9911796707
TMI Blog1991 (8) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... shtra and Mangilal along with others received total compensation of Rs. 1,05,035 as per an award dated 31-12-1973. The Assessing Officer worked out the average cost of land at Rs. 41.30 per sq. yd., determined the cost of 907 sq.yds. at Rs. 37,460 and worked out the capital gains at Rs. 67,575,of which he worked out the share of Mangilal at Rs. 22,525. Similarly, 1/3rd share was also assessed to tax in the hands of other co-sharers for the assessment year 1975-76. The assessment in the case of Phulwantibai Ramesh Parmar was completed on 15-3-1976 and that in the case of Ramesh Rupchand Parmar was completed on 11-3-1976. All these assessments were revised under section 263 of the Act by the CIT, Pune-2, Pune, by an order dated 24-2-1978 passed in the case of Mangilal J. Parmar and Ramesh Rupchand Parmar. The ostensible reason for setting aside the assessments was that the assessment of capital gains should have been made in the hands of the AOP since the compensation that was awarded by the Government in respect of the piece of land held by these three persons was receivable by an AOP. This was the position for the assessment year 1975-76. On 29-11-1977, the ITO issued notice under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d order, he observed, inter alia, in paragraphs 4 and 5 as follows : " The Officer who had jurisdiction under the provisions of law to assess the AOP was the ITO, SSC, Thane. He erred in dropping the proceedings without a physical verification of the records regarding validity of the assessment completed by the ITO, F-Ward, Thane, in the hands of Smt. F.R. Parmar. To this extent, the order passed by the ITO, SSC, Thane, was erroneous and prejudicial to the interests of revenue. 5. I, therefore, set aside the assessments for assessment years 1974-75 and 1975-76 in the case of Shri Mangilal J. Parmar and others (AOP) with directions to the ITO, SSC, Thane, to make assessments and compute the income of the AOP in the relevant years, in accordance with the provisions of law and issue demand notices accordingly. " Consequent to such directions of the CIT, the present order for the assessment year 1974-75 was passed on the AOP by ITO, F-Ward, Thane, on 6-1-1983. The assessee went in appeal and the Appellate Asstt. Commr. dismissed the appeal and confirmed the order. Initially, the following two grounds were taken at the appellate stage : " (a) The status of the appellant should n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s which were dropped. Therefore, the time-limit in respect of reassessment proceedings for this year commenced from 31-3-1978 and ended on 31-3-1982, whereas the order of assessment was passed on 6-1-1983. Therefore, argued Shri Chhajed, the order of assessment had become time-barred. Alternatively and without prejudice, it was argued that the ITO should have gone into the merits of the issue. Thirdly, it was argued that when the assessment had already been made on 31-3-1980 in the case of Phulwantibai R. Parmar for the assessment year 1975-76 and such assessment was cancelled by the CIT(A), which order has been accepted by the department, there was no case now for making assessment on the present AOP for the assessment year 1974-75, particularly when the original proceedings under section 147(a) were dropped. Reliance was placed on a decision of the Supreme Court in the case of Rajinder Nath v. CIT [1979] 120 ITR 14 and in the case of Goombira Tea Co. (P.) Ltd. v. ITO [1980] 125 ITR 260 (Cal.) and in particular the observations at pages 266, 268 and 269. Reliance was also placed on another decision of the Supreme Court in CIT v. Murlidhar Jhawar Purna Ginning Pressing Factory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6-1-1983 is in accordance with the directions of the Commissioner under section 263 and is not an order consequent to the re-assessment proceedings started. These directions were given by the Commissioner on 26-1-1981. The consequential order has been passed on 6-1-1983. Such order, in our opinion, has been passed within the time available to the Assessing Officer under section 153(2). Sub-section 153(2A) was inserted by the Taxation Laws (Amendment) Act, 1970, with effect from 1-4-1971 and as it stood at the relevant time read as follows : " (2A) Notwithstanding anything contained in sub-sections (1) and (2), in relation to the assessment year commencing on the 1st day of April, 1971, and any subsequent assessment year, an order of fresh assessment under section 146 or in pursuance of an order, under section 250, section 254, section 263 or section 264, setting aside or cancelling as assessment, may be made at any time before the expiry of two years from the end of the financial year in which the order under section 146 cancelling the assessment is passed by the Income-tax Officer or the order under section 250 or section 254 is received by the Commissioner or, as the case may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Revenue, and, therefore, the Commissioner of Income-tax had jurisdiction under section 263 to revise such an order. " Having recorded these arguments, the Tribunal gave a finding in unambiguous terms in para-5 of its order as follows : " 5. Having heard the parties and after going through the facts on record, we are satisfied that the order of the Income-tax Officer, Special Survey Circle, Thane, dropping the proceedings started by him under section 148 constituted an order within the meaning of section 263, that the 'Association of Persons' having, admittedly, not filed the returns of income before the notices dated 17-4-1979 under section 148 were issued, the provisions of section 147(a) were applicable and not those of section 147(b) and that the Income-tax Officer proceeding on the assumption that the other Income-tax officer (F-Ward, Thane) had passed valid assessment orders on the 'Association of Persons' in pursuance of the directions of the Commissioner of Income-tax and, therefore, there was no necessity to continue the proceedings started by him under section 148 was erroneous and prejudicial to the interests of the Revenue. " In the light of the above, we cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The learned Income-tax Officer erred in computing the cost of acquisition at Rs.35,000. 5. The learned Income-tax Officer erred in taxing the income in the Assessment year 1974-75. " Since these grounds were not pressed before the AAC, the AAC did not deal with them. He dismissed them as not pressed. The only ground that the AAC dealt with is the question of limitation with which we have dealt extensively in the foregoing paragraphs. Having not pressed the grounds concerning the merits before the AAC, it does not lie in the mouth of the appellant how to argue before us that the merits of the case have not been dealt with by the AAC or the ITO. The appellant has already succeeded in frustrating the attempt of the department in bringing to tax the capital gains in the hands of the AOP. As we have pointed out earlier, when an effort was made to assess the profit in the hands of AOP of Smt. Phulwantibai R. Parmar, that AOP went in appeal and secured a decision in its favour from the CIT (Appeals)--X, Bombay (pages 54 to 57 of the compilation) which decision has apparently been accepted by the department inasmuch as no appeal against it has been filed by the revenue. The overall pi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... second decision cited before us was the judgment of the Calcutta High Court in the case of Goombira Tea Co. (P.) Ltd. Here again, the facts were materially different. In that case, the appellant was assessed by ITO, A-Ward, Karimgunj, Assam. Their cases were transferred by the CBDT to Calcutta. The appellant moved the Court under Article 226 of the constitution and obtained rules nisi. They also obtained an interim order under which all further proceedings were stayed. The interim order was varied at the instance of the revenue to the extent that the proceedings may continue and the final order be passed, but it will not be given effect to or communicated pending the disposal of the rules. The rules were made absolute and writs were issued by a Single Judge quashing the impugned order of transfer and directing the IT authorities from giving effect to the order of transfer. Thereafter, a direction was given by the Single Judge to the ITO, Karimgunj, to make fresh assessments within four months. The Calcutta High Court held that in view of the directions in the writ petition and the terms of the modified interim order, the assessment was not the subject matter of the writ petitions. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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