeearse BRAT SN aca Ha fratfedt % fava st 7 faaten. BRAT SN aca Ha fratfedt % fava st 7 faaten. SN aca Ha fratfedt % fava st 7 faaten. aca Ha fratfedt % fava st 7 faaten. Ha fratfedt % fava st 7 faaten. fratfedt % fava st 7 faaten. % fava st 7 faaten. fava st 7 faaten. 7 faaten. faaten.priaitsal Haga % wo H sataat aet a andl| ga T9T TT AT Vee FATATAT> are Roe H Ta Bat Sew A AT ATATATE ||| —ompgarfgal at aaeearse BRAT SN aca Ha fratfedt % fava st 7 faaten. aaeearse BRAT SN aca Ha fratfedt % fava st 7 faaten. BRAT SN aca Ha fratfedt % fava st 7 faaten. SN aca Ha fratfedt % fava st 7 faaten. aca Ha fratfedt % fava st 7 faaten. Ha fratfedt % fava st 7 faaten. fratfedt % fava st 7 faaten. % fava st 7 faaten. fava st 7 faaten. 7 faaten. faaten. 9. afemmaet aha aana at g atk aaj afer afer at adler. Gtfea FT TE | ato/Fo [1990] 2 wae Fro To 208 qaed, TAea AE, TfaR ATI sigre fade, Jat TAS, HATH 28 ata, 1989 (Ho WTo ATo THo WSF, Alo Yeo THo MAL ate To to AAT ama cigda (Bea za) Gaz, 1941— eater 2(at) catered at ate—faatfcat tas gre sata gFa We ada Ala wT caaa feat wAT— tas gre sata gFa We ada Ala wT caaa feat wAT— gre sata gFa We ada Ala wT caaa feat wAT— sata gFa We ada Ala wT caaa feat wAT— gFa We ada Ala wT caaa feat wAT— We ada Ala wT caaa feat wAT— ada Ala wT caaa feat wAT— Ala wT caaa feat wAT— wT caaa feat wAT— feat wAT— wAT—Gal aI AAA F Ma VAY H TANT FI arading at aAagay ATATST anal 3—aa: fratfeat saa aret F saat & fer cateret at| Vasu GuptaAdvocate The appeals filed by the assessee before the Appellate Assis\ant ·commissioner were dismissed, but iiI second appeal the Income~!fax c Appellate Tribunal took the view that the re-assessments proceeded - tnn a mere change of opinion on the part of the Income Tax Officer and, therfore, were without jurisdictiion, and further as the assess-ments had been made originally on the agents it was not open to the Income Tax Officer to proceed directly against the assessee. Accord-ingly, the Appellate Tribun~l allowed the appeals and set aside the D re-assessments made on the assessee. At the instance of the Revenue, the Appellate Tribunal referred . 1 the two questions of law set forth earlier to the High Court of Andhra ~ Pr11desh for its opinion. On the first question the High Court held that it was not a mere change of opinion on the part of the Income Tax Officer pursuant to which he made. the re-assessments, but that the E Income Tax Officer had received information subsequent to the origi-nal assessments from the records of the subsequent assessment year that the overhead expenses related to the entire business, including the business as commission agents, and not merely to the business of the ~~urchases and sales of tobacco. On the second question the High Court held that there was nothing to prevent the Income-tax Officer, F . hen he found that re-assessment proceedings could not be taken against the agents, from proceeding directly against the assessee and re-assessinglt for the two assessment years. · Two points have been urged before us·by learned counsel for the _ ~_J assessee. It is contended that the Income Tax Officer has no jurisdic- assessee. no - -1 tion to take proceedings under ss. 147 and 148 of the Income-tax Act .because the conditions pre-requisite for making the reassesssments were not satisfied. The re-assessments were made with reference to cl. (b) of s. 147 of the Act, and apprarently the Income Tax Officer proceeded on the basis that in consequence of information in his possession he had reason to believe that income charg.,able to tax had SUPREME COURT REPORTS [1989] 2 S.C.R. escaped assessment for the two assessments years. From the material 1' { A before us it appears that the Income Tax Officer came to realise that income had escaped asssessment for the two assessment years when he was in the process of making assessment for a subsequent assessment year. While making that assessment he came to know from the docu-ments pertaining to that assessment that the overhead expenses B related to the entire business including the business as commission \).' agents and were not confined to the business of purchase and sale. It i~ · 1 true, as the High Court has observed, that this information could ha'~ been acquired by the Income Tax Officer if he had exercised due diligence at the time of the original assessment itself. It does not appear however, that the attention of the Income Tax Officer was directed by anything before him to the fact that the overhead expenses c related to the entire business. The information derived by the Income Tax Officer evidently came into his possession when taking assessment"~ -proceedings for the subsequent year. In the circumstances, it cannot be doubted that the case falls within the terms of cl. (b) of s. 147 of the Act, and that, therefore, the High Court is right in holding against the D assessee. ata—faatfcat tas gre sata gFa We ada Ala wT caaa feat wAT— tas gre sata gFa We ada Ala wT caaa feat wAT— gre sata gFa We ada Ala wT caaa feat wAT— sata gFa We ada Ala wT caaa feat wAT— gFa We ada Ala wT caaa feat wAT— We ada Ala wT caaa feat wAT— ada Ala wT caaa feat wAT— Ala wT caaa feat wAT— wT caaa feat wAT— feat wAT— wAT— fratfedt afan gat tat ada sfawe Fah werarga ae aeaATata ar eqga azar21 arte| aye, 1952 at fratfedt 4 adaat at aarar-HA ATA Bl AMAT FATA qigda aoa Zam daz HTS sgherdt F wa H efsedlazTr& fac aaan fear ate dagare sa Usettea wx frat warsad freaatfar are feu ag frateat & aque F avtgay sararga ate weAAT ATABart Haga ere feu ae fam at faacait TegT al aie fawa-nr aaa fear |amit aid, 1959 BY aatca ata are ate faarfgal at faaten sraarfgat 4fratfeat & afafian & alta saterdy & wa F fralfedt ar cfrediacate HA> fac saan fearafnfeas at afeard a arma oc fear feat ae aegotta aediatt at at fe fraifedl eaterdt val 21 faatfeat 4 aaa afafsarat ayant & ana gave maar wren feargageaaa ea favEe az27 qaadt, 1960 at aIeae BX feat aT fe fralfeht are Pa we fase afa-fan & afta fear} ate ag fe fratfedt eaterdt ar.fretfedt 4 ofeaet The second point urged before us is that when the Income tax Officer had taken the assessment proceedings against the Indian agent of the assessee it was not open to him to take assessment proceedings )-., against the assessee. It is open to an 'Income Tax Officer to assess E either