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TMI Blog1985 (7) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... He did not award anything by way of interest on the said amount up to the date of award. However, he awarded interest at 6 per cent per annum if the awarded amount was not paid to the assessee within 60 days of the date of award. This award was ratified by the Court as required under Arbitration Act, 1940 on 3-5-1974. The Court awarded interest even for the period prior to the date of award. The Government appealed to the High Court against the award of interest for the period prior to the date of award while the assessee appealed to the High Court seeking a higher amount as award. The High Court by their judgment dated 19-11-1975 restored the original award dated 5-8-1972 given by the arbitrator. As per this award which thus became final by the judgment of the High Court on 19-11-1975, the assessee became entitled to the payment of the awarded amount plus interest as awarded by the arbitrator for the period of the delay subsequent to the date of the award. This amount including the aforesaid interest was received by the assessee on 26-8-1976. Similarly, in respect of the Berhampur award, the arbitrator gave the award on 31-8-1974 for a sum of Rs. 11,089. Interest for the delayed p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of A.P.S. Cold Storage Ice Factory v. CIT [1979] 119 ITR 709 (All.). Next, it was contended by the assessee that the principal amount as well as the interest was not taxable as income in view of the decision in the case of Govinda Choudhury Sons v. CIT [1977] 109 ITR 497 (Ori.). The Commissioner (Appeals) accepted the above contention, viz., that in view of the aforesaid decision, no amount was taxable as income of the assessee. Finally, the assessee urged that the status taken as unregistered firm by the ITO was incorrect. This was rejected by the Commissioner (Appeals) on the ground that the assessee never filed an application praying for registration. In the light of the above findings, the Commissioner (Appeals) determined the income from the Sundargarh award by starting from the award amount of Rs. 3,09,304 (which did not include any interest) and deducting therefrom the intangible additions made in the assessment years in which the work was executed, he estimated the expenses incurred by the assessee in the course of the arbitration proceedings. Thus, he arrived at an income of Rs. 1,90,582. In respect of Berhampur contract, he found that the intangible additions m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 130 (AP) wherein it has been held that proper service of a notice under section 148 in accordance with law is a condition precedent to the validity of any assessment under section 147. Shri G.P. Nanda referred to the letter dated 25-1-1980 written by Shri L.P. Patnaik and addressed to the ITO wherein it has been stated that notices under section 148 have been issued to the assessee. Shri Nanda urged that the assessee was having knowledge of the notice under section 148 when that letter was written. Shri Patnaik explained that the assessee erroneously assumed that the notice under section 148 must have been issued as notices under sections 142(1) and 143(2) of the Act have been served on the assessee even though the assessee had filed no return for this year. The said letter dated 25-1-1980 was written in response to the notice under section 142(1) without verifying the assessee's record as to whether notice under section 148 was served. He urged that the validation of jurisdiction under section 147 goes to the very root of the matter and is a legal issue and so, it could be taken at any time. Further, he vehemently urged that he did not give up this ground before the Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause the amount was not received during this year. We find that the provisions of section 176(3A) clearly state that the amount will be charged to tax in the year of receipt if it is otherwise taxable. In this appeal we are not called upon to decide as to whether any portion or the whole of the amount received by the assessee was taxable or not. All that has to be decided in this appeal is the year in which the taxability of the amounts has to be considered. We agree with the stand taken by both the parties and hold that the amount is not taxable during the assessment year 1975-76 which is under consideration because the amounts were not received during this year. Consequently, the assessment made under section 148 for the assessment year 1975-76 has to be cancelled. We hereby do so. It is for this reason that we refrain from sending the affidavit and the bunch of papers referred to above to the ITO for his verification and comments. 8. The last ground taken in this appeal states that the status of the unregistered firm taken by the ITO was incorrect. As we have cancelled the assessment itself, this ground has become infructuous and so, we reject the same as such. 9. Appeal No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 263 is captioned as Memo No. Adm. (ITO/263/90/80-81/48911/53, 218, dated 3rd March, 1981/19th Feb., 1981 in the copy given to the assessee and filed before us along with the memorandum of appeal. Shri G.P. Nanda pointed out before us from the correspondence between the departmental representative and the office of the Commissioner as well as from the original record of the Commissioner that the order under section 263 was actually passed on 26-2-1981. We have verified this matter from the records as well as the fact that a copy of the said order was received by the ITO in March 1981 and we are satisfied that the order under section 263 was indeed passed on 26-2-1981 though this date was not mentioned due to inadvertence at the top of the order as is usually done in such cases. 12. Shri L.P. Patnaik urged before us that the order under section 263 passed by the Commissioner was arbitrary and illegal. He pointed out that the original assessment was made by the ITO on 28-2-1980. The assessee filed an appeal against the said order before the AAC on 21-3-1980 though the assessee received a copy of the order under section 263 on 24-2-1982. It has been passed on 26-2-1981 as wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case as narrated in the said judgment that the AAC had already passed his appellate order and that the order of the ITO had merged in the said order of the AAC (vide page 679). It is in this context that the High Court held that the Commissioner had no jurisdiction to set aside the order of assessment acting under section 263 if the assessment order was the subject matter of appeal before the AAC. That was not a case where the Commissioner passed his order under section 263 when the appeal was pending. Actually that was a case where the appellate order had already been passed before the Commissioner acted under section 263. This case is, therefore, of no help to the assessee. Similarly, coming to the second case relied on by Shri L.P. Patnaik, viz., Oil India Ltd.'s case, we find that the said case was also one in which the appellate authority had already passed the appellate order before the Commissioner assumed jurisdiction under section 263. At page 838 of the report, it is clearly stated that the AAC disposed of the appeal on 3-4-1974 and the Commissioner proceeded under section 263 thereafter on 5-3-1975. This case is also of no help to the assessee. On the contrary, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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