9911796707
TMI Blog1984 (7) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the learned Commissioner (Appeals) in respect of the assessment year 1969-70, whereas the department is aggrieved of the aforementioned order of the learned Commissioner (Appeals) in respect of the assessment year 1968-69. 3. The circumstances in which proceedings under section 147(a) were initiated by the ITO against the assessee-company may be noted : The assessee-company owned an electricity supply undertakings at Rohtak, Hissar, Hansi and Bhiwani towns of the then Punjab and later Haryana State. The company's licence to supply electricity to the aforesaid towns expired on 8-4-1962. On its expiry, Punjab Electricity Board (predecessor of Haryana State Electricity Board) took over the undertaking in terms of the provisions of section 66 of the Indian Electricity Act, 1910. The statutory notice of one year of the Government's intention of take-over having already been given to the assessee-company, Rs. 1 lakh were given to the assessee-company ' on account ' pending the determination of the final compensation to be paid to the assessee-company. In the return filed by the assessee for the assessment year 1963-64, the company declared the above fact of take-over of it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on its own borrowings ; it is fit and proper that the company should be fully reimbursed in the matter of interest. It is true that the company has been paid only Rs. 1 lakh on account, at the time of the taking over, and is being kept out of the remaining amount of compensation that may ultimately be determined as payable to it ; it is not a matter to be decided on considerations of justice and equity. I should have felt bound to award the interest claimed, but the Electricity Act does not entitle the company to claim interest as of right. In certain other cases, the Electricity Act does contemplate payment of interest but not in cases like the present. Hence, the claim for interest from the date of taking over has to be disallowed. But the question still remains whether the company, should be entitled to claim interest pendente lite, that is to say, from the time the arbitration proceedings commenced in December 1966, until the date of the final determination of these proceedings, and until the date of actual payment of the amount determined and ultimately found due to the company. In my view, I am competent to allow interest at the usual rate of 6 per cent per annum during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid to the assessee-company as also the interest to be paid to the assessee-company. The aforesaid fact of the decree having been passed, was not brought by the assessee to the notice of the ITO in the course of the original assessment proceedings for the assessment year 1969-70. Accordingly, the original assessment for the assessment year 1969-70 was completed without taking into account any income from this source. 8. In the assessment for the assessment year 1971-72, the ITO included the interest awarded by the umpire, Shri B.P. Sinha, in the total income of the assessee-company on the footing that the said interest had accrued and arisen to the assessee-company from the award and was, therefore, assessable as the assessee's income for the year ending on 31-3-1971. The aforesaid addition was, however, deleted on appeal by the learned AAC on the footing that the said award of the umpire had not become final as both the sides had disputed the said award in the Court of the Senior Sub-Judge, Hissar, and that no income by way of interest could, therefore, accrue and arise to the assessee-company on the basis of such a disputed award. 9. On the basis of the aforesaid finding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay be, on expiration of the relevant period referred to in sub-section (1) pending the determination and payment of the purchase price : Provided that in any such case, the purchaser shall pay to the licensee, interest at the Reserve Bank rate ruling at the time of delivery of the undertaking plus one per centum, on the purchase price of the undertaking for the period from the date of delivery of the undertaking to the date of payment of the purchase price : (ii) Sub-section (5) shall be omitted and shall be deemed to have been omitted with effect from the 1st day of April, 1960 : (5) Notwithstanding anything contained in any judgment, decree or order of any Court, every option of purchase of an undertaking, in the territories now forming part of the State of Haryana, exercised by the erstwhile Punjab State Electricity Board or the Haryana State Electricity Board by serving a notice upon a licensee under section 6 of the principal Act and every delivery of an undertaking effected by a licensee to the said Electricity Board in pursuance of such notice at any time on or after commencement of this Ordinance, shall be deemed to have been exercised or effected, as the case may be, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lement, which was a matter of decision by the umpire, has become a statutory right rested with the appellant-company as it was dispossessed of the undertaking on the 8th April, 1962, and was not paid any compensation till June 1971. Under the income-tax law, income can accrue only when the right to receive such income vests with the assessee. In the present case, the right to receive interest is statutory. The right to interest does not get postponed to the quantification of the compensation." After reviewing the various case laws, from pages 8 to 11 of his judgment, the learned AAC reached his conclusion in paragraph 12 of his order as follows : " 12. From the ratio laid down in the above judgment, it will be clear : (i) that the right to receive interest under the Haryana Amendment Act has arisen from April 8, 1962, and has run from year to year. The interest is, therefore, assessable on accrual basis from year to year as against the whole of the amount included by the ITO which is clearly erroneous. (ii) the amount of compensation determined in 1967 had actually been related back to 8th April, 1962, and on such sum, the appellant had acquired the right to receive interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for reopening the said assessment, the ITO could not initiate proceedings for reassessment for that year. In respect of the assessment year 1969-70, however, the learned Commissioner (Appeals) confirmed the reassessment proceedings. While doing so, he made the following observations : " The assessment for 1969-70 was completed on 11-1-1972. The question of interest was finalised on compromise dated 17-6-1971 being made the rule of Court on 22-6-1971. This happened when the proceedings for the assessment year 1969-70 were going on and it is common ground that there was no disclosure about this compromise having been made during the course of the proceeding for the assessment year 1969-70. It was a fact which was of primary nature, and which should have been disclosed during the course of the proceeding for the assessment year 1969-70. I am of the opinion that there was a failure or omission to disclose this primary fact of compensation and interest having been compromised between the assessee and the Haryana State Government which should have been disclosed. There was, thus, failure or omission on the part of the assessee. The assessment order for the assessment year 1972-73, d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justified. As to the merits, the learned departmental representative supported the order of the ITO and submitted that the aforesaid interest income had been held to be accruing to the assessee from year to year by the AAC at the assessee's pleading in respect of the assessment year 1972-73, that there was nothing in law to show that the above view was not correct and that, therefore, the ITO was justified in bringing to assessment the aforesaid income. The learned departmental representative drew our attention, in this connection, to the decision of the Hon'ble Delhi High Court in the case of Fazilka Electric Supply Co. Ltd. v. CIT [1983] 143 ITR 551, in which case, according to the learned departmental representative, on identical facts, it has been held by the Hon'ble Delhi High Court that the interest awarded by the arbitrator did accrue and arise from year to year and could only be assessed on that basis and not on the basis of the date of the decree. Reference has also been made to the decisions of the Hon'ble Allahabad High Court in the case of Addl. CIT v. Virendra Singh [1979] 118 ITR 923 and Moti Lal Chaddami Lal Jain v. CIT [1980] 122 ITR 949. It has been held in both t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the date of the payment had been specifically negatived by the umpire by observing that the Haryana State Electricity Act did not permit the awarding of such an interest. What he granted was in the exercise of his discretionary powers as an arbitrator, who called it interest pendente lite. Such an interest could not be equated to the statutory interest and would arise only on the date of the decree. The learned counsel did admit that the plea, which was being taken by the assessee now was directly opposed to the plea that had been taken earlier by the assessee's counsel in the course of the appeal in the assessee's case for the assessment year 1972-73. He also conceded that the assessee had taken benefit of the appellate order for the assessment year 1972-73 and had been successful in getting the addition for interest made in respect of 1972-73 deleted from that assessment. He nevertheless submitted that the view taken by the AAC in respect of the assessment year 1972-73 was erroneous and that the assessee was now wiser and that he could now take the plea, which was permissible in law, despite the contrary plea, which had been taken by the assessee in respect of the assessment yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. We are, therefore, not referring to the catena of case law ; which was cited before us by either sides, though we have carefully gone through each case. 20. While examining the validity of reopening of an assessment under section 147(a), we have to ascertain the state of mind of the ITO at the time when he reopened the assessment. The question that the ITO has to ask while reopening an assessment is, whether he has reasons to believe that the assessee's income had escaped assessment on account of the assessee's failure to return all the details of his income. In the present case, the assessee's own plea before the learned AAC, in the course of appeal proceedings for the assessment year 1972-73, was that the interest income accrued and arose to the assessee from year to year, and not on the basis of the decree of the Court passed in June 1971. The above pleading of the assessee was accepted by the learned AAC. Once knowledge about the income from interest accruing and arising to the assessee from year to year came in possession of the ITO and he found by reference to the income-tax returns filed by the assessee that he had not returned the income from that source in his origina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the original assessment proceedings for the assessment year 1969-70, yet it was not brought to the attention of the ITO by the assessee. Withholding the information on this point, while the assessment was pending, would, without doubt, amount to withholding primary information having a bearing on the assessee's total income. It is of no consequence in this connection as to what was the honest opinion of the assessee with regard to the relevance of that information to the assessment to be made. The relevance or irrelevance of it has to be left to the decision-making authority. The fact of the decree should have been disclosed and it was, admittedly, not disclosed. 22. As regards 1968-69, it is true that the assessee could not have disclosed the contents of the decree, as the return was filed in the middle of 1968 and the assessment itself was completed on 26-12-1968. But the plea of the assessee before the learned AAC in the course of appeal for the assessment year 1972-73 was, and it is also correct, that the right to receive interest accrued to the assessee statutorily from 1-4-1962 onwards on the basis of the provision of section 6(5A), as applied to the State of Haryana b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement on this putative state of law. In Rai Singh Deb Singh Bist's case, their Lordships were dealing with loans in the names of some which had been disclosed, in the original returns. The ITO noted those loans and accepted them at their face value at the time of the original assessment. Subsequently, he came to the conclusion that the loans were bogus and initiated proceedings under section 34(1)(a) of the Indian Income-tax Act, 1922 (' the 1922 Act '). These proceedings were quashed by their Lordships by saying that all the primary facts had been disclosed by the assessee at the time of original assessment and that it was not for the assessee to instruct the ITO as to what inference he will draw from the given facts. Similar is the ratio of Calcutta Discount Co. Ltd.'s case. None of these cases dealt with the situation with which we are faced in the present proceedings, namely, the effect of retrospective legislation and an income accruing and arising as a result thereof. When such be the position, the putative state has to be taken as real one and the result of it would be that income from interest accrued to the assessee in the accounting periods corresponding to the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings, in view of the above provision, will not be subject to limitation prescribed in section 149 of the Act. If any authority for this proposition is needed, we may refer to the decision of the Hon'ble Calcutta High Court in the case of Hungerford Investment Trust Ltd. v. ITO [1984] 146 ITR 73. In that case, action under section 34 in respect of the assessment year 1949-50 taken on 29-10-1961 was held to be valid as the bar of limitation had been lifted on account of the finding of the AAC. The Hon'ble Allahabad High Court also took similar view in Raghunath Prasad Tandon v. CIT [1964] 51 ITR 763 and in Jawahar Lal Mani Ram v. CIT [1963] 48 ITR 837. In the latter case, action under section 34(1)(b) for the assessment year 1946-47 taken on 4-3-1955 was held to be valid as the bar of limitation had been lifted under the second proviso to section 34(3) of the 1922 Act (analogous to section 150(1) of the 1961 Act). 24. The learned counsel had drawn our attention to the provisions of sub-section (2) of section 150, which, in his opinion, constituted an exception to the general provisions of section 150(1). The said sub-section reads as follows : " (2) The provisions of sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal in the case of Bela Singh Pabla v. ITO [1982] 9 Taxman 114 (Delhi). In view of the Special Bench decision, with the reasoning and conclusion of which we concur, we reject the assessee's contention in this regard. 27. Now coming to the merits of the case, we are of the opinion that the subject-matter is no more res integra. The assessability of the aforesaid interest has been the subject-matter of litigation between the assessee and the department for a number of years in the course of several assessment proceedings, namely, the assessment years 1971-72, 1972-73 and the present assessment years. In the course of assessment proceedings for the assessment year 1972-73, all the relevant facts, which have a bearing on the determination of this question, were raised before the learned AAC and the stand of the assessee in the said appeal was that the income from interest accrued and arose to the assessee by the operation of the statutes from year to year and that such interest accrued to the assessee irrespective of the decree passed by the Court and that, therefore, it was wrong to tax the entire amount in one year, namely, the assessment year 1972-73, in the relevant accounting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their Lordships, it is settled, first, that the admission of a fact fundamental to the decision arrived at cannot be withdrawn and a fresh litigation started, with a view of obtaining another judgment upon a different assumption of fact ; secondly, the same principle applies not only to an erroneous admission of a fundamental fact, but to an erroneous assumption as to the legal quality of that fact. Parties are not permitted to begin fresh litigations because of new views they may entertain of the law of the case, or new versions which they present as to what should be a proper apprehension by the Court of the legal result either of the construction of the documents or the weight of certain circumstances. If this were permitted litigation would have no end, except when legal ingenuity is exhausted." [Emphasis supplied] In the present case, as has been seen while narrating the facts above, the learned counsel for the assessee fairly conceded that the stand which the assessee wanted to take up in the present appellate proceedings was directly opposed to what the assessee itself had taken in the course of appellate proceedings for the assessment year 1972-73 and on the basis of wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above enunciation of law was approvingly quoted by their Lordships of the Hon'ble Allahabad High Court in the case of Udrej Singh v. Ram Bahal Singh AIR (33) 1946 All. 436. Their Lordships of the Hon'ble Andhra Pradesh High Court have also reiterated the above principle in the case of Indermull Loniya v. Subordinate Judge, Secunderabad AIR 1958 AP 779. After referring to the decision of the Hon'ble Allahabad High Court in the case of Udrej Singh, their Lordships observed that : ". . . If the parties have taken up a particular position before the Court at one stage of the litigation, it is not open to them to approbate and reprobate and to resile from that position...." [Emphasis supplied] 30. It is true that as a general rule, the principle of res judicata is not applicable to the decisions of the income-tax authority, as has been pointed out by their Lordships of the Hon'ble Bombay High Court in H.A. Saha Co. v. CIT [1956] 30 ITR 618, but their Lordships have themselves pointed out in that case, that the above rule is subject to the limitation that the effect of revising a decision in a subsequent year should not lead to injustice. In that case, their Lordships were consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated by the Government of India. It was in this context that their Lordships observed that if a certain amount was not income, it would not be exigible to tax, and it would not be taxed on the principle of estoppel. Their Lordships made their intention clear by referring to the decision of the Hon'ble Calcutta High Court in the case of Amarendra Narayan Roy v. CIT AIR 1954 Cal. 271 and distinguishing it on facts. In that case, the assessee had challenged the imposition of tax on its concealed income on the basis that the due procedure of law had not been followed in order to tax him. The Hon'ble Calcutta High Court rejected the assessee's submission and said that the concealed income was taxable and, therefore, tax could be recovered from the assessee by the revenue following the procedure laid down in the Voluntary Disclosure Scheme, 1951. The revenue relied on this case of the Hon'ble Calcutta High Court to plead before their Lordships of the Supreme Court in the aforesaid case that the assessee having opted for the scheme of the Government of India, in accordance with which the amounts recovered by it from the debtors were to be taxed as the assessee's income, the assessee could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt parts of the excluded amount are being sought to be taxed in the present years as per the assessee's pleadings which have been accepted by the AAC. The assessee, in these circumstances, cannot be allowed to go back and thereby cause injustice to the revenue, depriving it altogether of its right of taxing the assessee's income. If we allow the assessee to reprobate on the aforesaid stand, the department would be losing an important advantage inasmuch as the entire amount, which is now being sought to be taxed on the basis of the decision of the AAC, which has been accepted by both the sides, would go without tax, even though it had taxable quality of the years in which the interest income accrued and arose. When this is going to be the result, the Hon'ble Bombay High Court says in H.A. Shah Co.'s case, that the principle of res judicata should be applied and the litigant concerned, who is trying to reprobate, must not be allowed to reprobate. 33. The assessee's learned counsel, though given an opportunity to do so, has not been able to bring to our attention any case law which might be militating against the view taken by us above. He had, of course, pleaded that the interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon'ble Delhi High Court to be not only revenue receipt being compensation for loss of profit, but also that it accrued from year to year. The above ratio is based directly on the ratio of the decision of the Hon'ble Supreme Court in the case of Satinder Singh v. Umrao Singh AIR 1961 SC 908. The facts of the present case have remarkable similarity with the facts of the above case. Here too, the Court awarded interest on 22-6-1971 for the period 1-4-1962 onwards for the reason that the assessee-company was kept out of the electricity undertaking as well as compensation during the aforesaid period. The nature of interest is clearly of compensation for loss of income for the aforesaid period. It has, therefore, to be taxed as revenue receipt and on year to year basis, and not all in one lump sum. The added factor in the present case is that such a right to receive interest has also been made statutory with effect from 1960 and so it derives its strength not from the award but from the statute itself. The plea of the assessee to this effect in the appellate proceedings for the assessment year 1972-73 was correct and was rightly accepted by the learned AAC. The plea of the learned c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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