High Court Of Delhi
CIT vs. Banwarilal & Sons (P) Ltd.
Sections 147(a), 149, 150
Asst. Year 1961-62, 1962-63, 1963-64, 1964-65,
1965-66, 1966-67, 1967-68, 1968-69, 1969-70
S.B. Sinha, C.J. & A.K. Sikri, J.
IT Ref. Nos. 102 to 110 of 1988
22nd March, 2002
Counsel Appeared
R.D. Jolly with Ms. Premlata Bansal, for the Petitioner : None, for the Respondent
JUDGMENT
S.B. SINHA, C.J. :
The question, which has been referred for opinion of this Court in these references at the instance of the Revenue under s. 256(1) of the IT Act, 1961 (in short, ‘the Act’) by the Income Tax Appellate Tribunal, Delhi Bench ‘D’, Delhi (in short, the Tribunal’), is as under :
“Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in confirming the order of the CIT(A) in annulling the reassessments for the asst. yrs. 1961-62 to 1969-70 framed by the ITO under s. 147(a) of the IT Act, 1961, for bringing to tax as income of the assessee-company under the head “income from house property”, in terms of the enhanced compensation in pursuance of the order of the AAC for the asst. yr. 1974-75 ?”
2. The relevant assessment years are 1961-62 to 1969-70. The assessee is a private limited company. Its main source of income was letting out of immovable properties including one situated at 6, Ansari Road, Daryaganj, Delhi. The said property was requisitioned for public purposes by the Delhi Administration on 13th March, 1959. A compensation of Rs. 3,212.50 per month was offered to assessee, whereas the claim of the assessee therefor was Rs. 10,000 per month.
The matter was referred to an arbitrator appointed under s. 8(b) of the Requisitioning & Acquisition of Immovable Property Act, 1952. A monthly compensation of Rs. 468 (sic-4618) was fixed by the arbitrator w.e.f. 30th March, 1959, by reason of his award.
The additional amount of Rs. 1,406 per month was thus taken into consideration for computing total income by the Income-tax Officer (in short, ‘ITO’) for completing the assessments for the asst. yrs. 1960-61 to 1965-66.
The assessee, however, being not satisfied with the award of the arbitrator, preferred an appeal thereagainst before this Court, wherein by a judgment dt. 8th Dec., 1971, the amount of compensation was enhanced to Rs. 6,423 per month. Pursuant to and in furtherance of the said judgment, the assessee during the asst yr. 1973-74 received a sum of Rs. 2,88,776 for the period from 13th March 1959 to 31st Oct., 1972. For the asst. yr. 1973-74, ITO took into account the sum of Rs. 21,180 being the excess amount at the rate of Rs. 1,805 per month for the period 1st Nov., 1971 to 31st Oct., 1972. The balance amount of Rs. 2,67,596 was taxed by ITO in the asst. yr. 1974-75 under the head “income from other sources”. An appeal thereagainst was filed by the assessee before Appellate Assistant Commissioner (in short, “the AAC”). AAC in his order dt. 15th March, 1979, made observations to the effect that ITO was not right in assessing the amount of Rs. 2,67,596 as “income from other sources”. He purported to have directed ITO by reason of the said order that the assessee be assessed under the head “income from house property” in the respective assessment years. The Revenue took two different proceedings in relation to the said order. On the one hand, the said decision was questioned in appeal before the Tribunal and on the other hand, a proceeding under s. 147(a) of the Act for reopening the assessment proceedings had also been started.
3. Sec. 147(a) of the Act as it stood on 1st May, 1973, is as follows : (a) Sec. 147. Income escaping assessment— The AO has reason to believe that, by reason of the omission or failure on the part of an assessee to make a return under s. 139 for any assessment year to the AO or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year.”
4. Sec. 149 of the Act as it stood on 1st May, 1973, is as follows : “Sec. 149 : Time limit for notice—(1) No notice under s. 148 shall be issued for the relevant assessment year,— (a) in a case where an assessment under sub-s. (3) of s. 143 or s. 147 has been made for such assessment year,— (i) if four years have elapsed from the end of the relevant assessment year, unless the case falls under sub-cl. (ii) or sub-cl. (iii); (ii) if four years, but not more than seven years, have elapsed from the end of the relevant assessment 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; (iii) if seven years, but not more than ten years, have elapsed from the end of the relevant assessment year, unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to (rupees one lakh) or more for that year; (b) in any other case,— (i) if four years have elapsed from the end of the relevant assessment year, unless the case falls under sub-s. (ii) or sub-cl. (iii); (ii) if four years, but not more than seven years, have elapsed from the end of the relevant assessment year, unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to rupees twenty-five thousand or more for that year; (iii) if seven years, but not more than ten years, have elapsed from the end of relevant assessment 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. Explanation—In determining income chargeable to tax which has escaped assessment for the purposes of this sub-section, the provisions of Expln. 2 of s. 147 shall apply as they apply for the purposes of that section. [w.e.f. 1st July, 2001] (a) if four years have elapsed from the end of the relevant assessment year, unless the case falls under cl. (b); (b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year. (2) The provisions of sub-s. (1) as to the issue of notice shall be subject to the provisions of s. 151. (3) If the person on whom a notice under s. 148 is to be served is a person treated as the agent of a non-resident under s. 163 and the assessment, reassessment or recomputation to be made in pursuance of the notice is to be made on him as the agent of such non-resident, the notice shall not be issued after the expiry of a period of two years from the end of the relevant assessment year. Time-limit for issue of notice under s. 148 : However, provisions contained in s. 150 of the Act, which contains a non-obstante clause, deal with the situation apart from that provided for in s. 149 of the Act. In terms of sub-s. (2) of s. 150 of the Act, the provisions as regard limitation would not apply in a case where a direction had been issued. However, it is not in dispute that if there was no such direction, s. 150(2) of the Act will have no application.
5. As noticed hereinbefore, the Revenue had preferred an appeal against the order of AAC. The assessee had also filed a cross-appeal against the said decision. By an order dt. 22nd April, 1981, the learned Tribunal dealt with the directions purported to have been issued by AAC as regards the said sum of Rs. 2,67,596 by treating the same as “income from house property” and held : “12. Before closing, we would like to say a word about the direction of the learned AAC to the ITO to bring the amount in question to tax under the head “income from house property” in the respective assessment years to which the income relates. This direction of the learned AAC has to be construed in the light of the decision of the Supreme Court in the case of Rajinder Nath vs. CIT (1979) 12 CTR (SC) 201 : (1979) 120 ITR 14 (SC) : TC 51R.2044. It was not at all necessary for the disposal of the assessee’s appeal for this year to give such a direction and, therefore, the same could not be treated as a direction given by the learned AAC as contemplated in s. 153(3)(ii). It should be taken to mean that the learned AAC directed the ITO to take proper action according to law to consider the amount in question in the respective assessment years, in the computation of income from house property.” In view of the aforementioned finding of the Tribunal to the effect that as there was no direction by the appellate authority, the reassessment proceedings could not have been initiated having regard to the provisions of s. 153(3)(ii) of the Act.
6. However, against the order of the CIT(A), the Department filed a second appeal before the Tribunal. The Tribunal upheld the findings of CIT(A) to the effect that the reassessment proceedings for the asst. yrs. 1961-62 to 1969-70 were initiated validly and hence they had rightly been cancelled by CIT(A). We, therefore, are of the opinion that the premises whereupon ITO had assumed jurisdiction in initiating the reassessment proceedings for the relevant years was erroneous. In view of the directions of the Tribunal that it was not necessary for AAC to issue the impugned direction, it must be held that CIT(A) proceeded on a wrong assumption that the direction issued by AAC was valid. In that view of the matter, it was not a case where the provisions of s. 150 of the Act were applicable. We, therefore, are of the opinion that the learned Tribunal was correct in passing the impugned order, dt. 22nd April, 1981. Thus, the answer to the question referred must, therefore, be answered in the affirmative, in favour of the assessee and against the Revenue.
These references are accordingly disposed of.
[Citation : 257 ITR 518]
