2009 (11) TMI 551 - HC - Income Tax

Revision Limitation Amount offered for assessment in year 1979-80 but not included for that year as sum already included in assessment for 1977-78 and assessment affirmed in appeal Assessing Officer reversing right to assess income in 979-80 if sum ultimately held not taxable in 1977-78 High Court in 1998 excluding income from assessment in 1977-78 Consequently reassessment for 1979-80 within four years from date of judgment of High Court, not barred by limitation Once the assessment of the very same amount for 1977-78 is ultimately cancelled by HC in the reference case, the exclusion of the amount in the original assessment for 1979-80 becomes a mistake by virtue of the condition imposed by the Assessing Officer. - In other words, the original assessment for 1979-80 on this issue gets finalized only when this court decided the reference case for the year 1977-78. Therefore, in our view, the original assessment for 1979-80 becomes a mistaken order on account of operation of the judgment of this court with regard to the assessment of the very same amount of refund of excess power charges from the KSEB for the assessment year 1977-78. We, therefore, hold that within four years from the date of judgment of this court in the reference case for 1977-78, the Assessing Officer is entitled to revise the assessment for 1979-80 by virtue of the right reserved for revision of assessment in the original assessment which is extracted above.

Summary

Issues:
1. Whether the Tribunal was justified in holding that the revision of the respondent's assessment for the year 1979-80 by the Assessing Officer under section 150 of the Income-tax Act, 1961, is beyond the period of limitation prescribed under section 150(2) read with section 149 of the Act.

Analysis:
The case involved a dispute regarding the revision of the respondent's assessment for the year 1979-80 by the Assessing Officer under section 150 of the Income-tax Act, 1961. The respondent had voluntarily filed a return for the assessment year 1979-80, offering a refund received from the KSEB for assessment. The Assessing Officer initially assessed this amount for the year 1977-78 based on the declaration of eligibility for refund by the Supreme Court. However, the respondent contested this assessment, claiming that the refund should be assessed only for the year 1979-80. The Commissioner of Income-tax (Appeals) upheld the assessment for 1977-78, preventing the Assessing Officer from including the same income in the assessment for 1979-80, even though the respondent had offered it for assessment. The Tribunal later upheld the respondent's claim for exclusion of the income for 1977-78, leading to a revision of the assessment for 1979-80 by the Assessing Officer.

The Commissioner of Income-tax (Appeals) dismissed the respondent's contest on limitation, stating that the revision was within time based on the Tribunal's first order dated January 30, 1982. However, the final judgment of the High Court in the reference case was against the Tribunal's revised order dated December 30, 1992. The Tribunal held that the assessment was not tenable under section 150(1) as the officer failed to establish that it was within the prescribed time under section 150(2). The High Court, in its analysis, observed that the original assessment for 1979-80 was conditional, allowing the Assessing Officer to revise it after the finality of the assessment for 1977-78. The High Court emphasized that the respondent had offered the income for assessment for 1979-80 and could not contest the liability on technical grounds of limitation after doing so.

The High Court further explained that the original assessment for 1979-80 was conditional and subject to modification depending on the outcome of the proceedings against the assessment for 1977-78. The Assessing Officer's right to revise the assessment within the time limit provided for rectification of assessment under section 154 was upheld by the High Court. The High Court concluded that the original assessment for 1979-80 became a mistaken order due to the High Court's judgment regarding the assessment of the same amount for 1977-78. Therefore, the High Court allowed the Departmental appeal, reversing the Tribunal's order and restoring the revised assessment sustained in the first appeal.