ORDER
1. The decision rendered in this writ shall also govern disposal of other writ being W.P. No. 1019/87 (renumbered as W.P. 3638/97) as both these writs involve identical issues and relates to same petitioner except the difference being the present petition arise out of Income Tax Act and the other one arise out of Wealth Tax Act.
2. By filing this writ under article 226/227 of the Constitution of India, the petitioner seeks to challenge the notices issued under section 147(a) of the Income Tax Act (hereinafter referred to as ‘the Act’) dated 17-11-1986 for the assessment year 1983-84, 1984-85 and 1985-86 (Annexures P/16, P/17 and P/18). The reasoning for seeking to re-open the assessment for the years in question and which is communicated to the petitioner along with impugned notices reads as under:
“fnukad 21-10-1979 dks fgUnq vfoHkDr dqVqEc dk vkaf’kd caVokjk ;k le>kSrk ds varxZr tks jkf’k :i, 1,25,112 esa ls izkIr gqbZ mldk fooj.kA mijksDr iawth ls vk; vkxkeh o”kksZ 1981-82 ls 1986-87 es izkIr gwbZA mldh iw.kZ ekfgrks nsosaA lkFk gh ;g crykosa fd bl iawth dk fofu;kstu dgka fd;k x;k rFkk izkIr vk; dk fooj.k nsosaA bl laca/k esa vko’;d lk{; Hkh izLrqr djsaA”
3. The petitioner is a assessee as defined under section 2(7) of the Act. It is an Hindu undivided family which is being assessed in that capacity by and under the name M/s. Kesrimal Bapulal through its Karta Keshrimal at all relevant time. During pendency of this writ, Keshrimal, i.e., Karta of said HUF expired and hence present petitioners who are his legal representatives and also co-parceners of HUF are brought on record to continue the proceedings. The petitioner-an assessee is engaged in the business and derives income from property as also from money lending and interest.
4. For the assessment year 1980-81, the assessing officer (A0) made assessment of the petitioner under section 143(3) of the Act. In this assessment, the petitioner had set up one document styled as family agreement settlement dated 21-10-1979 (Annexure P/3). By this family agreement, the petitioner claimed that a sum of Rs. 1,25,112 has gone out of the hands of Hindu undivided family and hence cannot now be taxed as an income of Hindu undivided family. In other words the contention of petitioner on the basis of the said family settlement was that on and after 21-10-1979 (the date of family settlement), the amount of Rs. 1,25,112 will no longer be available for being taxed as Hindu undivided family property and hence it be not accordingly treated as an income/assets of the Hindu undivided family. It is this issue which was gone into by the assessing officer In the assessment proceedings initiated under section 143(3) ibid for the year 1980-81 and by his order dated 25-10-1982 (Annexure P/2), he (AO) accepted the claim of the petitioner and accordingly granted benefit of the said sum i.e., Rs. 1,25,112 to the petitioner for the year 1980-81. However, the Commissioner then invoked the powers conferred under section 263 of the Act and questioned the correction of the finding recorded by the assessing officer. In his order dated 25-10-1982 when he granted benefit to petitioner of Rs. 1,25,112 on the basis of alleged family settlement. In the opinion of Commissioner the order of Income Tax Officer was prejudicial to the interests of revenue in as much as it wrongly relied upon the alleged family settlement for giving benefit to the petitioner to the extent of Rs. 1,25,112. The petitioner was thus afforded an opportunity of hearing in the suo motu exercise of powers by the Commissioner under section 263 ibid and eventually by order dated 5-10-1984 (Annexure P/9), the Commissioner set aside the order of Income Tax Officer insofar as it related to grant of benefit to petitioner of an amount of Rs. 1,25,112 on the basis of family settlement. It is stated that the order of Commissioner still holds the field.
5. Then came the assessment years in question i.e., 1983-84, 1984-85 and 1985-86. The petitioner submitted their return for these three years. However, the assessing officer passed an assessment order under section 143(1) of the Act on 18-7-1985, (Annexure P/13) and P/14 for the year 1983-84 and 1984-85 and on 21-1-1986 (Annexure P/15) for the year 1985-86. It may be noted that since the assessment orders for all the three years had been passed under section 143(1) of the Act and not under section 143(3) ibid the return submitted by the petitioner were accepted as it is and no demand of tax as such was issued nor any inquiry held.
6. On 27-11-1986 the assessing officer issued the impugned notices of re-assessment of the aforesaid three years cases (Annexures P. 16, 17, 18) asking the petitioner to submit the detail of income of Rs. 1,25,112 and also details of income earned out of it. The petitioner was also asked to explain as to where they have invested the said income and the manner in which it was utilised for the years in question. As observed supra it is against these notices of re-assessment for the three years in question, the petitioner has felt aggrieved and filed this writ. Notice of the petition was issued to respondents. They are served and represented.
7. Heard Shri P. M. Choudhery, L/c for the petitioner and Shri A.P. Patankar, L/c for the respondent.
8. Having heard the L/c for the parties and having perused the record of the case, I find no merit in the writ.
9. In my considered opinion, the impugned notices issued under section 147(a) of the Act for making re-assessment of the 3 years in question were rightly issued and hence has to be given effect to. Firstly, it is clear that the assessment for these years had been made under section 143(1) of the Act. In other words, since the assessing officer had made assessment of these three years under section 143(1) of the Act and hence no enquiry into any of the matters including that of investment in relation to disputed amount of Rs. 1,25,112 could be undertaken by the assessing officer in these three years. This could only be done either by issuing notice to the petitioner under section 143(2) ibid or by issuing a notice of re-assessment under section 147(a) of the Act. There is an authority for this proposition which empowers the assessing officer to issue notice of re-assessment under section 147(1) of the Act in respect of assessment made under section 143(1) of the Act. In A Pusalal v. CIT (1988) 169 ITR 215 (AP) (reference is made in Chaturvedi and Pithisaria 4th Edition page 3554) their Lordships while dealing with this issue held as under :
“………..The power that can be exercised under section 143(2) to correct the assessment made under section 143(1) does not exclude the Income Tax Officer’s power to reopen the assessment under section 147. If the ingredients of section 147 are satisfied, it is open to the Income Tax Officer to exercise that power notwithstanding the fact that there are other remedies open to him under the Act. It cannot, therefore, be accepted that the reassessment under section 148 is vitiated because the Income Tax Officer failed to invoke his power to correct the assessment already completed under section 143(1) by issuing a notice under section 143(2).” (p. 219)
10. The only thing which is required to be seen while issuing notice under section 147(a) of the Act is whether requirement of section 147(a) of the Act are satisfied in the facts of the case or not? The submission of L/c for the petitioner was that none of the conditions necessary for invoking section 147(a) ibid are satisfied in this case and hence no notice much less notice under section 147(a) could have been issued. L/c contended that it was not a case of escape assessment because the assessee had already disclosed the family settlement in the year 1980-81 and the same having been dealt with by assessing officer in its order, referred supra, no more reference of that document was needed. I do not agree to this submission.
11. It is not a case where by impugned notice, the petitioner is called upon to disclose the document (family settlement). It is however a case where a document disclosed by the petitioner in the year 1980-81 for taking certain benefit to the extent of Rs. 1,25,112 and which was not allowed to be taken by the Commissioner it being found to be prejudicial to the interests of the revenue, the petitioner is now called upon to disclose as to its details of investment and use of Rs. 1,25,112 for the subsequent years. Indeed, once the amount of Rs. 1,25,112 is held to be petitioner’s income and they are not allowed to take benefit of so called family settlement then the same is required to be explained in subsequent years as to how, where and in what manner, it was utilised and accounted for by the petitioner in their accounts. As observed supra since admittedly the assessment for the three years in question i.e., 1983-84 to 1985-86 were made under section 143(1) of the Act and not under section 143(3) ibid, the assessing officer had every right to ask the petitioner to explain the details of the said amount so as to properly give effect to it in the respective years. In other words, once the said sum is held to be petitioner’s income and was not allowed to go out of their fold (though claimed on the strength of alleged family partition), it comes within the net of taxation in the hands of petitioner for being taxed in subsequent years. It is then necessary for the petitioner to explain its details to the satisfaction of assessing officer for being taxed in accordance with the provisions of Act. In such circumstances, the enquiry has got to be made by assessing officer. It then certainly becomes a case of escape assessment for the years in question so as to invoke the provisions of section 147(a) ibid The position would have been different if for the three years in question, the assessing officer had made regular assessment as contemplated under section 143(3) of the Act and had dealt with this issue after granting an opportunity to the petitioner. But admittedly and as taken note of supra the assessment for the three years in question were not made under section 143(3) ibid but were made under section 143(1) ibid where no enquiry could be made nor contemplated.
12. L/c for the petitioner had placed reliance on 2001 (29) TC 581, Calcutta Discount Co. Ltd. v. ITO (1961) 41 ITR 191 (SC) and Smt. Prabha Rajya Lakshmi v. Wealth Tax Officer (1983) 144 ITR 180 (MP). I find these cases to be distinguishable on facts involved in this case. The law decided must be applied to the identical facts when facts differ, the case law does not help. Same is the case here.
13. In view of the aforesaid discussion I find no merit in the writ which fails and is dismissed. As a consequence all interim order passed by this court in this writ are vacated. The assessing officer is directed to complete reassessment proceedings pursuant to impugned notices within a period of three years after affording an opportunity to the petitioner.
No costs.