1. This is an appeal filed by the assessee against the order of the Commissioner (Appeals), Hyderabad, dated 20-9-1983 and it relates to the assessment year 1974-75. There are three grounds in the appeal. The first ground questions the validity of the reopening made by the ITO under Section 147(Z) of the Income-tax Act, 1961 ('the Act').
According to the assessee the reopening made by the ITO and upheld by the Commissioner (Appeals) is invalid. The brief facts of the case are as follows: 2. The assessee worked as a general manager in Coromandel Fertilisers Ltd., Visakhapatnam. He was a foreign national who arrived in India in 1971 and left India for USA on 2-12-1973. He maintains books of account on mercantile basis. His only source of income in India was salary income payable in dollars. For the assessment years 1972-73 to 1974-75 he filed income-tax returns showing calendar years as the previous years. However, the ITO assessed him treating the financial year as the previous year originally. The assessee filed appeals before the AAC and has agitated the correctness of determining the financial year as the previous year instead of the calendar year. The contention of the assessee about fixing the calendar year as the previous year was accepted by the AAC for the assessment year 1972-73 on 22-10-1975 and for the assessment year 1973-74 on 25-2-1977. The revenue did not accept the correctness of these decisions passed by the AAC and, therefore, it had taken the matters in second appeal to the Tribunal.
The Tribunal by its orders dated 28-2-1977 for the assessment year 1972-73 and 28-9-1978 for the assessment year 1973-74 confirmed the orders of the AAC as regards fixing the financial year as the previous year for each of the assessment years, viz., 1972-73 and 1973-74. The revenue did not accept even the Tribunal's orders mentioned above. It had filed references which were granted and proceedings relating to the assessment years 1972-73 and 1973-74 have been pending before the High Court.
3. For the assessment year 1974-75, the assessee consistent with his stand for the immediately two preceding assessment years, filed his income-tax return disclosing his salary income received from 1-1-1973 to 31-12-1973. However, the ITO while completing the assessment on 7-3-1977 took into consideration, only the salary earned by the assessee from 1-4-1973 onwards and determined the assessee's total income at Rs. 1,98,985. While giving effect to the AAC's appellate order dated 22-8-1977, the ITO passed a modificatory order dated 1-10-1977 whereby the total income of the assessee was further reduced to Rs. 1,84,753.
4. In fact the ITO even while passing his modificatory order dated 1-10-1977 could have taken steps to bring to tax the salary income of the assessee pertaining to the three months, viz., January, February and March 1973 also. However, according to the ITO, this did not happen as the Tribunal's order in the departmental appeal for the assessment year 1973-74 was received only in September 1978.
5. The ITO issued notice under Section 148 of the Act dated 7-1-1981 intending to bring to tax salary income earned by the assessee for the months of January, February and March 1973 and intending to include the said income also as part of his income for the assessment year 1974-75.
In pursuance of the said notice, the assessee filed a return of income on 20-3-1982 declaring income of Rs. 2,31,540 which is the same figure which was returned in his original return on 1-7-1974.
6. Before the ITO, the assessee's representative questioned the basis for reopening the assessment under Section 148. He objected to the invocation of Section 147 saying that there was no failure on the part of the assessee to disclose the material particulars and in any event, the issue relating to the previous year is pending before the High Court at the instance of the department.
7. The ITO did not uphold the objection for reopening. He held that action is taken under Section 147(6) notwithstanding the fact that there is no failure on the part of the assessee to disclose more particulars. The authority for reopening the assessment, according to the ITO was derived under the relaxed provision of time limit under Section 150 of the Act to give effect to the orders of the appellate authorities for the assessment years 1972-73 and 1973-74. He also stated that the assessment for 1974-75 should be revised in accordance with the previous year adopted for the assessment years 1972-73 and 1973-74. Thus, disregarding all the objections raised for reopening, the ITO passed a reassessment order dated 29-4-1982 under Sections 143(3), 147(6) read with Sections 150 and 151(2) of the Act determining the total income of the assessee at Rs. 2,36,230.
8. Aggrieved against the said order of the ITO the assessee had taken the matter in appeal to the Commissioner (Appeals). Again validity of the reopening was questioned especially in view of the availability of the order of the AAC dated 20-10-1975 for the assessment year 1972-73, at a time when the original assessment for the assessment year 1974-75 was passed on 7-3-1977. The learned Commissioner (Appeals) countenanced this argument but did not accept it. He held that taking into account the consistent stand taken by the department that the financial year should be taken as the previous year in respect of salary income, the ITO who completed the original assessment did not follow the modificatory order for the assessment year 1972-73 which itself was in appeal before the Tribunal. However, at the stage of reassessment proceedings, the Tribunal's order rejecting the departmental appeals against the AAC's orders for 1972-73 and 1973-74 became available. As on the day of issue of notice under Section 148, the Tribunal's orders for the assessment years 1972-73 and 1973-74 remained as operative orders. The learned Commissioner (Appeals) found that it is an established proposition of law that a different view taken on facts already on record by a higher Tribunal in appeal from the ITO's decision can constitute information within the meaning of Section 147(b). He relied upon several decisions including Jawahar Lal Mani Ram v. CIT [1963] 48 ITR 837 (All.), Raghunath Prasad Tandon v. CIT [1964] 51 ITR 763 (All.), A.V. Thomas & Co. Ltd. v. CIT [1966] 61 ITR 1 (Ker.), E.A. Venkataramier & Sons v. CIT [1967] 65 ITR 316 (Mad.), CIT v. India Reconstruction Corpn. Ltd. [1968] 67 ITR 204 (All.), CIT v.A.J. Zaveri [1968] 68 ITR 594 (Bom.), Hari Bros. (P.) Ltd. v. ITO AIR 1967 Delhi 146 and V.S.L. Narasimha Rao v. ACED [1971] 80 ITR 662 (AP).
Purporting to follow the ratio of the above decisions and in view of the appreciation of facts on record, in the fashion in which he did, the learned Commissioner (Appeals) upheld the validity of reopening under Section 147(b). The assessee also contended that the reassessment framed was horribly time barred under Section 149(1)(6) of the Act. The learned Commissioner (Appeals) got over the objection by stating that the 'finding' or 'direction' contained in the appellate order of the Tribunal for the assessment years 1972-73 and 1973-74 was taken by the ITO as the basis for reassessment proceedings under Section 147(6) for the assessment year 1974-75 and in view of this position as per Section 150(1) there was no time limit for the issue of notice under Section 148. Thus, having held that the reopening was valid under law and is perfectly in time, the learned Commissioner (Appeals), however, gave some relief to the assessee on some other grounds and partly allowed the appeal filed before him by the assessee as per the impugned order dated 20-9-1983.
9. Aggrieved against the impugned orders of the learned Commissioner (Appeals), the present second appeal is filed before this Tribunal. We heard Shri S.E. Dastur, the learned advocate for the assessee and Shri N. Santhanam, the learned departmental representative. The following contentions were raised by Shri Dastur, the learned advocate for the assessee:-- (i) There is not enough information available to the ITO when he issued notice under Section 148 intending to assess the alleged escaped income for the assessment year 1974-75. The assessee while filing his return on 1-7-1974 had disclosed his salary income which he got for the calendar year of 1973. Therefore, the information which the ITO purported to be having at the time of notice is an information which he was already having even before passing the original assessment order for the assessment year 1974-75 on 7-3-1977. The learned advocate for the assessee contended that on 30-12-1975 itself, the ITO gave effect to the appellate order of the AAC regarding the assessment year 1973-74 treating the calendar year as the previous year. The ITO should have followed the said order while making his original assessment for the assessment year 1974-75 which is now under appeal. It is no doubt true, the learned advocate argued, that the department did not accept the decision of the AAC as regards the previous year to be adopted and took the matter in appeal to the Tribunal. However, it is noteworthy that the department did not succeed before the Tribunal which by its order dated 28-9-1978 merely confirmed the order of the AAC on the subject. Shri Dastur further argued that reaffirmation of the view taken by the AAC by the Tribunal would not amount to information though the legal concept advanced on the other side that the decision of the appellate authority constitutes information is unexceptional. In support of his contention Shri Dastur relied on the decision of the Calcutta High Court in L. Madanlal (Aluminium) (P.) Ltd. v. ITO [1978] 115 ITR 293 at 299 where it is held that it is absurd to think that affirmation or reiteration of the same principle of law can furnish any subsequent knowledge or information within the meaning of Section 147(b).
(ii) Nextly, the learned counsel argued that when the assessee himself offered the calendar year as the previous year in his return the ITO had no authority to alter it. According to him there is no option left for the ITO to adopt some other period than the calendar year as the previous year. For this purpose he relied upon the decision of the Madras High Court in CIT v. K. Saraswathi Ammal [1981] 127 ITR 404.
(iii) Nextly, the learned counsel for the assessee argued that under Section 149(1)(b) reassessment under Section 147(6) can be done only within four years after the close of the relevant assessment year.
So in this case four years from the close of the assessment year 1974-75 would be complete on 31-3-1979. However, notice under Section 148 which was issued on 7-1-1981 is much later than the last day of limitation and hence, the reassessment is barred by time.
(iv) Nextly, it is contended that in this case the revenue cannot get over the bar of limitation by taking refuge under Section 150 for the simple reason that the Tribunal's order dated 28-9-1979 did not contain either a finding or a direction pertaining to the assessment year 1974-75.
(v) Nextly, it is argued that while dealing with an appeal for the assessment year 1973-74, the Tribunal cannot under law be competent to give a direction with regard to a different assessment year, viz., 1974-75. The learned counsel relied on the Supreme Court's decision in ITO v. Murlidhar Bhagwan Das [1964] 52 ITR 335 in support of his stand.
(vi) Lastly, Shri Dastur, the learned counsel for the assessee argued that the revenue in the case may try to call in aid Section 153(3), Explanation 2 of the Act. But it is significant to note that the said Explanation did not deal with information having been obtained from an order for a different assessment year and, thus, it does not apply to the facts of the case. He contended that nowhere in the Explanation any mention is made about Section 147(b) and so it does not deal with information and, hence, it is of no help to the department. He argued that a finding that an amount should be assessed in another assessment year would be valid under Explanation 2. But the Explanation does not deem any non-existing direction as a direction. According to him there is no deeming of a rinding which can be culled out from the said Explanation.
10. As against all the above arguments, the learned departmental representative, Shri Santhanam argued that when an appeal is filed against the AAC's order of 22-10-1975 and when once the department did not accept the correctness of the said decision it would not constitute information within the meaning of Section 147(6). He referred us to the Supreme Court decision in Grindlays Bank Ltd. v. ITO [1980] 122 ITR 55 where it is held that the High Court while quashing the assessment can validly direct the ITO to redo the assessment even while exercising its writ jurisdiction in order to do complete justice to the parties. He argued that as far as implementing a finding or a direction passed by an appellate authority is concerned, that can itself constitute information and no extraneous information is necessary to validate the reopening under Section 147(6). He heavily relied upon the decision of the Andhra Pradesh High Court in B.A.R. Abdul Rahman Saheb v. ITO [1975J 100 ITR 541. He submitted before that this decision is on all fours and fully applies to the facts on hand and is a complete answer to all the contentions raised by Shri Dastur.
11. Thus, we have considered the rival contentions advanced on either side. We propose to deal with each of the arguments advanced by the assessee's counsel, Shri Dastur. His first contention is whether there is any information to justify the reopening of assessment made in this case. In this connection we feel that the Allahabad High Court's decision which is cited by the learned Commissioner (Appeals) in his impugned order in Jawahar Lal Mani Ram's case (supra) is instructive.
The facts of that case are important to be noted before appreciating the legal exposition made in the judgment. There was a bigger HUF up to the assessment year 1945-46. The bigger HUF was used to be assessed to income-tax. During the assessment year 1946-47, an application was made claiming disruption in the family with effect from 19-5-1945. It was claimed that on disruption of the bigger HUF two smaller HUFs had come into existence. The ITO did not accept the claim and rejected the application for recognising the partition by his order dated 4-10-1950.
One month after that date, one of the smaller HUFs filed its returns for the assessment years 1946-47 to 1949-50 showing income from business which had hitherto been carried on by the bigger HUF. So also the second smaller HUF which is said to have been emerged from partition claimed also filed four returns for the above assessment years. The bigger HUF went up in appeal to the AAC against the order passed under Section 125A of the Act. The AAC partly accepted the case of disruption of the bigger HUF. He had accepted the disruption only from 8-2-1952 but not from 19-5-1945 as prayed for by the bigger HUF.As against that order of the AAC the bigger HUF went in further appeal to the Tribunal which by its order recognised the claim for partition with effect from 19-5-1945. In the meanwhile the ITO following the view that there was no disruption of the family on 19-5-1945, assessed the entire income in the hands of the bigger HUF for the four assessment years mentioned above. When the matter ultimately went to the Tribunal following its own view about the partition in the family recognised by its order dated 31-8-1954 it had allowed the appeals filed by the bigger HUFs and issued direction to the ITO to make fresh assessment as against the smaller units. In pursuance of this direction, the ITO took the sanction of the Commissioner and initiated proceedings under Section 34 of the Indian Income-tax Act, 1922 ('the 1922 Act').
Sanction was accorded and notices were issued and assessments were completed. It was contended that as returns were already filed by the smaller HUFs and when they were still pending and when valid assessment under Section 23 of the 1922 Act should have been made the proceedings under Section 34(1)(b) were invalid. Examining this contention, the Allahabad High Court held that they are clearly of the view that in the circumstances it is wrong to say that the returns had not been acted upon and were still pending when the impugned orders were passed.
Acting or not acting upon a return does not necessarily mean passing or not passing an assessment order. The assessment order is the final act in the process of assessment but a return can be acted upon all the same even though acting on the return meant result in the passing of an assessment order. It further held that where an assessment order has been made on a return filed under Section 23(3), or in respect of income shown in it, but against another person, it cannot be argued that proceedings under Section 34 cannot justifiably be taken. They further held on construction of the then Section 34 and proviso thereunder that the period of four years limitation provided for assessment or reassessment under Section 34 where the escape of income was not due to any omission or default on the part of the assessee did not apply where the reassessment was made in pursuance of an order under Section 31 of the 1922 Act, etc. The Allahabad High Court held that if an assessment is made as per the direction of an appellate order the said assessment is altogether a different assessment than the one made under Section 23 or Section 34 and so there is no question of limitation. This exposition is found: ... Under the system of hierarchy of Courts in this country including proceedings under the Income-tax Act a subordinate authority like the Income-tax Officer is bound to carry out the directions of a superior authority. This was so laid down by the Supreme Court in the case of Bhopal Sugar Industries Ltd. v. ITO [1960] 40 ITR 618. It follows that as there is no period of limitation prescribed either for the Appellate Assistant Commissioner or for the Income-tax Appellate Tribunal for disposing of an appeal pending before them by reference to the assessment year involved in the appeal if the assessment made in consequence of an appellate order is an altogether different kind of assessment than one made under Section 23 or Section 34 no question of limitation can at all arise and there would be no question of making any provision for the removal of a non-existence bar of limitation. In other words, the question would arise whether on the hypothesis that a fresh assessment made in consequence of an appellate order is a different kind of assessment the proviso was not a mere superfluity or was enacted merely by way of abundant caution. This precise question came up for consideration before the Bombay High Court in CIT v. Kishoresinh Kalyansinh [1960] 39 ITR 522 and the Bombay High Court took the view that the proviso had been enacted merely by way of abundant caution. If this view is accepted it will not be necessary to comply with the conditions prescribed in the enacting portion of Section 34. If they were not complied with it would make no difference to the validity of the fresh assessment as that assessment would be in a class by itself and would not require those conditions to be satisfied ; it would be sufficient that the assessment had been completed in consequence of the directions of the appellate authority. (p. 849) 12. Therefore, it can be seen that according to the Bombay High Court decision cited in the excerpt given in CIT v. Kishoresinh Kalyansinh Solanki [1960] 39 ITR 522 the assessment order that is to be framed as per the directions given by an appellate authority is altogether a different proceeding and while framing such an assessment the conditions prescribed in the enacting provision of Section 34 of the 1922 Act which is equivalent to Section 147 of the 1961 Act, need not be complied with. It is made clear that if the requirements of Section 34 were violated or not complied with it would not affect the validity of the fresh assessment made. We found that the legal position expounded by the Allahabad High Court and the view taken by the Bombay High Court which was followed by the Allahabad High Court, still appear to be holding the field. Therefore, simply because some of the requirements of Section 147(6) are not com-lied with, the validity of the assessment made in this case does not appear to have been affected in any way. Therefore, the argument of Shri Dastur, the learned advocate for the assessee, that returns were filed showing the calendar year as the previous year, but, however, the ITO took the financial year as the previous year, that there is no new information available to the ITO justifying the reopening under Section 147(6), that the information which the ITO purported to have possessed while giving the notice under Section 148 was already available to the ITO, inasmuch as he had implemented the order of the AAC for the assessment year 1973-74 on 30-12-1975 far ahead of the return filed for the assessment year 1974-75 on 1-7-1974, cannot be of any avail and it does not secure to the assessee the intended result. As far as the argument that the reassessment order passed which is now under challenge only reflects a change of opinion on the part of the ITO, the learned counsel for the assessee relied upon the Bombay High Court decision in Addl. CIT v.Seth Hemant Bhagubhai Trust [1983] 140 ITR 471. The facts of the case are that in the wealth-tax assessment of the beneficiary of a trust for the assessment year 1957-58 the AAC held by his order dated 24-6-1959, the trustees were the owners of the trust and the beneficiary had no life interest in the income of the trust fund. In the income-tax assessment proceedings of the assessee-trust for the assessment year 1958-59, having regard to the finding recorded in the case of the beneficiary, the same ITO took the view that no assessment could be made on the trust and the proceedings were dropped. In the assessment year 1962-63, the ITO following his earlier view for the assessment year 1958-59 held that the trust was not liable to assessment on the total income of Rs. 3,84,225 which was returned by the trust and that the said entire income was to be assessed in the hands of the beneficiary. On appeal to the AAC for the assessment year 1962-63, the AAC by his order dated 17-9-1966 held that the beneficiary could not be assessed in respect of the entire income from the trust and that he was to be assessed only in respect of the actual receipt from the trust. He further held that the trust was to be assessed on the balance of the income at the rate applicable to an AOP. On 27-3-1967, the ITO issued a notice under Section 148 read with Section 147(b) for reopening the assessment of the assessee-trust for the assessment year 1962-63 on the ground that upon receipt of the order of the AAC dated 17-9-1966, in the case of the beneficiary for the assessment year 1962-63, the income of the trust had escaped assessment. The Bombay High Court held ultimately that the ITO cannot rely on the order of the AAC dated 17-9-1967 which merely followed the view taken by him in respect of the trust deed by the order dated 24-6-1959. Therefore, the reopening of the assessment was not in consequence of any information in the possession of the ITO and the reassessment proceedings were not valid.
Though this decision at the first blush give an impression that it may apply to the facts of the case, on a close scrutiny of the decision we are definitely of the opinion that there are several distinguishing factors and the ratio of the decision cannot be applied to the set of facts before us. Our reasons are as follows: 13. The ITO while making the assessment dated 1-7-1974 for the assessment year 1974-75 did not adopt the calendar year as the previous year unlike in the Bombay High Court case where a certain opinion was expressed by the ITO himself on the trust deed in the assessment order for 1957-58. The only argument that was very much pressed before us is that the ITO who had completed the assessment for 1974-75 implemented the order of the AAC on 30-12-1975 treating the calendar year as the previous year for the assessment year 1973-74 and, therefore, the order implementing the AAC's order should be taken to be the view expressed by the ITO himself on 30-12-1975.
14. On the other hand, the learned departmental representative submitted that technically the ITO was to implement the order of the AAC. The revenue did not accept the order of the AAC dated 22-10-1975 but preferred an appeal to the Tribunal and later reference is taken and the matter is now pending decision before the Hon'ble High Court.
Justice Sabyasachi Mukharji in ITO v. Panama (P.) Ltd. [1974] 97 ITR 210 (Cal.) at p. 212 listed out some conditions which are required to be fulfilled to constitute information under Section 147(6). One of the conditions was that 'the knowledge or information must be such which leads to the formation of the belief that the income of the assessee had escaped assessment or had been underassessed'. The learned departmental representative argued, when the revenue did not accept the AAC's order dated 22-10-1975 which was later implemented by the ITO by his order dated 30-12-1975, the AAC's order, though it is information was not capable of leading to the formation of the belief that the income of the assessee had escaped assessment. Therefore, according to the learned departmental representative, it is not simply enough if merely information is available. That information should be such which leads to the formation of the belief that income of the assessee had escaped assessment. This requirement of formation of the belief that the income of the assessee had escaped assessment was not fulfilled in this case when the ITO passed his order dated 30-12-1975.
15. After, thus, hearing both sides, we are inclined to agree with the arguments of the learned departmental representative and in pursuance thereof we hold that it is not simply enough that some information is available to justify reopening under Section 147(b), In our considered view such information should lead to the formation of the belief that the income of the assessee had escaped assessment. Simply because the ITO in order to maintain judicial discipline had to carry out the orders of his superiors and implement them. Is orders of implementation cannot be said to be information leading to the formation of the belief that the income of the assessee had escaped assessment. Further in the Bombay High Court decision, while framing the assessment against the beneficiary for the assessment year 1958-59, the ITO took the view that the entire trust income was receivable by the trustees on behalf of the beneficiary and, therefore, the provisions of Section 41(2) of the 1922 Act, applied to the entire income. Therefore, the question of information leading to the formation of the belief that the income of the assessee had escaped assessment is quite obvious in that case whereas it is not so in this case. Further, the Bombay High Court decision exclusively dealt with what constituted information under Section 147(b). In this case, there was no finding or direction relatable to the assessment year 1974-75. It is only implementation of the finding for the earlier years in pursuance of which a consequential position is to be adopted for a subsequent year. Further, the Bombay High Court decision did not consider the ratio of its own earlier decision in Kishoresinh Kalyansinh Solanki's case (supra) where it has been held that a fresh assessment made in consequence of an appel late order is a different kind of assessment and it will not be necessary to comply with the conditions prescribed under Section 34 of the 1922 Act, which is equivalent to Section 147 of the 1961 Act. Thus, we are of the opinion that the Bombay High Court's decision cannot be applied to the facts before us. As far as the argument that no option was left to the ITO except to follow the previous year adopted by the assessee in his return, we find it difficult to accept it. The learned counsel relied on the decision of the Andhra Pradesh High Court in the case of Addl.
CIT v. Allada Kanthayya. [1981] 127 ITR 401. The relevant portion of the judgment on which Shri Dastur relied upon is as follows: ... It is well settled that where, as in the present case, there is only a change in the constitution of the firm and there was neither dissolution of the original firm nor succession by the new firm, the only course that is open to the income-tax authorities is to make one single assessment for the entire period on the firm which was in existence at the time of making of the assessment. It is not open to the income-tax authorities in such a case to compute tax separately for the two broken periods.... (p. 404) It is obvious that the abo ve observations were made in a case of registration of a firm. In our humble opinion, the ratio is torn out of context. Suffice to say that does not apply to the facts of the case.
In our opinion, the decision in L. Madanlal (Aluminium) (P.) Ltd.'s case (supra) also is not applicable. The passage on which reliance is placed is as follows: ... It is absurd to think that affirmation or reiteration of the same principle of law can furnish any subsequent knowledge or information within the meaning of Section 147(6) of the Act.... (p.
299) Firstly, the above passage would reveal that some principle of law should have been affirmed or reiterated. The above ratio does not apply, in our opinion, if the affirmation or reiteration is about a question of fact and not about principle of law. The decision as to which period should constitute previous year relevant to a particular assessment year is not a pure question of law. Utmost it can be said it is a mixed question of facts and law. Therefore, this ratio does not apply to this case. On the other hand, the following passage which occur in the same decision would support the contention of the revenue: The fact that such knowledge or information could have been derived during the previous assessment from an investigation of the materials on record but was not in fact derived would not prevent such knowledge or instruction from being information in terms of Section 147(b). (p. 299) Now as far as the contention that Section 150 does not apply to this case inasmuch as there was neither a finding nor a direction pertaining to the assessment year 1974-75 is concerned, we are of the opinion that it should be accepted. But, however, our acceptance of this submission does not lead us any where nor affect the ultimate result of this appeal. Section 150 is a provision which applies to a case where a finding or a direction is given in any appeal, reference or revision.
For giving effect to such finding or direction the question of limitation does not apply subject to the provisions of Sub-section (2) of the said Section. In our view, Section 150(1) and Section 153(3), Explanation 2 govern different kinds of situations. Section 150(1) applies where there was a finding or a direction which has to be implemented, whereas the cases governed by Explanation 2 to Section 153(3) are cases where there is no such finding or direction to be implemented but govern cases where consequent upon any income excluded from the total income of an assessee for any assessment year should result in the assessment of such excluded income in another assessment year. To put in short, Section 150 governs cases where there is specific direction and Section 153(3), Explanation 2 governs cases where there is no specific direction. But consequent upon the decision governing the earlier assessment year, consequential changes should be made in the subsequent assessment year.
Explanation 2 to Section 153(3) apply to cases where there is no specific direction or finding. The argument of Shri Dastur that Section 153(3), Explanation 2 is not applicable because it did not deal with information having been obtained from an order is to be held not sound.
Further, submission that no help can be drawn from Explanation 2 to Section 153(3) by the revenue inasmuch as the provision does not deem any non-existing direction as direction and there is no deeming of a finding under the said provision cannot be accepted as correct. In fact, in our considered view Explanation 2 to Section 153(3) conceives a non-existing direction as a direction. Explanation 2 to Section 153(3) is as follows: Where, by an order referred to in Clause (ii) of Sub-section (3), any income is excluded from the total income of the assessee for an assessment year, then, an assessment of such income for another assessment year shall, for the purposes of Section 150 and this section, be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order.
This provision contemplates an assessment of excluded income of a particular assessment year in another assessment year. So a finding that a certain income included in the assessment years 1972-73 and 1973-74 should be excluded, should be read as a finding or direction that the excluded income relatable to those previous assessment years should be included in the total income for the assessment year 1974-75.
We are fortified in this regard by the categorical decision of the Andhra Pradesh High Court in B.A.R. Abdul Rahman Saheb's case (supra) where it is held as follows: Thus, on a careful reading of Explanation 2 to Sub-section (3) of Section 153, it is evident that the mere exclusion of an income from an assessment year by a higher authority in a proceeding before it, gives jurisdiction to the ITO to assess or reassess that excluded income in different assessment year, and, in such a case, under Explanation 2 to Section 153(3), it will be deemed to have been made in consequence of or to give effect to a finding or direction contained in the said order. If there is no finding or direction in the order of a higher authority, then Explanation 2 to Section 153(3) of the Act will apply. On the other hand, if there is a finding or direction, the case would fall under Section 153(3)(ii).
(p. 547) In our considered opinion, the Andhra Pradesh High Court's decision in B.A.R. Abdul Rahman Saheb's case (supra) aptly applies to the facts of the case.
The argument of the learned counsel that while dealing with an appeal for the assessment year 1973-74, the Tribunal cannot be, under law, competent to give a direction with regard to a different assessment year, namely, 1974-75 is supported by the decision of the Hon'ble Supreme Court in Murlidhar Bhagwan Das' case (supra). The said decision was considered by the Andhra Pradesh High Court in B.A.R. Abdul Rahman Saheb's case (supra). We have no quarrel with the ratio of the said decision which is binding on us. But we immediately add that the said ratio does not come into play at all in this case for the simple reason that there was neither a finding nor a direction from the appellate order directing that the excluded income from the assessment for the assessment year 1973-74 should be included in the assessment for 1974-75. The inclusion of the excluded income for 1974-75 is clearly justified because of a deeming finding or direction which is presumed to be embedded in the Tribunal's order dated 28-2-1977 for the assessment year 1972-73 and 28-9-1978 for the assessment year 1973-74.
Therefore, in our considered opinion there is no merit in the arguments advanced on behalf of the assessee and we, therefore, hold that the first ground of appeal is devoid of merits and it has to be dismissed.
16. The second ground has got two limbs. The first limb was that one-third of the cost on provision of accommodation, use of furniture and utilities provided to the assessee appellant by his employers were attributable for official purposes and, therefore, the said user should be excluded in determining the value of the perquisite in the assessee's hands. If this Tribunal considered that any lesser fraction is attributable to such user for official purposes then direction may be given to the ITO to work out the amount of exclusion from out of the perquisites included in the hands of the assessee with reference to such lower fraction as may be determined by this Tribunal. The same contention raised by the assessee in his appeal for the assessment year 1974-75 was dismissed by this Tribunal Bench 'A' by its qrder dated 18-9-1979 in IT Appeal No. 1396 (Hyd.) of 1977-78 and'also following its own earlier finding for the assessment year 1973-74 as per its order dated 28-9-1978 passed by this Tribunal Bench 'A' in IT Appeal No. 399 (Hyd.) of 1977-78. In the face of those orders the second limb in the second ground cannot be considered and following the abovesaid orders, we dismiss the whole of the second ground.