D.K. Seth, J.
1. The appeals being A.P.O. No. 118 of 2002 and A.P.O. No. 361 of 2001 arise out of the judgments and orders both dated January 28, 2002, passed in W. P. No. 2492 of 1994 (Simplex Concrete Piles (India) Pvt. Ltd. v. Deputy CIT : [2002]255ITR49(Cal) ) and W. P. No. 2489 of 1994 (Geo Miller and Co. Ltd. v. Deputy CIT : [2002]254ITR620(Cal) ), respectively. The learned judge was pleased to dismiss both the writ petitions after considering the relevant position in facts and proposition of law, which have since been assailed in these appeals.
2. The moot question we are required to consider is the validity and legality of the notices, all dated July 29, 1994, issued by the respondent-Income-tax Department under Section 148 of the Income-tax Act, 1961, for reopening the respective assessment under Section 147 for the assessment years 1984-85 to 1989-90 and 1985-86 to 1989-90, respectively, in the two cases.
3. Dr. Pal has contended that there was an embargo of a period of four years in reopening the assessment in respect of cases falling under Clause (b) of Section 147 as it stood prior to April 1, 1989, where the assessment is sought to be reopened on the ground other than failure or omission on the part of the assessee to disclose fully and truly all material facts necessary for assessment (read with Clause (b) of Sub-section (1) of Section 149). After the amendment, the proviso to Section 147 provides similar four years' embargo on grounds other than the assessee's default. He has also contended that the provisions being procedural law, it would be governed by the amended provision, since in 1994, the amended provisions were in force. But if it is done under the un-amended provision, then he stands on a better footing. According to him, these four years' embargo is not dependent on Section 151 where the period of four years had expired in respect of cases sought to be reopened on the basis of information other than the assessee's default. Therefore, the notices should be quashed. He has referred to various decisions to which reference would be made at the appropriate stage.
4. Mr. Dipak Som, learned counsel for the respondent, in Appeal No. 361 of 2001, appearing with Mr. Joydeb Saha, has contended that the period of limitation of four years, provided in the proviso to amended Section 147, is dependent on certain conditions, namely, that if the assessee had failed to make a return under Section 139 or respond to a notice under Section 142(1) or Section 148 or to disclose fully and truly all material facts necessary for assessment. Therefore, in the present case, after the notices under Section 148 were issued, the failure to respond to the said notice is sufficient to reopen the case. It is not necessary that this was being done on the basis of the information received by the assessee by reason of settling of fluid position by the apex court's decision rendered in 1993 (CIT v. N.C. Budharaja and Co. : [1993]204ITR412(SC) ). Therefore, these notices cannot be challenged. He has secondly contended that when such notices were issued, this court should be slow to interfere with the proceedings on the notices and determine their validity at the threshold and go into the question with regard to the validity of the notices. He thirdly contended that the notices, as it appears from the paper book, do not disclose on what ground they were issued. Therefore, the court cannot presume that they were issued on the ground other than the assessee's default and decide the case on this basis. Fourthly, he has also pointed out that sufficient reasons having been given and the sanction of the Commissioner having been obtained, the validity and legality of the notices cannot be challenged.
5. Mr. Pradip Ghosh, appearing on behalf of the Revenue in Appeal No. 118 of 2002, has adopted the submissions made by Mr. Som and contended that Section 147 is subject to Section 149. In case of information other than the assessee's default, the limitation is four years as provided in Clause (b) of Section 149(1). But then Section 149(2) makes the provision contained in Section 149(1) subject to Section 151. By reason of the provision contained in Section 151, the embargo of four years provided in Clause (b) of Section 149(1) is subject to extension with the sanction of the Commissioner as provided in Section 151. Therefore, it can be reopened even after four years.
6. Both Mr. Ghosh and Mr. Som have attempted to show that this case would be governed by the unamended provisions since the relevant assessment years were decided on the basis of unamended provisions. Both of them have dealt with the unamended provisions at length in order to bring home their case. At the same time, they have also dealt with the amended provision alternatively to support their contention and have contended that their case stands on a better footing under the amended provision. This is also supported by Dr. Pal that if the case is to be governed under the unamended provision, then he would stand on a better position ; but, however, he cannot take advantage of the old position because it is a procedural matter and needs to be governed by the amended provision. But still then, according to him, four years' embargo cannot be overlooked and cannot be stretched beyond four years with the aid of Section 151 of the Act or otherwise.
7. Both Mr. Ghosh and Mr. Som and Dr. Pal have relied on various decisions to which we shall be making reference at the appropriate stage.
8. So far as the present question is concerned, a comparison of the amended and unamended provisions makes it clear that though there might be some cosmetic changes, there has been no substantial change in the principle on which assessment can be reopened. The principle of law on this proposition as it stood before the amendment would be equally applicable even on the basis of the amended law. This is also made clear from the circulars issued by the Central Board of Direct Taxes as it appears from [1990] 182 ITR 33. At paragraph 7.13, the circular makes it clear that the amended provision which came into effect on April 1, 1989, would be retrospective in the sense that it will apply prospectively in all matters pending on April 1, 1989, and had not become closed or dead. Every amendment is prospective and if it becomes retrospective in respect of pending matters, then while interpreting this proposition, it would be very difficult to accept that though the notices were issued in 1994 the assessment was made prior to the amendment, therefore, it was the old law, which would govern the procedure and not the amended law. That would be a proposition, which cannot stand legal scrutiny. Admittedly, it is the new law that would apply in the present case. However, we would like to examine the question under the unamended law first and then under the law as amended subsequently.
9. The position would not be different either under the unamended or under the amended law. Inasmuch as under Section 147, before amendment, Clause (a) governed cases where the assessee was at fault and Clause (b) governed cases other than those. But there must be some information in the possession of the Assessing Officer to justify reopening. When the assessment was sought to be reassessed, it would have to be done in the manner as provided under Section 148 and before issuing such notices, the Assessing Officer had to record the reasons for doing so. Section 149 prescribed the time limit for issuing such notices. It prescribed that cases falling under Clause (a) were to be divided in Sub-clauses (i) and (ii). Sub-clause (i) enabled reopening up to eight years, and (ii) up to 16 years in respect of cases covered under Clause (a) of Section 147. But Section 149(1)(b) governed cases covered under Section 147, Clause (b), where notices could not be issued after the expiry of four years from the relevant assessment year.
Sub-section (2) of Section 149 made the provision of Section 149 subject to Section 151, while Section 147 was subject to Section 148 to 153. Section 151(1) prescribed that no notice under Section 148 after the expiry of eight years could be issued unless the Board was satisfied on the reasons recorded by the Income-tax Officer (the ITO) that it was a fit case for issue of such notice. Under Section 151(2) if four years had expired from the relevant assessment year then no notice under Section 148 could be issued unless the Commissioner was satisfied on the reasons recorded by the Income-tax Officer that it was a fit case for issuing such notice.
10. Mr. Som has contended that since Section 147 was subject to Sections 148 to 153, therefore, all these provisions were to be read together for the purpose of interpreting the same after giving a reconciled meaning. Whereas, Mr. Ghosh has contended that in view of Section 151, the embargo of Clause (b) of Section 149(1) was subject to Section 151(1) and (2) and, therefore, cases under Clause (b) of Section 147 could be reopened after the expiry of four years with prior sanction of the Commissioner and after the expiry of eight years with prior approval of the Board.
11. This proposition of Mr. Ghosh and Mr. Som does not cut any ice. Inasmuch as, the provisions of Section 148 having not provided the end period for reopening with the approval of the Board, then reopening could be done in respect of cases covered both under Clauses (a) and (b) of Section 147 for an eternity, which would render the embargo provided in Section 147 read with Section 149 otiose. The provisions of a particular section cannot be interpreted out of context. It has to be interpreted having regard to the other provisions provided in the statute. The provisions of Section 147 had been made subject to Sections 148 to 153. Therefore, the provisions of all these sections were to be reconciled together and given a comprehensive reconciled meaning without creating any conflict in between. The power conferred under Section 147 was a very wide power. This had since been canalised, restricted and guided by the provisions of Sections 148 to 153. Therefore, these are to be interpreted in a manner to advance the object of the guiding principle incorporated in the statute. These provisions formed an integral part of each other governing the power exercisable under Section 147. Each part has to be given its due meaning. No part of it can be rendered ineffective nor any part can be allowed to be eclipsed, unless the statute expressly provides for it, by reason of its interpretation in a particular manner. No conflict can be conceived within the said provisions.
12. A plain reading of the said provisions together makes it clear that Section 151 dealt with cases covered under Section 149(1)(a)(i) and (ii). It had no manner of application in respect of Clause (b) of Section 149(1). Once a four year embargo was provided for, it could not be made subject to the discretion of the Board or the Commissioner. A specific provision provided in the statute can never be made dependant on the discretion of the executive unless the statute specifically provides for conferring of such discretion on them. Section 151 was not a provision, which enabled the Revenue to do something. It was a restriction on the Revenue prohibiting it from doing something. It was a guidance to do such things in the manner provided in Section 151. These were provisions to protect the interest of the assessee. Therefore, it was to be read in consonance with Section 149(1)(a), Clauses (i) and (ii), where eight year and sixteen year embargo respectively were provided for. Even when this power was exercised by the Revenue after four years, it required the sanction of the Commissioner even though reopening could be made up to eight years. If it was done after the expiry of eight years and even though it could be done for a period of sixteen years after the expiry of eight years in cases coming under Clause (ii), it could be done only with the approval of the Board and not otherwise. Therefore, the scheme of these provisions clearly indicated to have been provided for protecting the interest of the assessee when reopening after four years under Section 149(1)(a)(i) and (ii), respectively, and not empowering the Revenue to overcome the embargo provided under Clause (b) of Section 149(1).
Now, so far as the amended provision is concerned, on a comparison between these two provisions, it does not appear that there has been any substantial change in the principle or the scheme envisaged either under the 1922 Act or the 1961 Act before April 1, 1989, and thereafter under the amended provision. The power to reopen is prescribed under Section 147 with effect from April 1, 1989, in a little different manner from the earlier provisions. It has provided that reopening can be done in case where the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for the relevant assessment year. He can reassess after reopening the case and proceed to recompute the same. But this power is subject to the proviso provided therein. The proviso prescribes certain restrictions with regard to the power of reopening limiting it to the period of four years from the end of the relevant assessment year, unless the escapement of the taxability of the income is due to the reason of failure on the part of the assessee (i) to submit a return under Section 139, or (ii) to respond to notices issued under Section 142(1), or (iii) to respond to notices issued under Section 148, or (iv) to disclose fully and truly all material facts necessary for the assessment of that assessment year.
13. While doing away with the two Clauses (a) and (b) of Section 147 as it stood prior to April 1, 1989, the amended provision has carved out an exception by means of a proviso providing that no action shall be taken under Section 147 after the expiry of four years from the end of the relevant assessment year. Thus, it has maintained the four years' embargo in respect of reopening of assessment by prohibiting action on the part of the Revenue. At the same time, it has provided for exception to this four years' embargo prohibiting action under this section, if any of the four conditions referred to above exists. Explanation 1 and Explanation 2 have explained further the factors on which Section 147 can or cannot be resorted to. Section 148, as amended, requires service of a notice setting forth the particulars as may be prescribed. But Subsection (2) of Section 148 requires recording of reasons for issuing notices by the Assessing Officer before such notices are issued. Section 149 under subsection (1), Clause (a), provides that no notice under Section 148 for the relevant assessment year shall be issued for reopening under Section 147 after the expiry of four years from the end of the relevant assessment year unless the case falls under Sub-clause (ii) or Sub-clause (iii). Sub-clause (ii) covers cases after four years but not exceeding seven years if the income escaped assessment is Rs. 50,000 or more. Sub-clause (iii) covers cases after seven years but not exceeding ten years in respect of escaped income amounting to Rs. 1 lakh or more. Whereas Clause (b) deals with cases other than those falling under Section 143(3) or Section 147 with which we are not concerned. By reason of Sub-section (2) of Section 149, Section 149(1) is subject to Section 151. Under Section 151(1), no notice under Section 148 for reopening of assessment under Section 147 shall be issued by an Assessing Officer below the rank of the Assistant Commissioner unless the Deputy Commissioner is satisfied on the reasons recorded by such Assessing Officer that it is a fit case for issue of such notice. By a proviso added to Sub-section (1) of Section 151, it is prescribed that no notice shall be issued after the expiry of four years from the end of the relevant assessment year unless the Chief Commissioner or Commissioner is satisfied on the reasons recorded by the Assessing Officer that it is a fit case for the issue of such notice. Whereas Sub-section (2) deals with cases other than those falling under Sub-section (1), we are not concerned with such cases.
14. Thus, we note that in substance and principle there seems to be no change in the scheme as it stood prior to April 1, 1989. The cosmetic changes introduced on April 1, 1989, have not effected any substantial change in the principle as it stood prior to April 1, 1989. A combined reading of these provisions, which are integral part of each other governing cases under Section 147 makes it clear that no action shall be taken after the expiry of four years unless any of the four conditions contained in the proviso to Section 147 is in existence. When issuing a notice under Section 148, reasons are to be recorded by the Assessing Officer before issuing such notice and no such notice under Section 148can be issued after the expiry of four years under Section 149(1)(a) unless the case falls under Sub-clause (ii) or Sub-clause (iii). Thus Section 149(1)(a)(i) creates a four years' embargo except in respect of cases mentioned in Sub-clause (ii) or (iii) where any of the four conditions provided in the proviso to Section 147 exists. Section 147 has been made subject to Sections 148 to 153. Therefore, the provision contained in Section 147 is to be qualified by the provision of Section 149. But that qualification cannot mutilate the provisions of Section 147 altogether. Section 147 is definitely subject to Section 149. But that cannot be meant to eclipse the proviso to Section 147 altogether. On the other hand, the proviso restricts action after the expiry of four years except in cases coming under any of the four conditions provided therein. These exceptions are subject to Section 149. Section 149 governs cases provided for in the exception clause relating to assessment after the four years from the end of the assessment year.
15. The object of introducing these provisions in addition to the proviso provided in Section 147 seems to restrict the exercise of power under Section 147 in deserving cases where the reopening would be viable and prohibiting exercise of such power in respect of insignificant cases. Inasmuch as such reopening would simply be a wastage of time and energy since the tax that might be charged would be too insignificant compared to the endeavour undertaken after the expiry of four years. Thus, the four years exception even in cases coming under any of the four conditions provided in the proviso to Section 147 are to be governed by Section 149(1)(a). But, if it is within four years, then none of these restrictions would stand in the way. The object was to bring a finality to an assessment made with the restrictions imposed. Under Section 147, no action can be taken. If no action can be taken, no notices can be issued. If after the expiry of four years on certain conditions action can be taken, then only notices can be issued. When notices can be issued, then only Section 149 can become operative. When the action is permissible, notice can be issued under Section 148. But when action cannot be taken but for the exceptional conditions, then the restriction for issuing notice under Section 148, as provided in Section 149(1)(a) shall come into play. It also forbids issuing of notice after four years unless it comes under Sub-clauses (ii) and (iii) to bring an end period of seven years and ten years, respectively. The distinction between Sub-clauses (ii) and (iii) itself makes the scheme clear that it would not be useful to reopen a case under Sub-clause (ii) after the expiry of four years unless the income escaped amounts to Rs. 50,000 or more. Similarly, it would not be useful to reopen a case under Sub-clause (iii) after the expiry of seven years unless the amount of escaped income is Rs. 1 lakh or more. Thus, Section 149(1)(a)(i) restricts the application of the second part of the proviso to Section 147 to the extent as indicated in Sub-clauses (ii) and (iii) in respect of cases where any of the four conditions contained in the proviso to Section 147 exists. Sub-section (2) of Section 149 makes the provision of Section 149(1) subject to Section 151. Section 151 requires the satisfaction of the Deputy Commissioner on the reasons recorded by the Assessing Officer that it is a case fit for the issue of such notice if the Assessing Officer is below the rank of the Assistant Commissioner provided such reopening is sought to be made under Section 147 before the expiry of four years from the end of the relevant assessment year. But in cases where four years from the end of the relevant assessment year have expired, such notices can be issued only after the Chief Commissioner or the Commissioner is satisfied on the reasons recorded by the Assessing Officer that it is a fit case for the issue of such notice. Thus Section 151 puts a restriction on the issue of the notices by the Assessing Officer, which requires the satisfaction of higher authorities in the respective cases. This has nothing to do with the limit of reopening provided in Section 147. It governs cases where action is permitted. The distinction of the period of four years as provided in these sections which are integral part of each other clearly indicates that this four years' embargo is mandatory in respect of both the cases where the assessee is in default or where the assessee is not in default. But where the assessee is in default, the restriction provided in Section 149 applies. By reason of Section 149 even where the assessee is in default unless it comes under Sub-clauses (ii) and (iii) of Section 149(1) after the expiry of four years, no notice can be issued.
16. The proviso to Section 147 provides that no action shall be taken after the expiry of four years unless the contingencies provided are satisfied. It is contended on behalf of the respondent that none of the conditions provided in the proviso to Section 147 as submitted by Mr. Som could be attracted in the present case. Therefore, the period of four years' embargo provided in the proviso cannot be stretched even though this provision might be subject to Sections 148 to 153. Even after making the provision of Section 147 subject to Sections 148 to 153 a proviso has been added by which an exception has been carved out. The principal section cannot be read without the proviso, which qualifies the principal section. The qualification is expressed in mandatory form. It has used the expression 'no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year'. Therefore, it is a question of action. The decision to issue notice and recording of reasons before issuing the notice are actions within the meaning of the proviso to Section 147 for the purpose of exercising jurisdiction under Section 147. Therefore, such action cannot be taken after the expiry of four years unless the four contingencies in the proviso to section are in existence. Whereas Section 149 is a provision relating to issue of notice which provides for mode or manner for exercising the power under Section 147. Section 147 is the provision, which provides the power or authority on the Assessing Officer to reopen the assessment or reassess. The time stipulated under Section 149 is not the time for reopening an assessment. That is the time for issuing the notices. The proviso prescribes limit of four years in respect of cases other than those covered under the four contingencies and no period of limitation has been provided for cases covered under the four contingencies contained in the proviso. In respect of those contingencies, we can fall back on Section 149 for the purpose of finding out the limits within which such notices can be issued by the authority. Therefore, the limitation prescribed under Section 149 cannot be implied when the case does not come within four contingencies under the proviso to Section 147. Section 149 governs the cases, which fall within the said four contingencies mentioned in the proviso to Section 147. Section 149 has been made subject to Section 151 under Sub-section (2) of Section 149. Therefore, Section 151 may have application only in respect of Section 149 and it cannot stretch its application to Section 147, proviso, in relation to cases other than the assessee's default. Under Section 151, the reopening can be done by the Assessing Officer only with the concurrence or approval or sanction. If the Assessing Officer is below the rank of the Assistant Commissioner or Deputy Commissioner or the Commissioner, before issuing such notices and after the expiry of four years, no notice shall be issued unless the Chief Commissioner or Commissioner is satisfied on the reasons recorded by the Assessing Officer that it was a fit case for issuing such notice. Therefore, Section 151 governs Section 149 to the extent that even if the reassessment or reopening is made within four years even then it has to be done in the manner provided under Section 151(1). But it relates to the provision of issuing of notice and nothing else. This procedural aspect cannot eclipse the provision expressed in mandatory term. There is a distinction between the prohibition of action and prohibition of issuing notice. In order to take such action taking of an action is the principal thing, which is followed by the notice. Unless the action is permitted, the question of following the same by notice does not arise. If there is no scope of issuing notice, the provision relating to the manner in which the notice is to be issued does not arise.
17. Admittedly, it is at the threshold that the notice under Section 148 is under challenge. Therefore, the other questions are not relevant for the present purpose.
18. Mr. Som has contended that this power to reopen is dependent on four conditions. In this case, notices under Section 148 had since been issued. The assessee had not responded to the same. Instead it had come before this court to challenge the same in the writ proceedings. Therefore, this case attracts the mischief excepted in the proviso to Section 147. Therefore, the writ petition should fail.
19. This proposition does not carry any substance. Here the very jurisdiction or authority to issue the notices under Section 148 has since been challenged. We are to deal with a situation at the threshold of issuing of the notices, viz., at a stage prior to the issuance of the notices or a stage leading to the decision to issue the such notices, or, in other words, to a situation that empowers the authority to assume the jurisdiction to issue the notices under Section 148. It is a stage before the situation to respond arises. Therefore, a stage after the issuance of the notices would not be relevant for the purpose of Section 147 if there is failure to respond to such notices. There is no allegation of the asessees' failure to respond to any notice issued earlier.
20. That apart, the question of failure to respond to a notice under Section 148 arises only after a notice is validly issued under Section 148. A notice under Section 148 is a prelude to the reopening of an assessment without which the assessment cannot be reopened in view of Section 148(1). Section 148(2) makes it incumbent that before issuing such notice, the Assessing Officer has to record his reasons for doing so. Therefore, it is a stage before the stage for responding to such notice arises.
21. Mr. Som has attempted to contend that this was a case covered on the ground of the assessee's default. He has pointed out so from the affidavit-in-opposition affirmed on behalf of the Revenue. This appears at pages 232-233 of the paper books in Simplex Concrete Piles (India) Ltd., and page 141 of the paper book in Geo Miller and Co. Ltd. The reasons given therein are identical. It appears that it was sought to be reopened on the basis of the decision in N.C. Budharaja and Co.'s case : [1993]204ITR412(SC) . The assessee in Simplex Concrete Piles (India) Ltd., had claimed benefit under Section 32A/ 32AB and Section 80HH/80HHB for the relevant assessment year. The Assessing Officer had allowed the benefit under those sections, which were made available to the assessee in the proceedings having regard to the law as it stood then governing these provisions. But there were divergence of opinion in the decisions of various High Courts. Those benefits would be available only to an industrial undertaking. The assessee had claimed itself to be an industrial undertaking. But this question when came to be considered by the apex court N.C. Budharaja and Co.'s case : [1993]204ITR412(SC) , then it had reversed the decision. It had held that the nature of business as were carried on by the assessee was not that of an industrial undertaking. This decision was taken in September, 1993. Therefore, admittedly, this is the information on the basis of which reopening was permissible under Section 147 but subject to the proviso thereunder. Admittedly, there is no allegation that the amounts now sought to be made taxable were not disclosed. On the other hand, these were disclosed but claimed to be non-taxable. Therefore, it cannot be said that there was any omission or failure to disclose fully and truly the materials necessary for assessment. After disclosing such materials if exemption from taxability is claimed by reason of the provision of law as the assessee had understood, it would not be an omission or failure to disclose the materials fully and truly relevant for assessment. It is the inference drawn on the materials produced that is relevant for the Assessing Officer. Such inference is not dependent on the understanding of the law of the assessee or the claim made by it. Therefore, there is no scope for bringing this case within the scope and ambit of non-disclosure of materials fully and truly. The very statement made in the affidavit by the Revenue discloses that it had proposed to reopen the assessment only on the basis of the information derived by it from the decision in N.C. Budharaja's case : [1993]204ITR412(SC) , not on the basis of anything else. As such the question of four years embargo cannot be overcome by the Revenue in respect of Simplex Concret Piles (India) Ltd.
22. In respect of Geo Miller and Co., Ltd., the assessment was sought to be reopened for the years 1985-86 to 1989-90 by the notice issued under Section 147 on July 29, 1994, on the same ground, namely, the information derived from N.C. Budharaja's case : [1993]204ITR412(SC) , to the extent that the assessee cannot be termed as an industrial undertaking entitling it to the benefit of deduction under Section 32AB and Section 80HH.
23. In N.C. Budharaja's case : [1993]204ITR412(SC) , it has been held after considering the scope and ambit of Sections 32AB and 80HH that the construction of road and dam does not come within the meaning of Sections 32AB and 80HH or Sections 32A and 80HHB and thus the assessee's undertaking in such kind of business is not an industrial undertaking entitling it to the benefit of those provisions. This might be an information to reopen an assessment within the period of four years. But in case it is required to be done after the expiry of four years, in that event, it can be done only in the assessee's default and that too within the time provided in Section 149(1) and with the approval of the authority as contained in Section 151 and not otherwise. In Maharaj Kumar Kamal Singh v. CIT : [1959]35ITR1(SC) , similar question had cropped up under the Indian Income-tax Act, 1922, where similar provision was contained. There it was held that after the four years without the assessee's default the assessment could not be reopened. This had followed the earlier Privy Council decision in Sir Rajendranath Mukerjee v. CIT [1934] 2 ITR 71. In Calcutta Discount Co. Ltd. v. ITO : [1961]41ITR191(SC) , the court had dealt with similar question and had not deviated from the principle already laid down, viz., that there is no scope of reopening of assessments beyond the period of four years from the end of the relevant year unless the Income-tax Officer has reasons to believe that there was an underassessment and (page 199) 'such 'underassessment' has occurred by reason of either (i) omission or failure on the part of an assessee to make a return of his income under Section 22, or (ii) omission or failure on the part of an assessee to disclose fully and truly all material facts necessary for his assessment for that year. Both these conditions are conditions precedent to be satisfied before the Income-tax Officer could have jurisdiction to issue a notice for the assessment or reassessment beyond the period of four years ...' In the said decision, on the question of omission to disclose, it was held that (page 201): '. .. once all the primary facts are before the assessing authority, he requires no further assistance by way of disclosure. It is for him to decide what inferences of facts can be reasonably drawn and what legal inferences have ultimately to be drawn. It is not for somebody else--far less the assessee--to tell the assessing authority what inferences, whether of facts or law, should be drawn. Indeed, when it is remembered that people often differ as regards what inferences should be drawn from given facts, it will be meaningless to demand that the assessee must disclose what inferences--whether of facts or law--he would draw from the primary facts.'
24. Dr. Pal has relied on the decision in Raj Kumar Bapna v. Union of India of the Rajasthan High Court. Dr. Pal then relies on the decision in Tantia Construction Co. Ltd. v. Deputy CIT : [2002]257ITR84(Cal) , which had followed the decision in N. C. Budharaja's case : [1993]204ITR412(SC) and had held that unless there, is any failure on the part of the petitioner to disclose fully and truly any material facts there is no scope for reopening a case after the expiry of four years. Dr. Pal then relies on the decision in Mahanagar Telephone Nigam Ltd. v. Chairman, CBDT : [2000]246ITR173(Delhi) which also proceeded on the same basis that it cannot be done after four years except on the assessee's default. Dr. Pal then relies on the decision in Raymond Woollen Mills Ltd. v. ITO : [1999]236ITR34(SC) , where a similar view was taken. Then Dr. Pal relies on the decision in N. Mangathayaramma v. TRO : [2002]255ITR127(AP) , which also supports his contention. Dr. Pal then relies on the decision in CIT v. Kelvinator of India Ltd. [2002] 256 ITR 1, in order to support his contention with regard to the principle of interpretation of taxing statute. The proposition laid down therein is an accepted proposition of law. There is no doubt about the same.
25. On the other hand, Mr. Som has relied on a passage from Kanga and Palkhivala's the Law and Practice of Income Tax, Volume I, 8th edition, p. 1200, in order to interpret the meaning of the word 'information'. In the said passage, it was observed that: 'The word 'information' does not necessarily imply factual material in contradistinction to the legal aspect of a case. 'Information' may be as to a fact (Niranjan and Co. (P.) Ltd. v. CIT : [1986]159ITR153(SC) (revised return after completion of assessment) ; Mahabir Prasad Munna Lal v. CZT : [1947]15ITR393(All) ; Badar Shoe Stores, In re : [1946]14ITR431(All) ; Ambalal Jivabhai Patel v. ITO : [1964]54ITR308(Guj) ; West India Cotton Association Ltd. v. K.C. Rao, ITO : [1966]61ITR226(Guj) ; CIT v. Narainji Manji Rathore : [1967]66ITR322(Patna) ; Elphinstone Picture Palace v. Union of India : [1969]74ITR115(Patna) and British Electrical and Pumps P. Ltd. v. ITO : [1978]113ITR143(Cal) but the word also includes some cases of information as to the state of the law (Maharaj Kumar Kamal Singh v. CIT : [1959]35ITR1(SC) ; V.M. Raghavalu Naidu and Sons v. CIT : [1945]13ITR194(Mad) ; CIT v. K.M.S. Lakshmana Iyer : [1945]13ITR242(Mad) ; Canara Industrial and Banking Syndicate Ltd. v. CIT : [1964]51ITR479(KAR) and Thakur Das Tej Prakash v. ITO : [1970]75ITR523(All) , e.g., information that a case on a certain point of law has been decided by the court in a particular way Chatturam Horilram Ltd. v. CIT : [1955]27ITR709(SC) or that a case has been overruled (CIT v. Sir Mahomed Yusuf lsmail : [1944]12ITR8(Bom) ; Maharaj Kumar Kamal Singh v. CIT : [1954]26ITR79(Patna) ; Mooljee Sicka and Co. v. Second Addl. ITO : [1960]40ITR163(Cal) ; A. R. Balakrishnan v. CIT : [1974]96ITR469(Mad) , or that a statute had been passed which was not brought to the attention of the Assessing Officer when he made the original assessment in CIT v. Sir Mahomed Yusuf Ismail : [1944]12ITR8(Bom) ; ITAT v. B.P. Byramji and Co. ; D.R. Dhanwatay v. CZT and Asghar Ali Mohammad Ali v. CIT : [1964]52ITR962(All) , or that a statute had been passed after he made the original assessment. The decision of a higher authority under this Act,--e.g., on the question as to which an assessable entity is chargeable in respect of a particular income, or whether the income is chargeable for a particular year, or what is the correct method of computing income, or whether a receipt is income or capital gain, or whether an expenditure is on revenue or capital account, or whether a firm is genuine,--may also constitute 'information'. On the strength of such 'information', action may be taken under this section'.
26. This proposition is an accepted proposition of law. There is no quarrel with the same. It is the question as to how the same has to be applied in the present case. The decision of N. C. Budharaja and Co.'s case : [1993]204ITR412(SC) , is definitely an information on the basis whereof the assessment can be reopened within four years from the end of the assessment year and not after without the assessee's default. We have already discussed the legal proposition having regard to the facts and circumstances of the case and in our view, this proposition, therefore, does not help Mr. Som. Mr. Ghosh has relied on the decision in Phool Chand Bajrang Lal v. ITO : [1993]203ITR456(SC) , in order to support this contention that the four years limitation is not mandatory and it can be extended by reason of Section 151 beyond four years with the sanction of the authority concerned. But this case proceeds on the basis of the assessee's default. Therefore, this decision does not help us for the purpose of our present proposition. Mr. Ghosh relies on the decision in Chhugamal Rajpal v. S. P. Chaliha : [1971]79ITR603(SC) . Here also the assessee had failed to disclose fully and truly all material facts. On the principle laid down in this case, the proposition propounded by Mr. Ghosh that Clause (b) of Section 149 read with Clause (b) of Section 147 is subject to Section 151 as it stood before April 1, 1989, cannot be sustained. Mr. Ghosh then relies on the decision in P. Munirathnam Chetty and P. Satyanarayana Chetty v. ITO : [1975]101ITR385(AP) for the same proposition. But there also the proposition was considered on a different context, which has no manner of application in the present case. It was never laid down in the said decision that the four years' embargo is subject to Section 151 or can be extended beyond four years with the sanction of the authorities concerned even without the assessees' default.
27. Mr. Som relies on the decision in CIT v. Bongaigaon Refinery and Petrochemical Ltd. . This decision has nothing to do with the proposition of four years' embargo. It supports Mr. Som's contention to the extent of the meaning of the word 'information'. In the said decision, it was observed that (headnote) :
'When the Supreme Court decides that the interpretation of a particular provision of law as given earlier was not legal it in effect means that the law as it stood from the beginning was as per its decision and that it was never the law otherwise. The interpretation placed on the action based on the erroneous view of law is also equally erroneous . . .'
28. Mr. Som then relies on the decision in Smt. Nirmala Birla v. WTO : [1976]105ITR483(Cal) [FB], wherein it was held 'that there is no bar to a notice under Clause (a) being treated as a notice under Clause (b). If having launched reassessment proceedings under Clause (a), the Income-tax Officer may proceed under Clause (b),.... The basic assumption in the cases reported in P.R. Mukherjee v. CIT : [1956]30ITR535(Cal) ; Kantamani Venkata Narayana and Sons v. First Addl. ITO : [1967]63ITR638(SC) and Mriganka Mohan Sur v. CIT : [1974]95ITR503(Cal) is that it is possible to form alternative beliefs ... He may believe that the escapement was due to omission or failure of the assessee to disclose fully or truly all material facts. He may also believe that even if there was no failure or omission on the part of the assessee, the new facts compose information in his possession which call for reassessment of escaped wealth or income.'
29. In the facts and circumstances of this case, there is nothing on record to attract the assessee's default ground. Therefore, this case also does not help Mr. Som.
30. For all these reasons, we agree with the contention of Dr. Pal and are unable to persuade ourselves to accede the proposition advanced by Mr. Som and Mr. Ghosh.
31. In our view, the order of the learned single judge has not reflected in the admitted facts and circumstances as discussed above. Though the proposition of law has been correctly laid down. But the law does not seem to have been properly applied having regard to the facts and circumstances of the case. We, therefore, hereby allow the appeal (A. P. O. No. 118 of 2002) and set aside the said judgment and order dated January 28, 2002, in Writ Petition No. 2492 of 1994-[2002] 255 ITR 49-appealed against. We allow the writ petition and quashed the notices dated July 29, 1994, issued to the assessee in respect of the assessment years 1984-85 to 1989-90 impugned in the writ petition of Simplex Concrete Piles (I.) (P.) Ltd. (W. P. No. 2492 of 1994) on the ground that those were issued after the expiry of four years without the assessees' default. The rule is made absolute.
32. Identical question is involved in Geo Miller and Co. Ltd. (W. P. No. 2489 of 1994). Therefore, the decision in Simplex Concrete Piles (I) Ltd. A. P. O. No. 118 of 2002), will govern this case (A. P. O. No. 361 of 2001). Therefore, we decide this case following the said decision and set aside the order of the learned single judge passed on November 28, 2001, in Writ Petition No. 2489 of 1994-[2002] 254 ITR 620. We allow the said writ petition (W. P. No. 2489 of 1994) and quash the notices dated July 29, 1994, issued to the assessee in respect of the assessment years 1985-86 and 1989-90 impugned in writ petition on the ground of Geo Miller and Co. Ltd. (W. P. No. 2489 of 1994) on the ground that the same were issued after the expiry of four years without the assessee's default.
33. Pursuant to an interim order passed in the writ petition, the assessment orders have since been made. Since we have quashed the notices, the assessment orders made pursuant to such notices respectively in the respective cases cannot be sustained and accordingly stand quashed.
34. Let a writ of certiorari do accordingly issue in each case.
Both the appeals are, thus, allowed. There will be no order as to costs.
35. All parties are to act on a signed copy of the minutes of the operative portion of this judgment on the usual undertaking.
R.N. Sinha, J.
36. I agree.