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TMI Blog2000 (5) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... statement which was procured by the Income-tax Officer after the conclusion of the assessment proceedings and appeal proceedings and that too, no opportunity was ever given to the appellant for rebutting the same, thus denying elementary principle of Income-tax (Appeals) is bad in law. 3. Without prejudice to above, it is submitted that expenses allowed by the Commissioner of Income-tax (Appeals) are very much on the lower side. These should be enhanced suitably." 2. The Revenue has also filed appeals for the assessment years 1985-86 and 1986-87 against the order of the CIT(A) dated 12-11-1992 and the assessee has filed cross objections for the assessment years 1985-86 and 1986-87. The grounds taken by the Revenue in their appeals are as under: ITA No. 129/93 "1. That on the facts and in the circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 6,70,895 made on account of capital gain on enhanced compensation. 2. That on the facts and in the circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 27,940 made on account of income from undisclosed sources." ITA No. 131/93 "1. That on the facts and in the circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,18,139 1983-84 1,18,139 1984-85 1,18,139 ------------------------------------------------------------------------ The Assessing Officer observed that in accordance with the judgment of the Hon'ble Supreme Court in the case of Rama Bai v. CIT [1990] 181 ITR 400 interest income on additional compensation as a result of compulsory acquisition of land is assessable on accrual basis from the date of dispossession of land to the date of payment of interest. The Assessing Officer observed that the assessee had neither filed return of income for assessment years 1979-80 to 1984-85 nor any notice under section 139(2) was issued by the Department for the said assessment years. He, therefore, observed that the income for assessment years mentioned above has escaped the assessment and therefore with the prior permission of D.C.I.T., notice under section 148 dated 9-3-1990 was issued and served on the assessee who filed returns declaring the interest income. The Assessing Officer issued notice under section 142(1) to respond to various queries. On 24-3-1992, the assesse filed legal objection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of individual or otherwise but the relevant fact remains that the assessee did not file return of income-tax for these assessment years under section 139 of the Act. According to the Assessing Officer information came to his notice that income chargeable to tax has escaped assessment. He, therefore, observed that the case will fall within the ambit of section 147(a) and for completing assessment under section 147(a), the assessment was made within a period of two years from the end of the financial year in which notice under section 148 was served. He observed that notice under section 148 was served on 14-3-1990, and as such assessment could be completed on or before 31-3-1992. 4.3 Aggrieved against the finding given by the Assessing Officer the appellant filed appeal before the Ld. CIT(A). Similar plea was taken before the Ld. CIT(A) and the Ld. CIT(A) has given finding of fact in para 2.3 of his order which is reproduced as below: "2.3 I have given careful consideration to the entire matter and I am not inclined to agree with the Ld. Counsel. Proceedings under section 147(a) were initiated since assessee had not filed returns of his income for the assessment years 1979-80 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not attracted on the facts and circumstances of the case. The Learned Counsel relied on the decision of the Hon'ble Madras High Court in the case of CIT v. V. Jayaraman [1994] 207 ITR 1038. The Ld. Counsel pleaded that the Hon'ble Madras High Court has given similar finding on similar facts. He relied on the following observations of the Hon'ble Madras High Court: "A. We find that the court, while considering the question of bar of limitation, pointed out that specific provision for removing the bar of limitation in respect of an assessment giving effect to a finding may not have been called for in case a reassessment made in order to give effect to a finding was considered to be a separate class of assessment. B. However, we are of the opinion that in a proceeding by the Income-tax Officer to give effect to a finding of an appellate authority, he must conform to one or the other of the sections of the Act, such as section 147 of the Act for revision (sic) or section 154 or 155 of the Act for amendment and when the appropriate sections are invoked, the conditions contained in those sections, will have necessarily to be fulfilled. C. In the present case, having invoked secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Act. The plea of the Ld. Counsel before the authorities below was that his case has become time barred and therefore, no assessment could be made by the Assessing Officer. During the course of arguments, the Ld. Counsel raised further objection regarding the legality of completion of assessment by the Assessing Officer. The first objection related to the fact that even if amended provisions of section 147 are attracted then law prevailing at the time and during the assessment year will be applicable and therefore, it will be very much material to take note of section 147(a) and 147(b). The other point raised by the Learned Counsel was that even in the amended provisions he could not have filed the return because during the previous year relevant to the assessment year under consideration, he was not having information regarding his income from the interest on enhanced compensation. 4.8 Mere reading of the section indicates that the controversy of section 147(a) 147(b) is removed by the legislature by amalgamating both the sections. Now in the amended provisions the Assessing Officer after having reason to believe has to come to the finding that 'any income' chargeab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of section 147 of the Income-tax Act w.e.f. 1-4-1989. The Hon'ble Justice D.K Jain has explained the impact of the amended provisions by making following observations: "The section provides that if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment. The new section not only merges clauses (a) and (b) of the pre-amended. section 147 but also brings about a significant change in the preliminary requirement of certain mandatory conditions before reassessment proceedings could be initiated under the old section. Under the old section 147(a), the Assessing Officer could initiate reassessment proceedings if he had reason to believe that income chargeable to tax had escaped assessment by reason of: (a) omission or failure on the part of an assessee to make a return under section 139 for any assessment year, or (b) to disclose fully and truly all material facts necessary for his assessment for that year. As is evident from the amended section, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 877. Any exposition of law by the Apex Court is not enactment of law and is only exposition of correct position of law and, therefore, even if the notice for reassessment has been issued before the decision of the Apex Court, it would not make any difference as while deciding this writ petition, the decision of the Apex Court cannot be ignored. The judgment of the Apex Court is binding under article 141 of the Constitution and any judgment which has been given by the Apex Court could be considered as information as contemplated under section 147(b) and even in accordance with the existing provisions, can be ground for reason to believe to the Income-tax Officer that the income chargeable to tax has escaped assessment. The question as to whether the proceedings should have been taken under the provisions of section 147 as were existing earlier or as they were brought into force with effect from April 1, 1989, is merely of academic interest because even if the proceedings were considered to be under section 147(b) of the repealed section, then there was limitation and the Income-tax Officer could validly be said to have the information in his possession and has the reason to believ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... now from 1-4-1989 onwards) (iii) Notice under section 148 can now be issued for any of the assessment years 1982-83 to 1984-85 if the following conditions are fulfilled:-- (a) In a scrutiny case, if the escaped income is Rs. 50,000 or more in each year and approval of the Chief Commissioner or Commissioner has been obtained. (b) In a non-scrutiny case, if the escaped income is Rs. 25,000 or more in each year and approval of the Deputy Commissioner has been obtained. (Under the old provisions, action could have been taken for all these assessment years, in respect of both types of cases, with the approval of the Chief Commissioner or Commissioner, whatever be the amount of escaped income. These old provisions, however, have no application now from 1-4-1989 onwards). (v) Notice under section 148 can now be issued for any of the assessment years 1985-86, whatever by the amount of income which has escaped asst., if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment. (Under the old provisions action could have been taken for these assessment years, if the circumstances mentioned in clause (a) or (b) of the old section 147 we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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