9911796707
TMI Blog1980 (3) TMI 162X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 148 on 1st July., 1970 and another on 27th March, 1972. The assessee filed one return apparently in response to both the notices on 23rd Feb., 1976. The draft order for approval under s. 144B was made on 24th March, 1976 and the final order was passed on 15th Sept., 1976. It was explained that the first notice was under s. 147 (b) and the second notice under s. 147 (a). When the appeals were taken up, there was a preliminary objection to the assessment on a question of jurisdiction by the assessee and this was subsequently by way of additional grounds. It was stated therein that all the information was supplied at the time of original assessment and that s. 147 (a) could have no application. It was alleged that the reassessment was sought to be made on a mere change of opinion. The Deptl. Rep. opposed the admission of the additional ground regarding jurisdiction which was not made either before the ITO or before the AAC or even in the original grounds filed before the Tribunal. In fact, additional income was offered in the return in reference to notice under s. 147 and this was also not disputed in the appeal before the AAC and the Tribunal. In these circumstances, he claimed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y pointed out that an amount of Rs. 2,55,000 was claimed as paid as compensation to Mr. Mallick while the amount due to the above party was shown only at Rs. 1,80,000 in the agreement with Thomas. It was also noted that an amount of Rs. 30,000 advanced by Mallick was included in the sum of Rs. 2,55,000 as compensation to him though this amount of Rs. 30,000 represented only return of deposit. The IAC wanted to have a report on these matters. There was also independent information from the ITO assessing John Thomas wherein the extra amount of Rs. 7,14,621 received by him was mentioned and the ITO concerned wanted enquiry as to why the assessee here did not opt to pay Rs. 50,000 for breach of contract to John Thomas instead of parting with the entire surplus over and above Rs. 10 lakhs on final acquisition. It was under these circumstances the first notice on the IAC's notes was issued on 1st July, 70 and the second notice on the letter from the ITO assessing John Thomas was issued on 27th March, 1972. All that we are concerned here is whether there was material to warrant application of s. 147 (a). As for the extra amounts over and above the amount of Rs. 10 lakhs received partly as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any difference. A payment was described as compensation to Shri Mallick through a Court, though Rs. 30,000 out it was only return of deposit. s. 147 (a) would surely apply in such a case. In this view, it is not necessary to go into the case laws cited by both the parties. There is really no conflict it interpretation of the provisions of law between the parties. There is no doubt that a mere change of opinion or a non-disclosure of fact not available to the assessee at the time of return will not justify a reassessment under s. 147 (a) as canvassed by the ld. counsel for the assessee. But it is not a case of mere change of opinion but a case of non disclosure of the material fact. It is a case where the computation was materially defective and there was a misdescription by claiming a return of advance as compensation payable. We, therefore, find that reassessment was patently justified in this ground alone and it is necessary to consider the other grounds urged on behalf of the Department in jurisdiction of action under s. 147 (a). It is under these circumstances we find that the additional ground though admitted for consideration cannot be accepted. In this view, it is also not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thomas for rendition of accounts. Shri John Thomas disputed the liability and claimed that the surplus was really not his own and that he was merely acting as a benamidar of one M.S. Sivaraj. The assessee succeeded before the Court, but effected a compromise during appeal proceedings. According to the compromise, she was to receive Rs. 4 lakhs, of which Rs. 1 lakh was received on 22nd Dec., 1975 on which date a compromise decree was also passed thereafter. In the meanwhile, M.S. Sivaraj filed a civil suit to block the amount of Rs. 71,093 which was to be given to her in acquisition case No. 247 of 1966 before the Tribunal, a fact already referred to. But the assessee succeeded in having the suit dismissed. Now, the first acquisition that arises for consideration is the extent of sale value that should be adopted. The ITO would say that the assessee was the owner of the full property as she had only agreed to sell the property to John Thomas and had not really sold it. The ld. Deptl. Rep. urged that at best, she could have got over the transaction by paying Rs. 50,000 as compensation to John Thomas. The ITO included the entire amounts of Rs. 7,85,714 (Rs. 7,14,621 and Rs. 71,093) as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overriding title here. We are also not impressed by the argument that the assessee could have paid Rs. 50,000 and got the balance of the entire consideration. This argument is not possible for more than one reason. In the first place, we cannot consider a hypothetical situation where she could have consciously committed a breach of contract. Besides, it is the assessee's case that she was not aware of the stage of the acquisition proceedings at the time of agreement and it was too late to rescind the contract because the acquisition had meanwhile been made. 6. After considering all the relevant facts, we are satisfied that there was an agreement for sale, Hence, what was acquired by the State Government was the property subject to the agreement of sale. Ordinarily we could not have taxed anything more than Rs. 10 lakhs which was originally offered for assessment and accepted by the ITO. A further amount became payable by a Civil suit and a further compromise decree. Hence, the amount receivable in respect of this property are the amounts that was originally received (Rs. 10 lakhs) the amount of Rs. 4 lakhs and the further amount of Rs. 66,227(out of Rs. 71093 after excluding inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as an Office bearer of Punjabi Refugee Association and persuaded the assessee to sell the property for an alleged public purpose. It was because of the alleged public purpose that a special concessional rate was agreed to by the assessee, who was a widow without issues. It was, however, seen that Shri Mallick proceeded to plot out the land and entered into agreement of sale with some local parties and the assessee was asked to sign the sale deeds. She refused to sign and had to face a suit for specific performance. The lower Court decided in her favour, but Mr. Mallick went in appeal. However, the pending proceedings dragged on, preventing the sale of property as no one would come forward to purchase the property with a pending suit for specific performance. It is stated that taking the cue from an observation from the Court that Shri Mallick's claim cannot be rightly rejected legally, the matter was settled by the Court in O.S. No. 92 of 63 dt. 7th Oct., 1965 in full satisfaction at the assessee paying by way of compromise an amount of Rs. 2,55,000 which, as noted earlier, included a sum of Rs. 30,000 received by the assessee as deposit earlier. The entire amount of Rs. 2,55,000 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contract becomes all the more difficult to be treated as cost of acquisition. We have therefore, no doubt that the disallowance was right and has to be confirmed. The assessee's appeal on this point fails. 8. The next question arising in assessee's appeal relates to the market value of the property as 1st Jan., 1954. It was estimated at Rs. 3,50,000 by the assessee in the original return and the ITO had adopted Rs. 2,28,000 as cost. The assessee had acquiesced to this valuation. However, it is now claimed that the value will not be less than Rs. 3,35,000. There is absolutely no material to support this claim on merits. In this view, it is not necessary to consider the additional objection taken by the Deptl. Rep. that the matter once closed in the original assessment cannot be reopened at this stage. Assessee's appeal on this point also therefore, fails. 9. The next ground in the assessee's appeal relates to the disallowance of Rs. 41,500 out of legal expenses of Rs. 72,871. It is claimed that these are fully allowable and that at any rate the legal expenses other than those incurred in Mallick s case to the extent of Rs. 21,500 could have been allowed. The original claim of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore him. Hence, it could not arise out of the order of the AAC. It was also not pressed before us. Hence, the claim has to be negatived. 11. The last ground in the departmental appeal relates to the allowance of Rs. 90,000 as cost of improvement. This was allowed even in the original assessment. In the reassessment it was sought to be taken back on the ground that there is no proof. It was urged before the AAC that the property was let out to Wimco for consideration of a rent of Rs. 300 per month, but the assessee had to spend a much larger amount on maintenance from year to year at the instance of the tenant. A protective bund was also put at the back to avoid erosion from Cooum river and to prevent encroachment. The assessee had also done considerable filling up of the land to level up the same before the property was let out again to Southern India Languages Book Trust. The expenses were incurred from time to time. It is stated that it was not possible to keep vouchers for all these expenditures. As against this, the only argument of the ITO was that there was no appreciable increase in the value of the property for wealth tax purposes from year to year. The AAC found that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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