1982 (6) TMI 25 - HC - Income Tax

Summary

Issues:
- Assessment of capital gains arising from property acquisition
- Reassessment proceedings under sections 147(a) and 147(b) of the Income Tax Act, 1961
- Time limitation for reassessment

Analysis:
The judgment concerns a case where the assessee derived income from property, share income from firms, and other sources for the assessment year 1962-63. The State Government acquired the assessee's building, and compensation proceedings ensued. The issue arose regarding the assessment of capital gains from the property acquisition. Initially, the Income Tax Officer (ITO) assessed the capital gains for the assessment year 1967-68. However, the Income Tax Appellate Tribunal held that the capital gains should have been assessed in the year of acquisition, i.e., 1962-63. Consequently, reassessment proceedings were initiated by the ITO under section 147 of the Income Tax Act, 1961.

The primary question before the court was whether the reassessment made for the assessment year 1962-63 was within the prescribed time limit. The Tribunal concluded that the reassessment fell under section 147(a) read with section 149(a)(ii), allowing for a reassessment period of 16 years. The court analyzed the facts and found that the assessee had not disclosed the acquisition proceedings or compensation amount in the original return for the assessment year 1962-63. As a result, income chargeable to tax had escaped assessment due to non-disclosure of material facts necessary for assessment.

The court rejected the assessee's argument that non-disclosure of a transaction does not constitute non-disclosure of income under section 147(a). It emphasized that the provision requires full and true disclosure of all material facts necessary for assessment. In this case, the failure to disclose the acquisition and compensation details amounted to non-disclosure of material facts essential for assessment. Therefore, the court upheld the Tribunal's decision that reassessment under section 147(a) was appropriate, and the reassessment was deemed timely within the statutory limit of 16 years.

In conclusion, the court ruled in favor of the Revenue, stating that the reassessment was validly conducted under section 147(a) read with section 149(a)(ii). The court held that the non-disclosure of material facts related to the property acquisition justified the reassessment within the prescribed time limit. Consequently, the court answered the question in the affirmative, allowing the reassessment to stand and awarded costs to the Revenue.