1984 (3) TMI 11 - HC - Income Tax

Summary

Issues Involved:
1. Validity of reopening concluded assessments u/s 147(a) of the I.T. Act, 1961.
2. Applicability of s. 153(3)(ii) of the I.T. Act, 1961, to lift the bar of limitation.

Summary:

1. Validity of Reopening Concluded Assessments u/s 147(a) of the I.T. Act, 1961:
The petitioner, an assessee, challenged the validity of notices issued by the ITO u/s 148 of the I.T. Act, 1961, for the assessment years 1969-70 to 1972-73. The petitioner argued that he had made a full and true disclosure of all material facts for the relevant assessment years, and the ITO had concluded the assessments based on this information. The petitioner contended that the modification of the award by the court in M.F.A. No. 279 of 1972 and the receipt of enhanced compensation on January 27, 1975, did not constitute a failure to disclose material facts, thus not justifying the reopening of assessments u/s 147(a). The court agreed, stating that the pendency of legal proceedings or a claim made under the Acquisition Act cannot be characterized as a material fact that should have been disclosed in the returns. Therefore, the primary reason recorded by the ITO to reopen the concluded assessments u/s 147(a) was found to be erroneous.

2. Applicability of s. 153(3)(ii) of the I.T. Act, 1961:
Despite the erroneous application of s. 147(a), the court examined whether the notices could be sustained under s. 147(b) and s. 153(3)(ii). The court noted that the facts regarding the legal proceedings and the receipt of enhanced compensation were not in dispute. The court held that the alternative ground urged for the Revenue to sustain the notices under s. 147(b) was valid. The court referred to rulings from the Punjab and Haryana, Gujarat, and Delhi High Courts, which supported the view that the Revenue could sustain a notice issued u/s 148 on a different ground than initially stated. The court also clarified that s. 153(3)(ii) lifts the bar of limitation for reopening assessments when there is an order of any court, regardless of the nature of the court or the order. The court rejected the petitioner's contention for a restricted interpretation of s. 153(3)(ii), affirming that the provision should be construed liberally as a machinery provision.

Conclusion:
The court upheld the impugned notices as validly issued under s. 147(b) and s. 153(3)(ii) of the I.T. Act, 1961. Consequently, the writ petitions were dismissed, and the petitioner was granted 60 days to file his return before the ITO in pursuance of the upheld notices. The parties were directed to bear their own costs.