1984 (7) TMI 90 - AT - Income Tax

Accounting Year, Assessment Proceedings, Assessment Year, Capital Or Revenue Receipt, Interest Income, Reassessment Proceedings, Res Judicata, Retrospective Effect, Right To Receive, State Electricity Board, Time Limit For Completion, Total Income

Issues Involved:
1. Validity of initiation of proceedings under section 147/148 of the Income-tax Act, 1961.
2. Assessment of interest income accrued from compensation for the assessment years 1968-69 and 1969-70.
3. Application of section 144B to assessments made under section 147.
4. Estoppel and consistency in legal pleadings by the assessee.

Issue-wise Detailed Analysis:

1. Validity of Initiation of Proceedings under Section 147/148:
The appeals challenge the initiation of proceedings under section 147/148 for the assessment years 1968-69 and 1969-70, alleging that the assessee's income from interest on compensation had escaped assessment. The learned Commissioner (Appeals) upheld the validity for 1969-70 but quashed it for 1968-69, leading to grievances from both the assessee and the department.

The department argued that the proceedings for 1968-69 were within the eight-year limit and that the retrospective legislation by Haryana State created a statutory right to interest, which the assessee failed to disclose. The assessee contended that it could not disclose unknown facts at the time of filing returns. The Tribunal concluded that the reopening of assessments was justified due to the retrospective nature of the legislation and the assessee's failure to disclose the accruing interest income.

2. Assessment of Interest Income Accrued from Compensation:
The interest income from compensation was contested in various assessment years. The umpire awarded interest from 1-1-1967 to 31-7-1970, which was later modified by a court decree on 22-6-1971. The ITO included this interest in the assessment year 1971-72, but it was deleted on appeal as the award was disputed. The interest was then included in 1972-73, but the AAC ruled it should be assessed from year to year.

The Tribunal upheld the AAC's view that the interest accrued from year to year, beginning from 1-1-1967, and was assessable in different years. The Tribunal rejected the assessee's plea to treat the interest as a capital receipt, citing consistent legal principles and previous judgments.

3. Application of Section 144B to Assessments Made under Section 147:
The assessee argued that section 144B did not apply to assessments under section 147, rendering the assessments invalid and time-barred. The department countered with a Special Bench decision supporting the application of section 144B. The Tribunal concurred with the Special Bench, rejecting the assessee's contention.

4. Estoppel and Consistency in Legal Pleadings by the Assessee:
The assessee's inconsistent positions were scrutinized. Initially, the assessee argued that the interest accrued from year to year, which was accepted by the AAC. In the present proceedings, the assessee attempted to retract this position. The Tribunal held that the assessee could not reprobate its earlier stand, having benefited from it in previous proceedings.

The Tribunal emphasized the principle that a litigant cannot assume inconsistent positions to the detriment of the opponent, citing various legal precedents. The Tribunal concluded that the assessee was estopped from changing its stance and upheld the assessment of interest income on an accrual basis from year to year.

Conclusion:
The Tribunal reversed the Commissioner (Appeals) for 1968-69, upheld the reassessment for 1969-70, and confirmed the inclusion of interest income on an accrual basis. The appeals and cross-objections were rejected, affirming the validity and correctness of the assessments.

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