2000 (6) TMI 128 - AT - Income Tax

Summary

Issues Involved:
1. Validity of the assessment order based on the notice u/s 143(2) served beyond the statutory period.
2. Validity of the revised return filed under section 139(5) when the original return was filed under section 139(4).
3. Assessment of income in the hands of legal heirs without issuing notice to all legal heirs.
4. Taxation of interest and additional compensation received by the assessee.

Summary:

1. Validity of the Assessment Order Based on Notice u/s 143(2):
The assessee argued that the assessment order was void as the notice u/s 143(2) was served beyond the statutory period of 12 months from the end of the month in which the original return was filed. The original return was filed on 31-8-1994, and the notice was served on 26-9-1995, which was beyond the permissible period. The Tribunal held that the notice u/s 143(2) should have been issued within 12 months from the end of August 1994, making the assessment order invalid. This conclusion was based on the authoritative pronouncements of the Supreme Court and Delhi High Court.

2. Validity of the Revised Return Filed u/s 139(5):
The assessee filed a revised return on 16-3-1995 after filing the original return u/s 139(4) on 31-8-1994. The Tribunal held that a return filed under section 139(4) cannot be revised under section 139(5), following the Supreme Court's decision in Kumar Jagdish Chandra Sinha v. CIT. Consequently, the revised return was deemed invalid, and the notice u/s 143(2) based on this revised return was also invalid.

3. Assessment of Income in the Hands of Legal Heirs:
The assessee contended that the assessment should have been made on all legal heirs of the deceased, Shri Bhika Ram, but notices were not issued to all legal heirs. The Tribunal did not adjudicate on this issue as the assessment order was quashed on other legal grounds.

4. Taxation of Interest and Additional Compensation:
The assessee argued that the entire interest amount should not be taxed in the period under assessment and that the lands were agricultural, not capital assets u/s 2(14) of the Income-tax Act, 1961. The Tribunal did not address these issues in detail as the assessment order was quashed on the grounds of invalid notice and revised return.

Separate Judgement by Judges:
Judicial Member:
The Judicial Member quashed the assessment order based on the invalidity of the revised return and the notice u/s 143(2) served beyond the statutory period.

Accountant Member:
The Accountant Member disagreed, holding that the second return filed within the period allowed u/s 139(4) was valid and that the notice u/s 143(2) was issued within the permissible period from the second return. The assessment was considered valid.

Third Member:
The Third Member agreed with the Judicial Member, holding that the revised return was non est and the notice u/s 143(2) was invalid, thereby quashing the assessment order.

Conclusion:
The majority opinion quashed the assessment order due to the invalidity of the revised return and the notice u/s 143(2) served beyond the statutory period. Other grounds raised by the assessee were not adjudicated upon.