NIRANJAN & CO. P. LTD. versus COMMISSIONER OF INCOME TAX, WEST BENGAL-I & OTHERS

Citation: [1986] 1 S.C.R. 916 · Decided: 19-03-1986 · Supreme Court of India · Bench: R.S. PATHAK · Disposal: Dismissed

Judgment (excerpt)

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916 
NIRANJAN & CO, P. LTD. 
v. 
COltllSSIONER OF INCOME TAX, 
WEST BENGAL-I & OTHERS 
!IARCH 19, J986. 
[R. S. PATHAK AND SABYASACHI MUKHARJI, JJ,] 
Income tax Act, 1961, s. 147 - Assessment - Reopening of 
- When permissible. 
Assessee -
Filing revised return voluntarily after 
making of first assessment - Income Tax Officer ·- Whether can 
reopen assessment. 
The appellant-assessee filed its return along with a 
copy of the Balance-Sheet and profit and loss account in 
November, 1962 showing an income of Rs.2,092 ea its profit. 
According to the appellant , a Ill.stake had occurred in the 
preparation of the return, inaamich aa the profit of Rs. 
10,718,46 arising from construction works had been left out 
from the return. However, in the Profit & Loss Account, the 
profit from construction work was indicated. The Income--tax-
Officer made an aaaesament on 27th November, 1963 after taking 
into account ~he profit from the construction work also. On 
3rd December', 
1963 the appellant-assessee again filed a 
revised return showing a general profit of Rs, 2.092 ea also 
profit fr0a the construction work aggregating Rs.12, 797.65. 
But; no copy of Balance-Sheet or Profit & t.oss Account was 
annexed with the revised return. The Income-tax Officer issued 
a notice to the appellant under section 147 of the Inc011e-Tax 
Act, 1961 on the ground that the revised return was not before 
the 
Income-T"" 
Officer 
when 
the 
assessment 
Order 
waa 
originally made but cue to her possession later on. The 
appellant challenged before the High Court the jurisdiction of 
the Income-tax-Officer to i11ue the notice. The Single Judge 
dislllissed the application and the Division Bench confirmed the 
~rder of the Single Judge in appeal pref erred by 
the 
appellant. 
In appeal to the Supreme Court, it was contended on 
behalf of the appellant-asaessee that there waa no question of 
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NIRANJAN v. C.I.T. 
917 
any escapement of income or 
under-assessment 
of income, 
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because the profit from construction work which was the item · 
alleged to have been left out from the first return and 
included in the revised return was 
already taken into 
consideration by the Income Tax Officer in making the first 
assessment order. 
Dismissing the appeal, 
Jll!U) : l(i) Under s. 147(a) of the Act, a completed 
asseasment can only be reopened either if there was omission 
or failure on the part of the assessee to make a return or to 
disclose fully and truly all material and relevant facts and 
the Income-tax Officer 1111st have in his posseasion before he 
issues notice s0111e material from which he can reasonsbly form 
a belief that there has been some eacapement of income due to 
SOiie failure or omission on the part of the asseasee to dis-
close fully all relevant or material facts. The second right 
under clause(b) of section 147 of the Act, under which the 
Income-tax Officer has to reopen a completed assessment is 
that notwithstanding that there was no omission or failure on 
the part of the assessee either to make a return or to dis-
close fully and truly all material facts, the Income-tax 
Officer in consequence of information in his posseasion subse-
quent to the first assessment has reason to believe that 
income chargeable to tax' has escaped asseasment. [923 A-<:] 
1. 2 It is true that even after the expiry of the time 
to make return, if an assessee files a return before the 
assessment is made, then the Inc0111e-tax Officer is bound to 
take cognizance of that return and cannot ignore that return. 
If a second return is there to the notice of the Incomo-tax 
Officer then it cannot be said that there was an eai:apement of 
income due to omission or failure of the asseasee to disclose 
fully and truly all material and relevant 'facts based on the 
facts mentioned in the second return. But after the completion 
of an assessment, the assessee is not entitled to take benefit 
of another return filed by him, nor is Income-tax Officer 
obliged or entitled to take that return into consideration 
except by the process of re-opening the assessment. [923 I>-F] 
ec-tsaiooer 
of 
~Tu, Bombay 
City II v. 
lanchhoc!des 
KaraondAul, 
36 
I.T.R. 
569, 
r.c-lssioner of 
In• 
ta, lladra v. S. llawh C...ttiar, 55 I.T,R. 630 and 
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918 
SUPREME COURT REPORTS 
[1986] l S,C.R. 
• Balcban4 V• 1--Ta Officer, Sagar, 72 I,T,R. 197 referred 
to. 
ro-tuioaer of 1--Tax, Gujarat v. A. 1

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