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Judgment
S.K. Jha, C.J.—In this reference u/s 256(1) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") the statement of the case has been submitted by the Income Tax Appellate Tribunal, Nagpur Bench, Nagpur, framing the following two questions for the opinion of this court:
"(i) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that no income accrued to the assessee u/s 41(2) of the Income Tax Act for the assessment year 1970-71 ?
(ii) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that the Income Tax Officer was not justified in reopening the assessment for the assessment year 1970-71 u/s 147(a) of the Income Tax Act ?"
The facts which can be culled from the statement of the case are these : The assessee is a limited company which was formerly engaged in the supply of electricity to the towns of Bilaspur and Katni. It had certain electrical installations and business activities at both these places. The original assessment for the year in question, viz., 1970-71, was completed by the Income Tax Officer on June 30, 1971, on "nil" total income. Later on, however, the Income Tax Officer was of the opinion that certain income chargeable under the Act had escaped assessment on account of failure on the part of the assessee to disclose truly and fully all material facts pertaining to this assessment. He, therefore, after going through the legal formalities, reopened the assessment. During the pendency of the proceedings, the jurisdiction of the case having been transferred to the Inspecting Assistant Commissioner of Income Tax, on completion of the reassessment proceedings, the Inspecting Assistant Commissioner brought to tax an amount of Rs. 5,74,550 which, according to him, had accrued to the assessee u/s 41(2) of the Act on account of the assessee''s machinery and plant having been taken over by the Madhya Pradesh Electricity Board u/s 7 of the Electricity Act, 1910. The Inspecting Assistant Commissioner found that the question of quantifying the compensation pertaining to the Bilaspur and Katni undertakings was entrusted to Shri B.P. Sinha, Ex-Chief Justice of India, as an arbitrator u/s 7A of the Electricity Act. The arbitrator gave his award in respect of Bilaspur undertaking on October 7, 1968. The award was confirmed by the District Court on September 16, 1969, subject to certain modifications. The High Court, on appeal, passed its order on September 14, 1971. The Madhya Pradesh Electricity Board preferred an appeal before the Supreme Court against the aforesaid order of the High Court. That appeal is still pending before the Supreme Court. In respect of the undertaking at Katni, the arbitrator gave the award on February 21, 1970. The District Court confirmed it on July 17, 1972, and the High Court Court on, June 27, 1979. As, according to the Inspecting Assistant Commissioner, since the awards were confirmed by the District Court in the accounting period relating to the assessment year 1970-71, the assessee had earned the income u/s 41(2) in the assessment year. Since the assessee had failed to disclose the same in the original assessment, proceedings u/s 147(a) were justified.
The assessee''s appeal before the Commissioner of Income Tax (Appeals) did not find favour with the Commissioner. The assessee, thereafter, filed an appeal before the Tribunal. In the course of hearing before the Tribunal, it was submitted that, as certified by the Director (Commercial) of the Madhya Pradesh Electricity Board under his letter dated February 24, 1978, the assessee had received the following payments in respect of the two undertakings :
"2. Payments made in respect of Bilaspur Undertaking
"2. Payments made in respect of Bilaspur Undertaking
Sl. No.
Date of payment
Amount
Rs. P.
1.
In the year 1964
3,00,000.00
2.
on 4-8-1969
1,00,000.00
3.
9-2-1970
3,20,000.00
4.
9-4-1970
3,30,000.00
6.
8-5-1970
2,65,796.00
6.
30-8-1972
1,47,217.04
Total
14,53,013.04
In respect of Katni Undertaking
1.
on 19-5-1964
2,50,000.00
2.
on 17-12-1964
35,000,00
Total
2,85,000.00"
It was contended on behalf of the assessee that, by its two letters dated December 29, 1960 and March 23, 1970, the assessee had brought all the facts to the notice of the Income Tax Officer. Furthermore, in the balance-sheets commencing with the year ending on March 31, 1965, up to 1973, the assessee had all along been disclosing the written down value of the assets taken over by the Madhya Pradesh Electricity Board and the compensation received from time to time. The argument before the Tribunal was that the assessee had furnished all the materials necessary for the assessment, not only along with the return of income, but prior to the end of the relevant accounting period. The Income Tax Officer, therefore, could not have reopened the assessment proceedings u/s 147(a) of the Act. Alternatively, it was submitted on behalf of the assessee that in so far as the Katni undertaking is concerned, admittedly, the award was given by the arbitrator on February 21, 1970 and it was made a rule of the court when the District Judge confirmed it on July 17, 1972 and the High Court confirmed it on June 27, 1979. Therefore, in so far as the Katni undertaking is concerned, by no stretch of imagination could it be argued that the money had become payable at any rate before July 17, 1972, even if the date of its confirmation by the High Court on June 27, 1979 is ignored. Therefore, the money, admittedly, could not be said to have become payable in the assessment year 1970-71.
In so far as the Bilaspur undertaking is concerned, the award having been made by the arbitrator on October 7, 1968, it was made a rule of the court with some modifications by the District Court on September 16, 1969, which was affirmed by the High Court on appeal on September 14 1971, and the Madhya Pradesh Electricity Board having preferred a further appeal before the Supreme Court against the order of the High Court, it could not be said that the money had become payable u/s 41(2) of the Act before the Supreme Court set the entire matter at rest. Even if the date of the order of the High Court be not taken into consideration, the date on which the High Court put its seal, i.e., September 14, 1971, was not covered by the assessment year in question. Therefore, even with regard to Bilaspur undertaking, no money was payable within the meaning of Section 41(2) of the Act in the year 1970-71.
From a discussion of the submissions and arguments advanced before the Tribunal, it can easily be seen--to put it briefly--that two distinct points had been argued on behalf of the assessee :
(i) that the assessee had all along been disclosing the written down value of the assets taken over by the Madhya Pradesh Electricity Board and the compensation received from the Board from time to time in the balance-sheets commencing from March 31, 1965 up to March 31, 1973 ; and
(ii) the award in respect of the Katni undertaking had become final on June 27, 1969, and that in respect of the Bilaspur undertaking had not yet become final at all and, therefore, no money was payable in respect thereof even up to date.
In so far as the second point aforementioned is concerned, the Tribunal has taken the view that no money became payable u/s 41(2) to the assessee in the assessment year in question. But, with regard to the first point argued before the Tribunal--although the argument has been noticed by the Tribunal at great length by even going to the extent of quoting the contents of the letters relied upon by the assessee--no finding has been recorded by the Tribunal as to whether the assessee had all along been disclosing the written down value of the assets taken over by the Madhya Pradesh Electricity Board and the compensation received from the Board from time to time in the balance-sheets commencing from March 31, 1965, up to March 31, 1973. If a finding on the first point had been categorically recorded in favour of the assessee, there would have been no need to go into the other question with regard to the date when the money became payable u/s 41(2) of the Act, in other words, as to when the amount can be said to have been accrued to the assessee. The question of the date of accrual in such circumstances could have been more or less of academic importance. It is conceded by learned counsel for the Revenue that, in so far as the Katni undertaking is concerned, there is absolutely no question of any amount having accrued to the assessee u/s 41(2) of the Act in the assessment year in question, i.e., 1970-71, since the award had been made a rule of the court during the next assessment year. But in so far as the money payable in respect of the Bilaspur undertaking is concerned, the parties are at loggerheads with regard to the date on which the money became payable. On the one hand, learned counsel for the Revenue contends that the relevant date of such accrual would be the date when the award was made a rule of the District Court and not by the High Court, much less the date when such an amount can be said to be ascertained by the final court of the land, viz., the Supreme Court.
In these circumetances, both the questions which have been canvassed before the Tribunal and which are agitated before us, seem to be interlinked ; for, in the ultimate analysis, we have to see whether the Tribunal was justified in holding that the provisions of Section 147(a) of the Act could be said to be attracted on the facts and in the circumstances of the case at all. In that view of the matter, it was necessary for the Tribunal to record a categorical finding on the first point aforementioned. We are, accordingly, constrained to call for a further statement of the case from the Tribunal after recording its finding on the question whether the assessee had all along been disclosing the written down value of the assets taken over by the Madhya Pradesh Electricity Board and the compensation received from time to time from the Board in its balance-sheets commencing from March 31, 1965, up to March 31, 1973, or not; for, if the answer be in the affirmative, there would be no need to go into the other question. If, on the contrary, the answer be in the negative, then only it would be necessary to dwell on the other aspect of law.
In the circumstances, we direct the Income Tax Appellate Tribunal, Jabalpur Bench, Jabalpur, which is the successor-in-office of the Nagpur Bench, to submit a further statement of the case with findings on the points aforementioned. No order as to costs.