High Court Of Kerala
Varkey Jacob Co. vs. CIT
Sections 147, 149
Asst. Year 1979-80, 1980-81, 1981-82, 1982-83, 1983-84, 1984-85
C.N. Ramachandran Nair, J.
O.P. No. 10460 of 1995
11th April, 2002
Counsel Appeared
N. Srinivasan, M.P. Abraham, Philip Mathew & Biju Varghese, for the Petitioner : P.K. Ravindranatha Menon & George K. George, for the Respondent
JUDGMENT
C.N. Ramachandran Nair, J. :
Petitioner, an unregistered dealer, was the lessee of a rubber estate which was acquired by the Government. Consequent on the acquisition, petitioner got share of the compensation for the land acquired and consequent termination of lease. The initial award was in March, 1974. Thereafter there was a claim for enhancement of compensation which ended up in the judgment of this Court in (sic-on) 28th Jan., 1987. Pursuant to the said judgment, the petitioner returned the income received as interest by filing returns for the asst. yr. 1979-80 to 1984-85 admitting its share of interest awarded in the land acquisition case. The AO on receipt of the returns dt. 3rd Jan., 1990, initiated reassessment proceedings apparently by issuing notices under s. 147(a) of the IT Act, 1961. It may be noticed that the assessments were completed under s. 143(3) r/w s. 147(a) of the Act. The impugned assessments are dt. 30th Oct., 1990. Even though the petitioner-filed returns offering to pay tax on the interest, petitioner later felt that the Department is not authorised to complete the assessments on account of limitation for proceeding under s. 147(b) of the Act which was only 4 years. According to the petitioner its case is not one falling under s. 147(a) of the Act and that is the position conceded by the Department also. Therefore, revision petitions were filed challenging the assessments before the first respondent under s. 264 of the Act. The CIT overruled the objections of the petitioner and sustained the assessments under the amended provisions of s. 147 of the Act which was introduced w.e.f. 1st April, 1989. The CIT found that the section quoted as 147(a) in the assessment is an obvious mistake and the assessments can only be under the amended provisions of s. 147. Further, he has relied upon s. 292B of the Act to hold that the assessments are not invalidated by the misquoting of the section. The CIT has gone into the period of limitation and on being satisfied, he has held that the assessments are completed within time. Thus, he has sustained the assessments. It is against the order of the CIT produced as Exhibit P13, the petitioner has approached this Court by filing this O.P. under Art. 226 of the Constitution of India.
I have heard Mr. N. Srinivasan and Mr. M.P. Abraham, learned counsel for the petitioners and Mr. P.K.R. Menon, learned senior Central Government standing counsel for the IT Department.
Learned counsel for the petitioner contended that s. 147(b) of the Act is the section that has to be applied for completion of the assessments because according to him the returns filed by the petitioner after so many years of the relevant assessments are non est returns not to be taken note of. According to him assessments completed have to be treated as orders under s. 147(b) of the Act. In view of the limitation, he prays for cancellation of the orders on this basis. On the other hand, learned standing counsel for the IT Department contended that sub-ss. (a) and (b) of s. 147 of the Act have no relevance as the same are no longer available w.e.f. 1st April, 1989, when the same was substituted by s. 147 of the Act which provides new set of situation including the ground and limitation for completing the assessment. The further contention of the learned standing counsel is that the assessments are not completed on the basis of the returns, but the Department has taken note of same information for the purpose of proceeding under s. 147. According to him the AO by mistake quoted s. 147(a) instead of s. 147. Besides this, s. 292B of the Act provides the settled position of law that misquoting of any section cannot invalidate an order provided the officer passing the order has authority to issue the order under any other section. Now it is a settled position by virtue of the decision Rama Bai vs. CIT (1990) 84 CTR (SC) 164 : (1990) 181 ITR 400 (SC) : TC 39R.668 that interest on enhanced compensation in land acquisition matters accrues from year to year. In fact the filing of returns by the petitioner after the final award of compensation by this Court is consistent with the law laid down by the Supreme Court. In fact the Full Bench of this Court has taken the same view in Peter John vs. CIT (1986) 51 CTR (Ker) 83 : (1986) 157 ITR 711 (Ker) (FB) : TC 39R.671. Learned counsel for the petitioner relied upon the decision of the Calcutta High Court in L. Madanlal (Aluminium) (P) Ltd. vs. ITO & Ors. (1978) 115 ITR 293 (Cal) : TC 51R.723 and contended that the basis for the assessment that is the information based on which the assessment was completed was not intimated. That was of course was a case under the pre-amended provision of s. 147 of the Act wherein the Supreme Court has held that a subsequent decision of the Supreme Court which lays down no new information but reaffirms the view taken earlier does not itself constitutes information for reopening the assessment under s. 147(b) of the Act. Petitioner has also relied upon the decision of the Madras High Court CWT vs. Varadharaja Theatres (P) Ltd. (2000) 162 CTR (Mad) 276 : (2001) 250 ITR 523 (Mad) and contended that the amended provisions will not apply to the case and what is relevant is s. 147(b) of the Act. On the other hand, learned standing counsel for the IT Department has contended that s. 147(a) and (b) are not retained for any purpose when the same was substituted by s. 147 of the Act w.e.f. 1st April, 1989, and, therefore, the petitioner cannot rely on s. 147(a) and (b) of the Act which is no longer available in the statute. Therefore, the short question is whether the amended provision of s. 147 or s. 147(a) and (b) is to be taken for the purpose of assessment.
4. There is nothing provided in the said amended provision of s. 147 to retain sub-ss. (a) and (b) of the s. 147 for the purpose of assessment for years prior to 1989-90 when the new provision came into force. Further, on going through s. 147 of the Act in the substituted form, it is clear that all assessments initiated after 1st April, 1989, have to be only under the said section and not under the repealed section. In fact s. 147 introduced w.e.f. 1st April, 1989, itself provides for complete assessment and pending assessments. Further, it is a settled position of law that a procedural section which provides for assessment has to be in force as on the date of initiation of the proceedings. In the circumstances, I feel that s. 147 that is in force as on the date of initiation of the assessment has to be applied. Petitioner admitted escaped income by fling of revised returns on the basis of which assessment was initiated. Since there was no assessment prior to s. 143(3), limitation available for the Department is 10 years. Since tax that would have been evaded for these years is more than Rs. 50,000 for each year, notice could be issued within 10 years under the new s. 147. Therefore, I feel that the CIT is right in rejecting the contentions of the petitioner. The contention of the petitioner that returns are non est does not have any relevance because the returns are not treated as returns for the purpose of assessment. The AO has got information regarding the escaped income and thereafter assessment was completed after issuing notice under s. 147 though mistakenly quoted as s.147(a) of the Act. Sec. 147 of the Act authorises the AO to make an assessment for charging the escaped income if the officer has reason for the same. In this case the assessment on the settled position of law is about the returned income which constituted information for invoking the amended provision of s. 147 of the Act. When the AO has sufficient reason for the assessment, there is no scope for examination as to whether the officer has proceeded under the amended provision of s. 147 of the Act.
In the circumstances, I see no ground to interfere with the order passed by the CIT under s. 264 of the Act and the O.P. is, therefore, dismissed.
[Citation : 257 ITR 231]
