JKLR-Part(IV)                                            I.T.Ref 7A/1982                                    Back To Index

(2001) 1 J & K LAW REPORTER 371
High Court of Jammu and Kashmir
at Srinagar
Before
Hon’ble Dr. Justice B.P. Saraf, Chief Justice
Hon’ble Mr. Justice N.A. Kakru, Judge

THE COMMISSIONER OF INCOME TAX                                                                   Petitioner
                                                                               versus
THE HOTEL HIGHLAND PARK, GULMARG                                                              Respondent

I.T.Ref. No. 7A / 1982 decided on 3.7.2000.

            Income-tax Act, 1961, S.143 - Assessment - Procedure - Computation of total income and sum payable  not  required to be done on the same sheet of paper - Tax payable calculated in Form I.T.N.S 150  duly signed by the   assessing officer alongwith  assessment order - Assessment order whether invalid - Held : No.

            It is sufficient compliance with the requirements of section 143(3) of the Income Tax Act, 1961 if the Tax payable is also computed and the computation is approved by the Income-tax Officer, either immediately or some time later. In the instant case, there is no dispute about the fact that the tax payable had been duly determined in a separate sheet, namely, assessment form (I.T.N.S 150) which was prepared and signed by the Income-tax Officer simultaneously with the assessment order. That being so, the ratio of the decision of the Supreme Court in Kalyankumar Ray V. CIT and of this Court in CIT V. Alkeensons Agencies is fully applicable. The assessment is a valid and legal order. There is no infirmity in the same. [Para 2]

            Income-tax Act, 1961, S. 246 - Appeal to Commissioner of Income-tax (Appeals) against order of  penalty – Whether validity of assessment can be challenged in such appeal - Held : No.    

            Law is well settled that penalty proceedings and assessment proceedings are two separate proceedings. Appeals provided in S.246 of the Act both against the order of assessment and the order of penalty. Any person objecting to any penalty imposed by the Assessing Officer under section 271 may appeal to the Appellate Assistant Commissioner under Clause (O) of Section 246(1) (as it stood at the material time). There is a separate provision in clause (c) of Section 246 (1) for appeal against an order of assessment under section 143 (3) and 144. Appeal against an order of reassessment or recomputation under section 147 or section 150 was provided in clause (e) of 246(1). If an order of assessment or re-assessment is not challenged, it becomes final and cannot be challenged in an appeal against an order of penalty. The challenge in such appeal is confined to the imposition of penalty.  The scope and ambit of the appeal is restricted to the order of penalty. The validity of the assessment order, which has attained finality, can not be challenged in such an appeal. The appellate authority can not entertain any challenge to the validity of the assessment order in an appeal against the order of penalty.                                                   [Para 3]

Advocates who appeared in this case :
Sr. Central Govt. Standing Counsel, Mr. Anil Bhan, Advocate for the revenue
None appears for the assessee.

Cases referred : Chronological
1. CIT v. M/s Alkeensons Agencies (IT Ref. 7 of 1979 decided on 26-07-2000)
2. Kalyankumar Ray v. CIT (1991) (191) ITR 634 (SC)
3. S. Mubarak Shah Naqashbandi v. CIT (1977) 110 ITR  J&K

JUDGMENT AND ORDER

Per Dr. B. P. Saraf, Chief Justice ( Oral )

            By this reference under section 256(1) of the Income-tax Act, 1961 (“Act”), the Income-tax Appellate Tribunal, Amritsar Bench, Amritsar (“Tribunal”) has referred the following questions of law to this Court for opinion at the instance of the revenue :

“1. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the assessment for the relevant year, made in the assessee’s case, was affected by the rule laid down in the case of S. Mubarak Shah Naqshbandi (110 ITR 217), even though the tax payable by the assessee was duly determined in the separate sheet, namely, Assessment Form (ITNS-150), which had been prepared and signed by the Income-tax Officer simultaneously with the assessment order?

2. Whether, in the facts and in the circumstances of the case, the Tribunal is right in law in considering in the course of and for the purpose of disposing of an appeal against levy of penalty under section 271(1)(a), a challenge to the validity of the assessment order when no such contention was pleaded before the Income-tax Officer and the Commissioner of Income-tax (Appeals) and, therefore, the Commissioner of Income-tax (Appeals) had not recorded any finding on the same?

3. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that if the assessment is affected by the rule laid down by the J&K High Court in the case of S. Mubarak Shah Naqashbandi (110 ITR 217), the Income-tax Officer could not have derived the satisfaction required for the levy of penalty in the course of assessment in terms of the provisions of section 217?

4. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in cancelling the penalty, levied by the ITO under section 271 (1)(a)?”

            None appears for the assessee. Mr.Anil Bhan, Advocate, appears for the revenue.

            We have heard the learned counsel for the revenue and perused the order of the Tribunal.The real controversy in this case, which pertains to the the validity of the assessment order, now stands concluded by the ratio of the decision of the Supreme Court in Kalyankumar Ray v. CIT (1991) 191 ITR 634 and the decision of this Court rendered on 26th June, 2000 in CIT v. M/S Alkeensons Agencies (I.T.Reference 7 of 1979), wherein it has been held that the statute does not require that both the computations, that is, of the total income as well as of the sum payable, should be done on the same sheet of paper ,viz., the assessment order ; it is sufficient compliance with the requirements of section  143(3) of the Income-tax Act ,1961 if the tax payable is also computed  and  the computation is approved by the Income-tax Officer ,either immediately or some time later. In the instant case, there is no dispute about the fact that the tax payable had been duly determined in a separate sheet, namely, assessment form (ITNS-150), which was prepared and signed by the Income-tax Officer simultaneously with the assessment order. That being so, the ratio of the decision of the Supreme Court in Kalyankumar Ray v. CIT  (supra) and of this Court in CIT v. Alkeensons Agencies (supra) is fully applicable. The assessment order is a valid and legal order. There is no infirmity in the same. The decision of this Court in S.Mubarak Shah Naqashbandi v. CIT (1977) 110 ITR 217 has no application to the facts and circumstances of the present case. Question No.1 is, therefore, answered in the negative, that is, in favour of the revenue and against the assessee.

            In so far as question No.2, 3 and 4 are concerned, the answer is obvious. Law is well settled that penalty proceedings and assessment proceedings are two separate proceedings. Appeal is provided in section 246 of the Act both against the order of assessment and the order of penalty.  Any person objecting to any penalty imposed by the Assessing Officer under section 271 may appeal to the Appellate Assistant Commissioner under clause (o) of section 246(1) (as it stood at the material time). There is separate provision in clause (c) of section 246(1) for appeal against an order of assessment under sections 143(3) and 144. Appeal against an order of reassessment or recomputation under section 147 or section 150 was provided in clause (e) of section 246(1). If an order of assessment or reassessment is not challenged, it becomes final and cannot be challenged in an appeal against an order of penalty .The challenge in such appeal is confined to the imposition of penalty .The scope and ambit of the appeal is restricted to the order of penalty. The validity of the assessment order, which has attained finality, cannot be challenged in such an appeal. The Appellate Authority cannot entertain any challenge to the validity of the assessment order in an appeal against the order of penalty.  In that view of the matter, we are of the clear opinion that the Tribunal was not justified in considering the challenge to the validity of the assessment order, which had become final and conclusive, in course of hearing of an appeal against the order of penalty, and declaring the same to be illegal and invalid.  Question No 2, 3 and 4 are, therefore, answered in the negative that is, in favour of the revenue and against the assessee.

            This reference is disposed of accordingly with no order as to costs.

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