9911796707
TMI Blog1996 (12) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... t was brought to tax for the assessment year 1980-81 for the reason that the decision of the High Court was given in the previous-year ending on 31-12-1979. The assessment for the assessment year 1980-81 was made on 27-1-1983 on a total income of Rs. 5,08,829 including interest of Rs. 1,50,832 on the additional compensation on the acquisition of the landed property. This assessment was confirmed in the first appeal before the CIT(Appeals). The appellate authority held that the Assessing Officer was justified in assessing the entire interest amount for the assessment year 1980-81 in view of the decision of the Kerala High Court reported in M. Jairam v. CIT [1979] 117 ITR 638. The assessee then took up the matter in further appeal before the Tribunal and one of the grounds raised by the assessee before the Tribunal was that the CIT(Appeals) erred in confirming the assessment of the entire interest allowed on the enhanced compensation pursuant to the orders passed by the High Court on 19-4-1979 in the assessment for the assessment year 1980-81. The claim before the Tribunal was that interest should be apportioned over the various years during which interest had accrued. While deciding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -do- -do- 1978-79 17-12-1980 -do- -do- 1979-80 23-12-1981 -do- -do- ----------------------------------------------------------------------------- 4. In the course of the proceedings before the Assessing Officer, the assessee had questioned the validity of the re-assessments under section 147(a) but the Assessing Officer rejected the assessee's contention on the ground that the re-assessments had been made under section 147(a) read with section 150(1) of the IT Act. The assessee was also not successful in its appeals before the CIT(Appeals). The appellate authority held that the re-assessments had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... right to interest on additional compensation accrues only when the Court decrees or awards interest and not prior to that and that interest on enhanced compensation decreed by the Court during the relevant assessment year should be included in the total income of that assessment year itself. The learned counsel further stated that it was on that basis that the Assessing Officer had proceeded to make the assessment for the assessment year 1980-81 including the entire interest of Rs. 1,50,832 in the assessment for that year. According to Shri Sarangan, if the Assessing Officer had added the entire interest in the assessment year 1980-81 on the understanding of the law prevailing at that time, no blame could be placed on the assessee for the failure or omission to disclose fully and truly the income by way of interest chargeable for the earlier years. Shri Sarangan contends that after the earlier decision was reversed by the subsequent decision of the Full Bench in the case of Peter John, that may give the Assessing Officer jurisdiction to re-open the original assessment under section 147(b) and not under section 147(a) of the IT Act. The learned counsel strongly contends that it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that the assessments for the earlier years could not be reopened on the basis of such directions when the Tribunal was not concerned with the earlier years. Shri Saragan relied on the decision in the case of CIT v. Prafulla Kumar Mallick [1976] 103 ITR 418 (Ori.) to contend that the observation of the Tribunal in the order for the assessment year 1980-81 did not amount to a finding or direction for the purpose of Explanation 2 of section 153 of the IT Act so as to extend the period of limitation for re-assessment. The learned counsel for the assessee contended that the non-obstante clause in section 150(1) applies only in respect of the periods of limitation under section 148 for the issue of notice for reopening the assessments and that the other conditions regarding the reopening are still to be fulfilled before the assessments could be re-opened. In this case, there was no failure on the part of the assessee to make a disclosure of its income and so the conditions under section 147(a) having not been fulfilled no notice could be issued for re-assessment even under section 150 read with section 148. Shri Sarangan strongly relied on the provisions of section 150(2) to contend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons 2 and 3 to section 153(3) set out the circumstances where an assessment, re-assessment, etc., is to be deemed to be one made in consequence of or to give effect to any finding or direction contained in the appellate order, etc. In CIT v. Goel Bros. [1982] 135 ITR 511, the Allahabad High Court held that the fiction of law created by Explanations 2 and 3 to section 153(3) is attracted for the purpose of section 150(1) also. Explanation 2 to section 153(3) reads as under : " Explanation 2 : Where, by an order [referred to in clause (ii) of sub- section (3)], any income is excluded from the total income of the assessee for an assessment year, then, an assessment of such income for another assessment year shall, for the purposes of section 150 and this section, be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order." The above Explanation partially supersedes the decision of the Supreme Court in the case of ITO v. Murlidhar Bhagwan Das [1964] 52 ITR 335 by providing that in any case where income is excluded in appeal, reference or revision or any other legal proceedings, from the assessment for any year, an assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment or recomputation may be taken." The provisions of sub-section (1) shall not apply where, by virtue of any other provision limiting the time within which action for assessment, reassessment or recomputation may be taken, such assessment, reassessment or recomputation is barred on the date of the order which is the subject-matter of the appeal, reference or revision in which the finding or direction is contained. In other words, the exception in sub-section (1) will not apply where the re-assessment proceedings would have been barred by time, even at the time when the order (which became the subject-matter of the appeal, revision, etc.) was passed. It is therefore necessary to consider whether on the date when the order (which later became the subject-matter of appeal) was made in respect of the assessment year 1980-81, the Assessing Officer had the jurisdiction to issue notice under section 148 to reopen the assessments for the years under consideration. 9. In this context, we may refer to the submission of the learned counsel for the assessee that the order which was the subject-matter of appeal before the Tribunal was the order of the CIT(Appeals) and the date of issuin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate basis and included that amount in the assessment. The Tribunal held that the entire interest of Rs. 62,000 must be held to have accrued to the assessee during the previous year relevant to the assessment year 1966-67 and ought to have been assessed accordingly. The income-tax Officer then issued a notice under section 148 on March 1, 1971 and completed the reassessment on March 29, 1972. The assessee contended that the reassessment proceedings were not valid, and that in any case they were barred by time. The Tribunal held that section 150(1) applied to the case, but the proceedings were barred by limitation. This finding of the Tribunal was upheld by the High Court. Shri Sarangan's contention is that in that case, the High Court had considered the order of the first appellate authority as the " order which was the subject-matter of appeal, reference or revision as the case may be " occurring in section 150(2) of the IT Act and so in view of that decision, the relevant date in the present case was 1-3-1984 when the CIT(Appeals) passed the appellate order for the assessment year 1980-81. This was what the Andhra Pradesh High Court held in the case of G. Viswanatham on page 412 : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as given subsequent to the judgment of the Calcutta High Court. It is important to note that though in Viswanatham's case, there was a reference to the decision of the Calcutta High Court, there is nothing to show that the Andhra Pradesh High Court dissented from that judgment. On the other hand, the judgment proceeded on the basis that even if the Calcutta judgment were followed, the finding would not have been different. It would be relevant to look into the reasoning behind the provisions of sub-section (2) of section 150 which imposes a restriction on the overriding jurisdiction available to the Assessing Officer under section 150(1) by virtue of the non obstante clause. Section 150(2) enacts a well-settled principle of law that an appellate or revisional authority cannot give a direction which goes to the extent of conferring jurisdiction upon the Assessing Officer, if he is not lawfully seized of the jurisdiction. Thus, if the assessment, etc., in respect of a particular assessment year had become time-barred at the time of original assessment which is the subject-matter of appeal, etc., section 150(1) cannot be harnessed to the aid of the revenue for making an assessment, et ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g date would be a certainty. 11. In section 150(1), subject to the restriction imposed by sub-section (2), we are concerned with the jurisdiction of the Assessing Officer to make an assessment, reassessment or recomputation, on the basis of the finding or direction contained in an order passed by an authority in respect of another assessment year. It would be only reasonable to think that if the Assessing Officer had the jurisdiction to make an assessment, reassessment or recomputation in respect of an assessment year at the time when he made the order for another year which later became the subject-matter of appeal, etc., then on the basis of the finding contained in that order he would get the jurisdiction to make the assessment, reassessment or recomputation for the other year. For that jurisdiction it can be seen that the time of passing of the order by the Commissioner IT (Appeals) or the Tribunal is of no consequence. Further, it is important to note that the expression used in sub-section (2) is " the order which was the subject-matter of appeal, reference or revision " and not " the order which was in appeal, reference or revision ". We are of the view that the order which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest was assessed for the assessment year 1980-81. It may be noted that in view of the earlier decision of the Kerala High Court in the case of M. Jairam entire interest on the enhanced compensation was brought to tax for the assessment year 1980-81. In that case, the High Court had held that the right to receive interest on enhanced compensation accrues only when the Court decrees or awards interest and not prior to it and that the entire interest on enhanced compensation was includible in the total income of that year itself. That judgment was delivered on February 6, 1979. Subsequently on July 3, 1985, the Full Bench of the Kerala High Court in Peter John's case held that interest on compensation awarded with respect to land acquired under the Land Acquisition Act would run from day-to-day accruing from the date on which the Government took possession of the land, that being the date on which the land owner's right to receive the entire compensation arose though determined and paid later and only the interest accruing in each year was assessable in that year. There is no doubt that in view of the later decision of the High Court, interest accruing in each year was assessable in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e notice under section 148 issued for the assessment years 1975-76 to 1979-80 were thus time-barred. But for the assessment year 1978-79, there was time up to 31-3-1983 for issuing the notice under section 148. For the assessment year 1979-80, the time-limit was 31-3-1984. That means for the assessment years 1978-79 and 1979-80 the Assessing-Officer had the jurisdiction to issue notice under section 148 on 27-1-1983 when the assessment for the assessment year 1980-81 was made on account of the provisions of section 150(1) read with sub-section (2). Our finding accordingly is that the proceedings for reassessment for the assessment years 1975-76, 1976-77 and 1977-78 were time-barred ; but the proceedings for the assessment years 1978-79 and 1979-80 were initiated by issue of notice under section 148 well before the time-limit. We, therefore, uphold the reassessments for the assessment years 1978-79 and 1979-80 ; but cancel the re-assessment for the assessment years 1975-76, 1976-77 and 1977-78.
14. In the result, the assessee's appeals for the assessment years 1975-76, 1976-77 and 1977-78 are allowed and the appeals for the assessment years 1978-79 and 1979-80 are dismissed. X X X X Extracts X X X X X X X X Extracts X X X X
|
