TMI Blog2011 (1) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 - SANJAY KISHAN KAUL AND RAJIV SHAKDHER, JJ. P.N. Monga and Manu Monga for the Appellant. Sanjeev Sabharwal for the Respondent. JUDGMENT Sanjay Kishan Kaul, J. - This appeal arises out of the Order dated 4-3-1999 of the Income-tax Appellate Tribunal (for short, the Tribunal ) in terms whereof the appeal of the assessee relating to the assessment year 1965-66 and the appeal filed by the revenue relating to the assessment year 1979-80 were partly allowed, while the cross-objections of the assessee relating to the assessment year 1979-80 were dismissed. 2. The questions of law, which arise for consideration before us in the present appeal, are: "1. Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that re-assessment proceedings under section 147(a) read with section 148 of the Income-tax Act, 1961 had been rightly initiated against the assessee? 2. Whether the Tribunal was right in holding that valid approval had been accorded by the Central Board of Direct Taxes under section 151(i) of the Income-tax Act for reopening of the assessment of the assessee?" 3. The necessary facts are being set out herein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, it was liable to tax in the same assessment year when the transfer took place and escaped assessment. The ITO assessed that the appellant derived LTCG to the extent of Rs. 9,48,357 Rs. 2,24,847 on land and Rs. 7,23,510 on assets entitled to depreciation. The ITO found that the assessee failed to disclose the aforesaid amounts in both the returns filed on 7-10-1965 and 16-2-1967 and computed a sum of Rs. 8,91,746 under section 143(3) as the income chargeable to tax. 7. Being aggrieved by the notice under section 148 dated 15-12-1981 for re-assessment as well as the Order of the ITO dated 24-3-1986, the assessee filed appeal before the Commissioner of Income-tax (Appeals) [for short, the CIT(A) ], which was partly allowed. The assessee contended that since it received a sum of Rs. 11,57,965 only on 28-9-1978 from the Government of Madhya Pradesh, which was deposited in the nationalized bank, it would be exempt from assessment for the assessment year 1979-80 as per the provisions of section 54E. It was submitted by the assessee before the CIT(A) that the Assessing Officer had observed that as per section 45(1), any profit or gain arising from transfer of capital assets affect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ** 149. Time-limit for notice. (1) No notice under section 148 shall be issued (a) in cases falling under clause (a) of section 147 (i) for the relevant assessment year, if eight years have elapsed from the end of that year, unless the case falls under sub-clause (ii ); (ii) for the relevant assessment year, where eight years, but not more than sixteen years, have elapsed from the end of that year, unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to rupees fifty thousand or more for that year; ** ** ** 151. Sanction for issue of notice. (1) No notice shall be issued under section 148 after the expiry of eight years from the end of the relevant assessment year unless the Board is satisfied on the reasons recorded by the Income-tax Officer that it is a fit case for the issue of such notice. ** ** ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 54E by depositing the amount and, thus, not incur the liability of capital gains would not imply that the same can be reason to re-open the closed chapter of the assessment year 1965-66. 12. To support its various pleas, the appellant relied upon various judgments. The judgment in Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191 (SC) was relied upon to support the plea that the pre-requisite of non-disclosure has to be there for the ITO to exercise the power. In this behalf, an important judgment referred to was in the case of CIT v. Shri Tirath Ram Ahuja (HUF) [2008] 306 ITR 173 (Delhi) where it was emphasized that the facts, which have not been disclosed, must be such facts which exist at all material times between the filing of the return and the order of the assessment. The relevant portion is extracted as under : "14. The language employed in proviso to section 147 of the Act shows that the disclosure thereby contemplated is to be with regard to material facts and, therefore, must necessarily be in respect of such facts which exists at all material times between the filing of the return and the order of assessment. A material fact which is not in existence right up to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he income or the income has accrued to him. In the facts of that case, the appeal regarding compensation was still pending. Relying upon various judgments, it was held that if the actual amount of compensation had not been fixed, no income could accrue to him and a mere claim by the assessee could not be said to be a certain sum of compensation. In New Friends Co-operative House Building Society Ltd. v. CIT [2010] 327 ITR 39 (Punj. Har.), it was held that the amount received by an assessee was taxable only after attaining finality from the highest Court. 16. A reference was also made to ITO v. Lakhmani Mewal Das [1976] 103 ITR 437 (SC) where it was emphasized that there are two conditions, which should be satisfied before the ITO acquires jurisdiction to issue notice under section 148 in respect of the assessment beyond the stipulated period, i.e., there must be a reason to believe that income chargeable to tax has escaped assessment and the ITO must also have reason to believe that such escapement of income from assessment is by reason of omission or failure on the part of the assessee to disclose fully and truly material facts necessary for assessment of that year. The duty o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mechanical manner. Even if the reasoning set out by the ITO was to be agreed upon, the least, which is expected, is that an appropriate endorsement is made in this behalf setting out brief reasons. Reasons are the link between the material placed on record and the conclusion reached by an authority in respect of an issue, since they help in discerning the manner in which conclusion is reached by the concerned authority. Our opinion is fortified by the decision of the Apex Court in Union of India v. M.L Capoor AIR 1974 SC 87 wherein it was observed as under :- "27. ... We find considerable force in the submission made on behalf of the respondents that the "rubber-stamp" reason given mechanically for the supersession of each officer does not amount to "reasons for the proposed supersession". The most that could be said for the stock reason is that it is a general description of the process adopted in arriving at a conclusion. ... 28. ... If that had been done, facts on service records of officers considered by the Selection Committee would have been correlated to the conclusions reached. Reasons are the links between the materials on which certain conclusions are based and the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceived from the Electricity Board." 22. As observed in Lakhmani Mewal Das case (supra), it is not the duty of the assessee to pin-point what inference have to be drawn by the assessing authority as long as full, complete and truthful disclosure has been made of primary facts , which, in fact, was made in the present case. Thus, there was nothing, which was not set out, which ought to have been set out as the factum of appeal pending was disclosed. 23. As stated aforesaid, there is no finality emerging in matters of enhancement of compensation as none of the parties can contemplate in advance as to what would be the fate of the appeal proceedings. The facts of the present case show that the Award was interfered with in appeal and again by the Supreme Court. The final picture emerged only when the Supreme Court pronounced its judgment. On receipt of the enhancement compensation, the appellant disclosed the same in its return as was the case in P.C. Gulati, Voluntary Liquidator, Panipat Electric Supply Co. Ltd. s case (supra); Harish Chandra s case (supra); Hindustan Housing Land Development Trust Ltd. s case (supra); and New Friends Co-operative House Building Society Ltd. s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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