- (1.) THIS is a reference under Section 256(1) of the I.T. Act, 1961 (hereafter referred to as " the Act "). The assessment year involved is 1950-51 the previous year being the financial year 1949-50. At the instance of the Commissioner of Inome-tax, Meerut, the Income-tax Appellate Tribunal, Delhi Bench-E (hereafter referred to as "the Tribunal"), has referred the following questions for our opinion : " (1) Whether the Appellate Tribunal was legally correct in its view that the reassessment made on March 28, 1970, for the assessment year 1950-51 in pursuance of Section 147(a) of the Income-tax Act, 1961, constituted a mistake apparent from record which could be rectified under Section 154 of the Income-tax Act, 1961 ? (2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in cancelling the order under Section 154 for the assessment year 1950-51 passed by the Income-tax Officer ? "
(2.) THE facts found by the Tribunal, stated in brief are that the assessee, an HUF, had income by way of share of profits from certain firms, income from property and dividends. For the assessment year 1950-51, the assessment was completed on February 28, 1955, and the total income was determined at a loss of Rs. 5,174. It appears subsequently some cash credits were found entered in a duplicate set of account books, and after some correspondence with the assessee the ITO gave a notice to it under Section 148 of the Act on November 26, 1965. Pursuant to that notice the assessee filed a return disclosing income as per assessment made on February 28, 1955. Subsequently, by a letter dated March 26, 1970, the assessee surrendered the following amounts for assessment : JUDGEMENT_462_ITR138_1982Html1.htm It was stated in that letter : " However, in order to have peace with the department and to avoid worry to us we beg to surrender the said amounts mentioned below as our income subject to the condition that the penalty will be levied at 331/3% according to law and the amount of tax be allowed to be paid in 12 equal monthly instalments." On the basis of that letter the ITO completed the assessment and determined the total income at Rs. 71,030 by his order dated March 28, 1970. Since the minimum amount of penalty imposable exceeded Rs. 1,000, he referred the case to the IAC who in due course passed a penalty order.
(3.) ON November 30, 1970, the assessee filed an application under Section 154 of the Act praying for cancellation of the reassessment order on the ground that the issue of notice under Section 148 of the Act was bad in law in view of the decision of the Supreme Court in J.P. Jani, ITO v. Induprasad Devshanker Bhatt [1969] 72 ITR 595. The ITO rejected that application by his order dated March 24, 1972, for the following reasons : that the assessee had not taken any objection as to the jurisdiction of the ITO as required under Section 124(5) of the Act, that the decision in J.P. Jani's case was not applicable to the facts of the instant case because the concealments for the assessment years 1950-51 to 1960-61 amounted to more than rupees one lakh, that the reassessment was made on the basis of a settlement arrived at with the assessee and, lastly, that the assessee had also filed a revision under Section 264 of the Act before the Commissioner, Delhi (Central), on the same point. Aggrieved, the assessee filed an appeal. The IAAC agreed with the reasons which had been given by the ITO and dismissed the appeal by his order dated August 7, 1972. The assessee then took up the matter in further appeal before the Tribunal. The learned Members constituting the Tribunal Bench passed separate orders but concurred in the ultimate conclusion in the matter and allowed the appeal. We shall refer to the decisions given by the learned Members in detail a little later. Now, at the instance of the Commissioner the questions mentioned above have been referred to this court.;