TMI Blog1996 (12) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... urt, the assessee was entitled to receive a total sum of Rs. 1,54,928 as interest on the additional compensation. The sum of Rs. 1,50,832 by way of interest 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 y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith 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 been made under section 150(1) on the basis of the definite finding given by the Tribunal about the taxability of interest on accrual basis in the years of accrual and the direction for spread-over of interest income in various previous years. The re-assessments were thus held to be valid under section 150(1) of the IT Act independent of section 149. Aggrieved with the order of the CIT(Appeals) confirming the reassessments, the assessee has filed these appeals before the Tribunal. 5. Before us, Shri G. Sarangan, Advocate for the assessee, submitted that the CIT(Appeals) was not justified in confirming the re-assessments without accepting the assessee's contention that the original assessments had not been re-opened validly. He submits that the provisions of section 147(a) are not applicable to the facts of this case for any of the years under consideration. It was pointed out that notice under section 148 was issued on 1-3-1989 and so the provisions as existing prior to the amendment of section 147(a) by the Direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer 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 a case of invalid assumption of jurisdiction under section 147(a) as there was no failure or omission on the part of the assessee to disclose any of the primary facts relating to the assessment. Shri Sarangan submits that the time-limit of four years for issuing notice for re-opening the assessment under section 147(b) had expired long back and so the CIT(Appeals) ought to have annulled the re-assessments. 6. As against the contentions of the assessee's counsel, the Sr. departmental representative, Shri Harilal Naick submits that it can be clearly seen that the re-assessment orders were passed by the Assessing Officer after the Tribunal had given the decision on 19-2-1988 in disposing of the assessee's appeal for the assessment year 1980-81. It is pointed out that the order of the Tribunal contained a clear finding that interest attributable to the year under consideration will be includible and the balance will be spread over the years to which the same pertained. Shri Naick submitted that the Assessing Officer w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 that those provisions imposed restrictions on the concession given under section 150(1) in regard to the time-limit for issue of notice under section 148 for reopening an assessment. According to the learned counsel, section 150(2) ensures that an order on appeal, revision, etc., cannot be availed of to confer a jurisdiction where the Assessing Officer had otherwise no jurisdiction to make an assessment it was contended that in view of the restrictions imposed by section 150(2), the notices issued by the Assessing Officer under section 148 to re-open the assessment were time-barred and so the re-assessments made consequent to the issue of such notice were not valid in the eye of law. 7. We have considered the submissions on both sides and also gone through the facts of the case. The main contention of the learned counsel for the assessee is that the re-assessments for the assessment years 1975-76 to 1979-80 were not validly initiated as the conditions under section 147(a) were not satisfied in the sense that there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of such income for another assessment year in the case of the same assessee shall be deemed to be one made in consequence of or to give effect to any finding or direction by the authority hearing the case. This fiction of law removes the bar of limitation irrespective of the question whether the authority has in fact given or can in law, give a finding or direction that the income should be taxed in a specified assessment year, other than the year for which the authority hears the case. The effect of section 150 and Explanation 2 to section 153(3) is that if any income is deleted from assessment in a higher proceeding on the ground that it is not the income of that year, steps may be taken under section 147 to assess it as income of another year, without any limitation applying to the issue of the notice under section 148 or to the completion of the assessment or re-assessment. The conditions of section 150(1) are overriding as is clear from the non obstante clause. In the present case we have already referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion 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 issuing of the order by the CIT(Appeals) was the relevant date to consider the jurisdiction of the Assessing Officer to reopen the assessment by virtue of the provisions of section 150 of the IT Act. It was pointed out that the CIT(Appeals) passed the appellate order for the assessment year 1980-81 on 1-3-1984. Shri Sarangan contended that on 1-3-1984 no action could have been taken for the assessment years 1975-76 to 1979-80 as the period of 4 years had expired and in that sense the notices issued by the Assessing Officer were not saved by the concession given in section 150(1). Relying on the decision of the Andhra Pradesh High Court in the case of CIT v. G. Viswanathan [1988] 172 ITR 401, the learned counsel contended that the crucial date to be considered for this purpose is 1-3-1984, i.e., the date on which the CIT(Appeals) passed the appellate order for the assessment year 1980-81. In the above case, the Andhra Pradesh High Court observed : " Explanations 2 and 3 to section 153, merely illustrate and clarif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 984 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 : " According to section 149(1)(b), re-assessment proceedings could not be initiated after the expiry of four years from the end of the relevant assessment year. The relevant assessment year in this case was 1966-67. Four years therefrom would expire on March 31, 1971. In this case, the second appeal in which the finding was recorded arose from the order of the Appellate Assistant Commissioner dated October 6, 1972, which was clearly beyond the period of limitation. Even if the expression ' the order which was the subject-matter of the appeal, reference or revision, as the case may be ' occurring in section 150(2) was construed as referring to the original order of assessment the result would not be different because the order of assessment in this case was made on March 29,1972." 10. It would be useful to refer in this context to the decision of the Calcutta High Court in ITO v. Eastern Coal Co. Ltd. [1975] 101 ITR 477. This is what the Court said : " The next question that was urged in this case was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, etc., in respect of that assessment year. The relevant question in this context is whether the Assessing Officer had the jurisdiction to make an assessment, etc., at the time the order which was the subject-matter of appeal, etc., was made. If the argument of the assessee's counsel is accepted, it would mean that the jurisdiction of the Assessing Officer to make an assessment, reassessment or recomputation under section 150(1) would be fluctuating depending on the order which is the subject-matter of appeal, etc. For example, in a case where an assessment, re-assessment or recomputation is to be made in consequence of or to give effect to any finding or direction contained in a reference, the relevant date is the date of the order of the Tribunal and if the assessment, reassessment or recomputation is to be made in consequence of or to give effect to any finding or direction contained in an order of the Tribunal, the relevant date is the date on which the CIT(Appeals) passed the order. In case the finding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s " 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 was the subject-matter of appeal before the Tribunal, to be considered for the purpose of the time-limit under section 150(2) is the order passed by the Assessing Officer and not that of the Commissioner (Appeals) though the latter was the order in appeal before the Tribunal. Notwithstanding the persuasive arguments of the learned counsel for the assessee, we prefer to follow the decision of the Calcutta High Court in the case of Eastern Coal Co. Ltd. to hold that the jurisdiction of the Assessing Officer under section 150(1) to issue the notice under section 148 is to be considered with reference to the date when the order was passed by the Assessing Officer. Moreover, in the case of G. Viswanatham, the Andhra Pradesh High Court has not expressed any dissenting note on the Calcutta decision. [Emphasis supplied] 12. In the light of the above discussion, we have to consider now whether the Assessing Officer had the jurisdiction to issue notice under section 148 for reopening the assessments for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 that year itself and in that sense there was escapement of income in the hands of the assessee for the assessment years 1975-76 to 1979-80. But then can we say that the escapement was on account of the omission or failure on part of the assessee to disclose any primary facts relating to the assessment ? The original assessments for all the years under consideration had been completed before 1985 when the Full Bench decision was delivered. That means in accordance with the view prevailing at the relevant time, interest relating to each year could not be brought to tax in that year. Even if the assessee wanted to offer for assessment the interest in each assessment year, that could not have been done. There was no law at that time requiring the assessee to include the interest relating to each year in the return of income for that year. An essential condition for reopening an assessment under section 147(a) is that the Assessing Officer should have reason to believe that the escapement of income was on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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