- (1.) These two appeals under section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act) were heard together and we propose to deliver this common judgment for the disposal of the two appeals. I.T.A. No.15 of 2002 relates to the assessment year 1982-83 and the I.T.A. No.16 of 2002 relates to the assessment year 1983-84 and are directed against the common order passed by the Income Tax Appellate Tribunal.
(2.) The I.T.A. no.15 of 2002 has been admitted for hearing on the following two questions: 1. Whether on facts and circumstances of the case the Tribunal was right in law in holding that section 3(1) (f) of the Income Tax Act is applicable on the association of persons born out of joint-venture agreement instead of right section i.e. Section 3(1) (b) of the Income Tax Act 1961? 2. Whether on facts and circumstances of the case the Income Tax Appellate Tribunal was right in law for not passing any order on cross objection on the points of initiation of proceedings under Section 147/148 of the Income Tax Act when it is necessary to pass a speaking order giving judgment on all points raised by the assessee whereby the liabilities of tax on the assessee is casted by virtue of the said proceeding under Section 148?
(3.) The I.T.A. 16 of 2002 was admitted on the following question: Whether on facts and circumstances of the case the Tribunal was right in law in holding that section 3(1) (f) of the Income Tax Act is applicable on the association of persons born out of joint-venture agreement instead of right section i.e. Section 3(1) (b) of the Income Tax Act 1961? The facts giving rise to filing of these two appeals may be summed up thus: 1) The Assessee is a private trust created under the deed of trust dated July 18, 1978 and is assessed in the status of ''Association of persons''. For the Assessment year 1982-83, the previous year of the Assessee was the Dewali year ended October 27, 1981. 2) An agreement was entered into between one Ashoke Sancheti and the Assessee on April 2, 1979 to carry on a joint venture business under the name of ''M/s. Sancheti Enterprises'' with a stipulation that the profit and loss of the business would be shared in the ratio of 60:40. By a subsequent agreement dated January 2, 1981, the said share was varied to the extent of 10:90. For the Assessment Year 1982-83, the previous year of M/s. Sancheti Enterprises was the calendar year ended December 31, 1981. 3) For the purpose of carrying on business with one M/s. Contemporary Tea Company Ltd, M/s. Sancheti Enterprises opened a branch named ''Sancheti Enterprises - Service Department'' at Siliguri on April 1, 1981. The remuneration received from Contemporary Tea Company Ltd was Rs. 45,000 a month. The said branch incurred various types of expenses for earning the said income and in respect of the business of the said branch, which was treated by M/s. Sancheti Enterprises as a separate source of income, it adopted the financial year as the previous year. 4) Ashoke Sancheti retired from Sancheti Enterprises with effect from December 31, 1981 and thus, the Assessee became the sole proprietor from January 1, 1982 and from that day, M/s. Sancheti Enterprises became the sole proprietary concern of the Assessee with previous year as the calendar year and that of the Branch business as the financial year. 5) M/s. Sancheti Enterprises, whose previous year ended on December 31, 1981, was separately assessed in the status of ''Association of Persons'' for the Assessment year 1982-83. In the said Assessment year, M/s. Sancheti Enterprises did not include the income of its Branch office business, the previous year of which, it alleged, ended on March 31, 1982, which is subsequent to the close of the previous year of M/s. Sancheti Enterprises, i.e. December 31, 1981. However, the Assessee in its return for the year 1983-84, disclosed the income from M/s. Sancheti Enterprises for the calendar year ended December 31, 1982 and the same included the income from the Branch office business for the financial year ended March 31, 1982. 6) Similarly, the income in respect of the Branch office business for the financial year ended on March 31, 1983 was included in the income of M/s. Sancheti Enterprises for the calendar year ended December 31, 1983 and was reflected in the return of the Assessee for the Assessment year 1984-85. 7) The cases of both the Assessee and M/s. Sancheti Enterprises arising out of the assessment year 1982-83 ultimately went before the Commissioner of Income Tax (Appeal). The appeal filed by Sancheti Enterprises being No. 169/III/CIT(A)-X/86-87 was disposed of on September 23, 1988. In that appeal, the question was whether the said ''Association of Persons'' was liable to be assessed in the Assessment year 1982-83 for which its previous year was the calendar year ended December 31, 1982 in respect of the income arising out of its Branch office business, the account of which was closed on March 31, 1982. The Assessing officer of M/s. Sancheti Enterprises included in the assessment, the remuneration received from M/s. Contemporary Tea Co. Ltd at the rate of Rs. 45,000/- a month from April 1, 1981 to December 31, 1981 amounting to Rs.4,05,000/-. 8) The appeal was allowed by the Commissioner of Income Tax (Appeal) by deleting the said amount with the following observations as recorded in paragraph 5 of the order which is quoted below: ''I have carefully considered the facts of the case and the submissions made in this regard. The records of this case and that of M/s. Pradeep Trust have also been examined. It is seen that the assessee had started a new department called Sancheti Enterprises (Service Department) for attending to the work of M/s. C.T.C Ltd. from 1-4-81. The accounts of the new department were closed for the first time on 31-3-82 and since the accounting year of the assessee for assessment year 1982-83 was 31-12-81, the result of the Service Department was not included in the accounts for this assessment. Moreover, the business of the Service Department was taken over by one of the partners M/s. Pradeep Trust on and from 1-1-82 i.e. before the close of the accounts of the Service Department for the first time on 31-3-82. The result of the Service Department which has been taken over by M/s. Pradeep Trust has been disclosed in the return of M/s. Pradeep Trust in the assessment for 1983-84. This was done as per return filed on 17-8-83 before the search in the case of M/s. C.T.C. Ltd. on 22-11-83. The appellant 's contention that an assessee is permitted to have two separate accounting years for separate departments and branches is supported by the decisions of the Supreme Court and the Allahabad High Court relied upon by the appellant. It is seen that M/s. Pradeep Trust, which has taken over the service department has accounted for the entire receipts from M/s. C.T.C Ltd., in its assessments for the assessment years 1983-84 and 1984-85. The return of income in this regard was filed by M/s. Pradeep Trust before the search in the case of M/s. C.T.C Ltd. Therefore, the ITO.s decision that the claim is nothing but a fabrication after the search operation to hide the fact of nondiscloser of the income cannot be supported. On these facts, I find that since the entire receipts for services rendered to M/s. C.T.C Ltd. has been accounted for in the returns of M/s. Pradeep Trust, there is no justification for including any part of the same as income in the hands of the assessee and doing so amounts to double taxation for the same income. The addition of Rs.4,05,000/- is, therefore, found to be not justified and is accordingly deleted.'' 9) None of the parties preferred any appeal against such order and thus, the said order attained finality. However, the Assessing officer by taking aid of Section 147 of the Act, reopened the Assessment for the Assessment year 1982-83 and included the Rs.5,40,000/- received from the Branch office business from April 1, 1981 to March 31, 1982. It appears from the Assessment order dated March 31, 1995 that although the Assessing officer accepted the position that the Branch business was a separate source of income, was of the view that the same was assessable for the Assessment year 1982-83 because, according to him, the income or loss from different sources of the relevant previous year in relation to a particular assessment year should be taken into consideration for the assessment of the same year. 10) In appeal before the Commissioner of Income Tax (Appeal), the grievance of the Assessee was twofold. First, according to the Assessee, there was no justification of the invoking the jurisdiction under Section147. Secondly, the addition of the said amount was illegal. 11) The Commissioner of Income Tax (Appeals), by his order dated March 7, 1996 followed the earlier order September 23, 1988 and allowed the appeal by deleting the additional amount of Rs.5,40,000/-. The first point taken by the Assessee, regarding the justification of invoking Section 147 of the Act was, however, not decided by the Commissioner of Income Tax (Appeals). 12) Against the said order, the Revenue preferred an appeal before the Tribunal while the Assessee preferred a cross-objection on the question of assuming the jurisdiction under Section 147 of the Act. 13) So far as the reassessment order dated March 31, 1995 for the Assessment year 1983-84 are concerned, the Assessing officer included the remuneration received from M/s. Contemporary Tea Co. Ltd at the rate of Rs. 45,000/- a month for six months from April 1, 1982 to September 30, 1982 amounting to Rs. 2, 70,000/-. On Appeal, the Commissioner of Income Tax (Appeals) deleted the amount. 14) The Revenue preferred a separate Appeal before the Tribunal in respect of the Assessment year 1983-84. 15) The Tribunal by the orders impugned in these appeals has allowed the appeals of the Revenue by upholding the order of reassessment. Mr. Khaitan, the learned Senior Advocate appearing on behalf of the appellant, at the very outset, contended that the learned tribunal erred in law in holding that the Appellant had only one source of income viz. M/s. Sancheti Enterprises. Mr. Khaitan points out that M/s. Sancheti Enterprises, in respect of Branch business, which was regarded as separate source of income, had a separate previous year i.e. financial year and the order passed by the tribunal that the assessee had only one source of income is contrary to the assessment order dated March 31, 1995 where the Assessing officer accepted that the Branch business was a separate source of income. According to Mr. Khaitan, under the provisions of Section 3 of the Act prior to its amendment with effect from April 1, 1989, it was permissible for the assessee to have different previous year in respect of separate source of income as provided in sub-section (3) thereof and for that reason, the Commissioner of Income Tax (Appeals) by his order dated September 23, 1988 by following the decision of the Supreme Court in the case of CIT vs. Lady Kanchanbai, 1970 77 ITR 123 upheld the adoption of different previous years for different sources of income and the Department having accepted such position by not preferring any appeal against the order dated September 23, 1988, it was not open to it to contend in a different way. ;