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TMI Blog1990 (11) TMI 198X X X X Extracts X X X X X X X X Extracts X X X X ..... perty was passed on 24-11-1954 and possession of a number of buildings of the assessee was taken by the Government on 25-12-1954 and possession of some other buildings was taken on later dates in the months of March to September 1955. The order requisitioning the properties, operated for about four years and thereafter, the Government started passing orders for de requisitioning of the properties and by August 4, 1958, all the properties were released. 3. As the assessee, the owner of the requisitioned properties and the Punjab Government could not come to any agreement, as to the amount of compensation payable, the District Judge, Kapurthala was appointed by the Punjab Government as an Arbitrator under section 8 of the Punjab Requisitioning and Acquisition of Immovable Property Act, 1953, for the purpose of making an award determining the amount of compensation payable under the said Act and for specifying person or persons to whom the same was payable in relation to requisitioning of properties, consisting of all buildings and structures, situated on the land. The assessee claimed compensation of Rs. 6,60,777. A written statement was filed on behalf of the State, completely den ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee and that the accrual was not held in abeyance merely because the quantification was postponed. In para 30 of its order the Tribunal expressed its agreement with the contention urged on behalf of Department that compensation can be held to have accrued either in 1954 when the property was taken over or in 1962 when the award was made. The Tribunal was of the view that there was no justification to say that income accrued only when the High Court delivered its judgment in 1965. 6. It appears that the amount of Rs. 2,31,682 being the compensation finally determined by the High Court, was also brought to tax in the year 1967-68. The matter again went up to the Tribunal vide order dated 30th June 1976 in ITA Nos. 5289 5452/1972-73, the Tribunal referring to its order for assessment year 1963-64, held that no part of the compensation was assessable in the assessment year 1967-68. The addition on account of compensation restricted to Rs. 1,75,709 by the AAC, was deleted by the Tribunal. 6a. On the basis of orders of the Tribunal passed for the assessment years 1963-64 and 1967-68 in the case of the assessee, the ITO proposed reopening of assessments under section 147(a) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 147(a). The CIT(Appeals) also justified the action of the ITO reopening the assessment under section 150. In this connection, it was pointed out that the Tribunal has observed in its order that the amount was assessable in the assessment year 1964-65. The assessee's contention challenging the reopening of the assessment was accordingly repealed by the CIT(Appeals). 7. One of the arguments advanced before the CIT(Appeals) was that the ITO was wrong in making the addition of Rs. 2,31,662 under the head " Business income ", being compensation received for the requisitioned properties. It was pointed out that the aforesaid amount consisted of the following sums :-- (i) in respect of rent of Bungalow, properties and other assets the period of their occupation by Govt. Rs. 1,47,109.50 (ii) Compensation for demolition of building and removal of articles. Rs. 80,972.00 (iii) Compensation for vacation and reoccupation of properties. Rs. 3,600.00 -------------------------- Rs. 2,31,681.50 -------------------------- It was further contended on behalf of the assessee that as far as the amount of Rs. 1,47,109 was concerned, the same pertained to the assessment ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been received. On the basis of this note it was thus submitted that all the primary facts had been fully and truly disclosed during the course of assessment proceedings and, therefore, reopening of the assessment under section 147(a) was not valid. Reliance was placed on the decision of the Tribunal in ITO v. Arun Sugar Ltd. [1990] 34 ITD 136, in support of the contention, that the assessee had disclosed fully and truly all the material facts. In this connection reliance has also been placed on the decision of the Tribunal in State Bank of Indore v. ITO [1982] 1 ITD 343 (Indore) According to the learned counsel it was on the basis of mere rethinking on the part of the Department that the assessment has been reopened under section 147(a), which was not permissible under the law. 9. It was next contended that the Tribunal in its orders for assessment years 1963-64 and 1967-68 did not give any clear finding that the amount of compensation was assessable in the assessment year 1964-65 and, therefore, it could not be said that the reassessment was made pursuant to the orders of the Tribunal passed in appeal. For this reason, even the provision of section 150 was not applicable in thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation was assessable in the assessment year 1964-65 and, therefore, the reassessment framed in this case could not be said to have been done in consequence of or to give effect to a finding or direction given by the Tribunal in their orders for the assessment years 1963-64 and 1967-68. 12. We have considered the rival submissions made on behalf of the parties and have perused the record of the case, including the paper book filed by the assessee. There is no dispute about the material facts narrated above. We will first address ourselves to the question whether the assessment could have been validly reopened in this case under section 147(a). Though the ITO has not mentioned the reasons for reopening the assessment, but from the impugned order of the CIT(Appeals) it would appear that while recording the reasons the ITO took note of the Tribunal's observation in respect of embargo of six months on payment of the amount which became assessable in the year 1964-65. It was also mentioned that the particulars were not fully disclosed and there was only a note appended to the balance-sheet, which could not be construed as leading to the disclosure of material facts fully and completely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitation for reopening and this action was to give effect to the finding of the Tribunal. Though the ITO has not mentioned in the reassessment that he was taking recourse to section 150 but from the fact that he was framing reassessment to give effect to the finding of the Tribunal makes it clear that he was taking recourse to section 150, while framing the reassessment, though this section was not specifically mentioned in the reassessment order. Moreover, the CIT(Appeals) has also considered the question of reopening of the assessment under section 150 and after considering this matter has concluded that assessment could be reopened under section 150. 15. Sections 149 and 150 have to be read together with section 153. While two former sections deal with the limits of time, within which notices for assessment or reassessment under section 148 can be issued, section 153 deals with the limits of time, within which assessments or reassessments have to be completed. Section 150(1) is an exception to the provisions of section 149, because it starts with a non obstante clause, " notwithstanding anything contained in section 149 ". Section 150(1) runs as follows :-- " 150(1) Notwiths ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or any authority under the Income-tax Act. The authorities under the Act have no jurisdiction to issue a direction relating to a year of assessment other than the assessment year under appeal or revision. While dealing with the scope of appellate powers under the Income-tax Act, 1922 the Supreme Court in ITO v. Murlidhar Bhagwan Das [1964] 52 ITR 335 at page 345 observed :-- " A 'finding', therefore, can be only that which is necessary for the disposal of an appeal in respect of an assessment of a particular year. The Appellate Assistant Commissioner may hold, on the evidence, that the income shown by the assessee is not the income for the relevant year and thereby exclude that income from the assessment of the year under appeal. The finding in that context is that that income does not belong to the relevant year. He may incidentally find that the income belongs to another year, but that is not a finding necessary for the disposal of an appeal in respect of the year of assessment in question. The expression 'direction' cannot be construed in vacuum, but must be collated to the directions which the Appellate Assistant Commissioner can give under section 31. Under that section, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be brought into the net of taxation. In the case of Ganga Saran Sons (HUF) v. ITO [1981] 130 ITR 212 it has been held by the Delhi High Court that though the ITO purported to have reopened the assessment under cl. (a) of section 147, the validity of the notice could be supported by reference to cl. (b). The ITO in the instant case received information from the orders of the Tribunal passed in appeals for assessment years 1963-64 and 1967-68 that the amount of compensation receivable by the assessee in respect of the requisitioned properties had escaped assessment in the assessment year 1964-65. In this connection it would be useful to refer to the relevant observations of the Tribunal, contained in their orders dated 11th March 1974, passed in the appeal for the assessment year 1963-64. These observations are as follows : " We agree with the contention urged on behalf of the Department that the compensation can be held to have accrued either in 1954 when the property was taken over or in 1962 when the Award was made. There is no justification to say that the income accrued only when the High Court, delivered its judgment in 1965. In appeal for the assessment year 1967-68, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was to be paid within six months of the date of the award, the amount of compensation was assessable in the assessment year 1964-65, as the accrual was postponed by a period of six months. It was thus contended that since the right to receive compensation accrued in the accounting year relevant to assessment year 1964-65, it was rightly brought to tax in this assessment year. 21. We have considered the submissions made on behalf of the parties. As has already been stated above, the Arbitrator was appointed by the Punjab Government under section 8 of the Punjab Requisitioning and Acquisition of Immovable Property Act, 1953, for the purpose of making an award, determining the amount of compensation payable and for specifying person or persons to whom the same is payable in relation to requisitioning of the properties. Before the Arbitrator, the Punjab Government filed a written statement, pleading that the petition was liable to be dismissed and that the company could recover a reasonable amount as compensation from Jagjit Distilling Allied Industries Ltd., for whose benefit the property had been requisitioned by the Government. These facts are mentioned in the award. Further, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeals, filed against the award, made by the Arbitrator, postponed the right to receive the compensation and consequently the accrual. This decision, given in the assessee's own case, clearly supports its contention that right to receive compensation accrued only on 24-11-1965 when the Punjab Haryana High Court finally decided the matter. 23. The decision of the Supreme Court in Hindustan Housing Land Development Trust Ltd's case also supports the view canvassed before us on behalf of the assessee. In that case certain lands belonging to the assessee company, were acquired by the State Government. The Land Acquisition Officer awarded a sum of Rs. 24,97,249 as compensation. On an appeal, preferred by the assessee company, the Arbitrator made an award dated 29-7-1955 fixing the compensation at Rs. 30,10,873. Thereupon, the State Government preferred an appeal to the High Court. Pending the appeal the State Government deposited in court Rs. 7,36,691 being the additional amount payable under the award. The assessee company was permitted to withdraw that amount only on furnishing a security bond for refunding the amount in the event of appeal being allowed. On receiving the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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