1980 (8) TMI 110 - AT - Income Tax

Summary

Issues Involved:

1. Validity of assessment under section 147 read with section 150(1).
2. Applicability of section 150(2).
3. Notice under section 147(a) without mentioning the status.
4. Inclusion of the sum of Rs. 62,000 on merits.
5. Re-computation of house property income.
6. Levy of interest under section 139(8).

Issue-wise Detailed Analysis:

1. Validity of assessment under section 147 read with section 150(1):

The primary issue was whether the reassessment under section 147 read with section 150(1) was valid. The Tribunal had previously determined that the interest income accrued to the assessee when the Court decree was passed, and this finding was necessary for the effective disposal of the appeal. The Tribunal observed, "The assessee was clearly not entitled to this amount until the compromise decree was passed." Therefore, the reassessment was in consequence of or to give effect to the Tribunal's finding and fell within the purview of section 150(1).

2. Applicability of section 150(2):

The second contention was whether the reassessment was barred by time under section 150(2). The Tribunal noted, "Sub-s. (2) prohibits any assessment, reassessment or recomputation if such assessment, reassessment or recomputation is barred by time on the date when the assessment order was made." The original assessment was made on 29th March 1972, and by that date, reassessment under section 147(b) was barred as the four-year period for the assessment year 1966-67 ended on 31st March 1971. The Tribunal concluded, "The assessment could not have been reopened under s. 147(a) as the case is clearly outside its purview." Thus, the reassessment was invalid under section 150(2).

3. Notice under section 147(a) without mentioning the status:

The assessee contended that the notice under section 147(a) was served without mentioning the status, rendering the proceedings vitiated. The Departmental Representative argued that this plea was not raised before the lower authorities and involved an investigation of facts. The Tribunal did not specifically address this issue in detail, given its decision on the applicability of section 150(2).

4. Inclusion of the sum of Rs. 62,000 on merits:

The assessee argued that the inclusion of Rs. 62,000 was improper on merits. However, since the Tribunal quashed the reassessment on the ground of limitation under section 150(2), it did not pronounce upon this contention, leaving it open.

5. Re-computation of house property income:

The assessee contended that the house property income was recomputed, which could not be done since the assessment was reopened only for a specific purpose under section 150(1). The Tribunal did not address this issue in detail due to its decision to quash the reassessment.

6. Levy of interest under section 139(8):

The assessee argued that the levy of interest under section 139(8) was not correct. Similar to the other contentions, the Tribunal did not pronounce upon this issue due to its decision to quash the reassessment on the ground of limitation under section 150(2).

Conclusion:

The Tribunal concluded that the reassessment made in this case could not stand and quashed the same. The appeal was allowed, and the Tribunal stated, "In the view we have taken it is not necessary to pronounce upon the other contentions arising in this appeal. They are left open."