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TMI Blog2010 (9) TMI 380X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Writ Petition No. 991 (Tax) of 2007 and 994 (Tax) of 2007 are allowed - 54 of 2004,991 of 2007,994 of 2007 - - - Dated:- 15-9-2010 - YATINDRA SINGH, RAJES KUMAR, JJ. 1. The main question involved in these writ petitions is, should the initiation for the assessment of escaped income--on the basis of capital gains due to acquisition of petitioner's land--be nipped in the bud at the threshold? THE FACTS Relating to acquisition of land 2. The petitioner's 27,225 square yards of land was acquired by the Meerut Development Authority (the MDA) under the Land Acquisition Act in the year 1987. 3. The Special Land Acquisition Officer, Meerut (the SLAO) made an award on 22.2.1990. He awarded Rs. 50 per square yard. In pursuance of the award, the petitioner received Rs. 21,26,757/- as compensation on 30.6.1990. 4. The petitioner filed an application under section 18 of the Land Acquisition Act for referring the matter to the district court for enhancement of compensation. The case was referred and the reference was allowed on 11.5.1992. The IIIrd Addl. District Judge, Meerut (the ADJ) enhanced the rate of compensation to Rs. 240/- per square yard. 5. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for assessment may go on, however, the final order may not be passed. 15. During pendency of the first WP, the notices dated 1.5.2006 were issued for the AY 1989-90 to 94-95. The petitioner filed her return for the years on 16.6.2006 showing nil income. 16. The petitioner also applied for the reasons for issuing notices for the aforesaid years. The reasons for AY 1989-90 to 93-94 were the same. However, the reason for AY 1994-95 was slightly different. 17. The petitioner filed writ petition no. 991 (Tax) of 2007 (the second WP) against the notices under section 148 of the Act in respect of AY 1994-95 and writ petition no. 994 (Tax) of 2007 (the third WP) against the notices issued under section 148 in respect of AY 1989-90 to 1993-94. 18. The second and third WPs were also entertained and interim orders were granted on 1.8.2007 that the assessment proceedings may go on and the assessment order may be passed but it would not be served upon the petitioner without the leave of the court. POINTS FOR DETERMINATION 19. We have heard Sri RR Agrawal and Sri Suyash Agrawal, counsel for the petitioner; Sri Shambhu Chopra and Sri Ashok Kumar for the respondents.1 The f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner was partly allowed and the compensation was enhanced to Rs. 175/- per square yard; The petitioner received the enhanced compensation determined by the ADJ of Rs. 67,24,575/- with interest of Rs. 55,31,898/- from the date of acquisition to the date of payment on 16.8.1993; The accrued interest on the compensation turns out to be Rs. 8,69,950/- per annum. The interest on compensations was chargeable on accrued basis in view of Ashwani Dhingra Vs. CST 276 ITR 98; The petitioner failed to declare and file return of her income for assessment in the year 1989-90 to 1993-94. 22. The counsel for the petitioner submitted that: The capital gain was to be calculated in accordance with sub-section 5 of section 45 (see below)2 {section 45(5)} of the Act; Under section 45(5) (a), the capital gain was to be calculated with reference to the compensation received at the first instance. It was on 30.6.1990 (AY 1991-92); The assessment of the enhanced compensation was to be done when it was received under section 45(5)(b) of the Act. It was on 16.8.1993 (AY 1994-95) The income could be assessed in the AY 1998-99. 23. The counsel for the respondents submitted that: The appeal of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount to rupees one lakh or more. In that event, the time limit is six years. 30. The escaped income chargeable to tax is likely to be more than one lakh for AY 1998-99. In view of this, limitation would be six years. The notice for AY 1998-99 was issued on 15.10.2003 within six years. This is not hit by the time limit under section 149 of the Act. 31. The notice for the AY 1989-90 up to year 1994-95 were issued on 1.5.2006. These notices undoubtedly are beyond six years. However, time limit in the notice for these years or for that matter in the AY 1998-99 is not covered by section 149 but is covered by section 150 of the Act (see below)3, where no limitation is provided for. 32. Section 150 is titled as 'Provision for cases where assessment is in pursuance of an order on appeals, etc'. Sub-section 1 of section 150 {Section 150(1)} begins with 'notwithstanding' clause. It overrides section 149 and provides that notice can be issued at any time or in other words there is no limitation, if assessment, reassessment, or re-computation was being undertaken in order to give effect to any finding or direction contained in any order passed by, Any authority in proceeding unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer. If the Joint Commissioner was satisfied on the reasons recorded by the AO, then the notice could be issued by the AO. 41. The aforesaid intention is clear from the explanation to section 151 of the Act. It was inserted by the Finance Act, 2008 with effect from 1.10.1998. This further clarifies that the Joint Commissioner or the Chief Commissioner as the case may be should be satisfied on the reasons recorded by the AO and need not issue such notice himself. 42. In the SumanGala case, the Division Bench of the Karnataka High Court did observe that section 151 of the Act required that the notice should be issued by the officer holding the rank not less than that of the Deputy Commissioner (as was the section at that time). However, with due respect to the Judges of that case, this is not correct. 43. In our opinion, notice under section 151 of the Act is not to be issued by the Joint Commissioner but could be issued by the AO. The only requirement is that after expiry of 4 years, the Joint Commissioner should be satisfied on the reasons recorded by the AO. 4th 5th POINT: NOTICE AYs 1989-90 TO 1994-95--INVALID 44. While deciding the third point, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that section 151 of the Act applies to cases under section 149 but not to cases under section 150 of the Act. With due respect to the Judges deciding those cases, we beg to differ. Our reasons are contained in the succeeding paragraphs. 51. Section 148 (see below)5 is titled 'Issue of notice where income has escaped assessment'. The notices are issued in case income escapes assessment. This is irrespective of the fact that the case is covered by section 149 or section 150. 52. Section 151(2) (see foot note 3) provides that 'no notice will issue under section 148 by an Assessing Officer...' This shows that section 148 is subject to section 151 of the Act. The condition mentioned therein will apply to cases covered by section 150 of the Act. 53. The aforesaid intention is also clear from section 150 of the Act. This section provides 'Notwithstanding anything contained in section 149, the notice under section 148 may be issued at any time....; subject to the conditions mentioned in section 150. If the legislature wanted section 151 of the Act not to apply to cases covered under section 150 then words would have been 'Notwithstanding anything contained in section 149 and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the MunnoLal case was, whether once an order with reference to some grounds had become final then could on the basis of the same very grounds alongwith some others, a second notice could be given. 62. It is in this light the Division Bench held, '[T]he assessment orders already made by the Income Tax Officer regarding them and others had been quashed. The Commissioner of Income-Tax still gave sanction for starting the proceedings in respect of these two items as well. This clearly shows the non-application of his mind to the controversy, whether the present was a fit case for according sanction or not. Had he applied his mind properly he would have found that as a competent court had already found that the Income Tax Officer did not have justification, to start proceedings of reassessment on their basis, the approval to initiate proceedings afresh in respect of these items could not be given'. 63. The facts of the present case are entirely different. Here the earlier reassessment proceeding were never quashed. On the contrary, it was a case where the petitioner received a huge amount of compensation that was liable to be taxed as capital gains and yet she chose not to disc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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