Commissioner of Income Tax vs V. Jayaraman

Rangarajan, J.—The facts leading to the filing of this case are :

The assessee is an individual. The accounting year is the year ended on March 31, 1968, corresponding to the assessment year 1968-69. Certain

land belonging to the assessee was acquired and compensation was paid on December 11, 1967. Later, on July 3, 1972, the assessee received an

additional sum. The Income Tax Officer assessed the enhanced compensation for tax for the assessment year 1973-74. On appeal, the Appellate

Assistant Commissioner by his order dated June 11, 1976, deleted the addition stating that it is to be assessed only for the assessment year 1968-

Consequently, the Income Tax Officer initiated proceedings u/s 147(a) of the Income Tax Act and the additional amount was included for

reassessment. This was upheld on appeal. But on further appeal to the Appellate Tribunal, the Appellate Tribunal held that since there was no

failure on the part of the assessee to disclose material facts, the assessment u/s 147(a) of the Act cannot be sustained. The Appellate Tribunal also

proceeded to consider whether it could be regarded as a mistake in quoting the provision of law and held that such a mistake could not be

assumed because in every part of the proceedings section 147(a) of the Act had been stressed. The Appellate Tribunal also considered whether

the assessment could be regarded as one made for giving effect to a finding and held that since section 147(a) of the Act had been specifically

invoked, the assessment could not be affirmed without fulfilling the ingredients of that section.

At the instance of the Revenue, the Appellate Tribunal has referred the following question :

In a reassessment made u/s 147(a) of the Income Tax Act, 1961, even if such reassessment is made in consequence of or to give effect to any

finding or direction contained in an order passed u/s 250 of the said Act, whether it is necessary that the ingredients of section 147(a) of the said

Act should be satisfied ?

Learned counsel for the Revenue contended that giving effect to a finding by the appellate authority by a reassessment could be considered as a

separate class of assessment and it was not bound by the procedural conditions incorporated in those sections. Reliance was placed on the

decision in JAWAHAR LAL MANI RAM Vs. COMMISSIONER OF Income Tax, U. P., and the observations at page 849 :

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. 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. In the present case, having invoked section 147(a) of the Act, the provisions of section 147 of the Act must be fulfilled.

Thus, the answer to the question referred to above is self-evident. The Tribunal has only found that the conditions in section 147(a) of the Act have

not been fulfilled. Hence, we answer the question in the affirmative, i.e., against the Revenue with costs of Rs. 500.