(a) Income-tax---

----Reassessment---Limitation---Exception to bar of limitation--Reassessment to give effect to finding or direction in an order of Court- Finding or direction contained in order passed by reference Court in land acquisition proceedings---Bar of limitation will not apply---Indian Income Tax Act, 1961, Ss. 147, 149 & 150.

The jurisdiction conferred on the High Court under Article 226 of the Constitution of India is not intended to supersede the jurisdiction and authority of the Assessing Officer to deal with the merits of the contentions that the assessee may raise before him including that of limitation.

Subsection (1) of section 150 of the Income Tax Act, 1961, provides that where the reassessment proceedings are initiated in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceedings under the Income Tax Act by way of appeal, reference or revision or by a Court in any proceeding 'under any other law, the time limits prescribed in section 149 shall not apply and that notice under section 148 could be issued at any time. An order passed in a land acquisition proceeding would definitely be included within the ambit of the expression used "any finding or direction contained in an order passed by a Court in any proceedings under any other law".

(b) Income-tax---

----Reassessment---Writ---Limitation---Existence of alternative remedy-- Question regarding limitation---High Court's jurisdiction will not supersede that of assessing officer---Delay in filing writ petition---Reassessment completed in the meantime ---Assessee had alternative remedy---Writ petition not maintainable against reassessment notices---Indian Income Tax Act, 1961, S.150---Constitution of India, Art. 226.

The assessee's lands measuring about 4,200 Bighas were acquired by the Chief Commissioner of Delhi by notifications, dated March 6, 1966, and September 6, 1966, issued under section 6 of the Land Acquisition Act, 1894. By judgment, dated May 20, 1980, the Additional District Judge held the petitioner to be entitled to a 1/32 share of the compensation awarded. As a consequence thereof the petitioner received a compensation of Rs.1,33,810. On a reference application filed by the petitioner under section 18 of the Land Acquisition Act, the Additional District Judge, Delhi, by his judgment, dated July 31, 1991, passed his award. Consequently, the petitioner was paid a sum of Rs.1,10,20,624 which amount represented principal of Rs.41,96,496 and interest of Rs.76,84,829 up to May 18, 1992. On March 31, 1993, the petitioner was served with notices under section 148 of the Income Tax Act, 1961, for 16 assessment years, i.e., for the assessment years 1968-69 to 1971-72 and the assessment years 1981-82 to 1992-93, asking the petitioner to file returns of income for these years. On a writ petition challenging the notices:

Held, dismissing the writ petition, that the notices were issued on March 29, 1994, whereas the writ petition was filed in the High Court in the month of March, 1996. In the meantime, the reassessment proceedings had been completed and, therefore, the petitioner had effective alternative remedy provided under the statute to challenge the validity of the said reassessment proceedings before the statutory authorities as well. Hence, the writ petition was not maintainable. Moreover, on the merits the initiation of the reassessment proceedings was based on the findings or directions contained in the order passed by the reference Court in a land acquisition proceeding and hence the bar of limitation was automatically lifted. The reassessment notices were valid.

Prashar (S.C.) v. Vasantsen Dwarkadas (1963) 49 ITR (SC) 1; Gadgil (S.S.) v. Lal & Co. (1964) 53 ITR 231 (SC) and Jani (J.P.), I.T.O. v. Induprasad Devshanker Bhatt (1969) 72 ITR 595 (SC) distinguished.

Lalji Haridas v. ITO (1961) 43 ITR 387 (SC) and Lalji Haridas v. Bhatt (R.H.) (1965) 55 ITR 415 (SC) ref.

B.B. Ahuja with K.M. Sharma and Sanjay Abott for Petitioner.

R.D. Jolly with Miss Prenm Lata Bansal for Respondents.

JUDGMENT

DR. M. K. SHARMA, J.---This writ petition is directed against the notices under sections 148 and 142 of the Income Tax Act, 1961, issued to the petitioner relevant to the assessment years 1968-69 to 1971-72, 1981-82 and 1982-83.

The lands measuring about 4, 200 bighas were acquired by the then Chief Commissioner of Delhi by notification, dated March 6, 1966, and September 6, 1966, issued under section 6 of the Land Acquisition Act, 1894. By judgment dated May 20, 1980, the then Additional District Judge held the petitioner to be entitled 1/32th share of the compensation awarded under the awards. As a consequence thereof, the petitioner received a compensation of Rs. 1,33,810. On a reference application filed by the petitioner under section 18 of the Land Acquisition Act, the Additional District Judge, Delhi, by his judgment, dated July 31, 1991, passed his award, Consequently, the petitioner was paid a sum of Rs. 1,10,20,624 which amount represented towards principal amount at Rs. 41,96,496 and interest at Rs. 76,84,829 up to May 18,1992. According to the petitioner, no tax is leviable on interest accruing up to March 31, 1982, as it had become time-barred. However, on March 31, 1993, the petitioner was served with notices under section 148 of the Income Tax Act, 1961, for 16 assessment years, i.e., for the assessment years 1968-69 to 1971-72 and the assessment years 1981-82 to 1992-93, asking the petitioner to file returns of income for these years.

By this writ petition, the petitioner has challenged the aforesaid notices issued under section 148 for the assessment years 1968-69 to 1971-72 and for the assessment years 1981-82 and 1982-83 and also the reassessment proceedings. In pursuance of the aforesaid notices, the petitioner filed revised returns for the assessment years 1983-84 to 1992-93 paying additional tax amounting to Rs.32,22,828. For the assessment years 1961-62 to 1981-82 and 1982-83, the petitioner informed the Income-tax Officer that the notices for these years were time-barred under section 149 of the Act and that the provisions of section 151 are not attracted to the facts of the case because there was no finding or direction of any Court to assess or recompute his income for the said years. By letter dated February 7, 1996, respondent No. 2 informed the petitioner that his case was covered by section 150(1) and that the impugned notices were within jurisdiction.

Learned counsel appearing for the petitioner submitted before us that the provisions of section 150(1) of the Act are not applicable to the facts and circumstances of the present case inasmuch as the said provision does not confer any fresh power on the Income-tax Officer to make assessment in respect of the escaped income without any time-limit and particularly in respect of those assessment years which had become time-barred. Learned counsel relied upon the provisions of subsection (2) section 150 and submitted that in view of the said provisions, the provisions of subsection (1) of section 150 shall not apply where by virtue of any other provision limiting the time within which the action for assessment, reassessment or recomputation might be taken, such assessment, reassessment or recomputation was barred on the date of the order which is the subject-matter of appeal, reference or revision. In support of his submissions learned counsel relied upon the decisions of the Supreme Court in S. S. Gadgil v. Lal & Co. (1964) 53 ITR 231 ; J. P. Jani, ITO v. Induprasad Devshanker Bhatt (1969) 72 ITR 595 and S. C. Prashar v. Vasantsen Dwarkadas (1953) 49 ITR (SC) 1. Learned counsel further relied upon the Department's Circular No. 549 (see (1990) 182 ITR (St.) 1), dated October 31, 1989, and submitted that the amendments which came into force on April 1, 1989, including the amendments in section 151 would apply to all matters which were pending on April 1, 1989, and had not become closed or dead on that date. According to him in view of the clauses of the said circular as on March 31, 1994, not notices could have been issued by the respondents for the years prior to the assessment year 1983-84.

We also heard Mr. Jolly, learned counsel appearing for the respondents, who submitted before us that the impugned notices were issued as far back as March 29, 1994, and, therefore, there is unexplained delay in preferring the present writ petition. He further submitted before us that in the meantime the assessment orders in respect of the aforesaid assessment years have also been passed as against which statutory effective remedies are available to the petitioner and, therefore, the writ petition is not maintainable. He also submitted before us that the provisions of section 150(1) which are in the nature of an exception to section 149 are fully applicable to the facts and circumstances of the case and, therefore, the respondents are within their jurisdiction in issuing the notices under section 148 -of the Income Tax Act to the petitioner and also in continuing with the reassessment proceedings and making an order of reassessment in respect of the relevant assessment years.

It is true that a plea of limitation in respect of initiation of proceedings under section 147 of the Income Tax Act may and should be taken before the Assessing Officer and the appellate or revisional authorities constituted under the Act. It is held by the Supreme Court in the case of Lalji Haridas v. ITO (1961) 43 ITR 387 and Lalji Haridas v. R. H. Bhatt (1965) 55 ITR 415 that the jurisdiction conferred on the High Court under Article 226 is not intended to supersede the jurisdiction and authority of the Assessing Officer to deal with the merits of the contentions that the assessee may raise before them including that of limitation.

The petitioner has also approached this Court belatedly inasmuch as the impugned notices were issued on March 29, 1994, whereas the writ petition was filed in this Court in the month of March, 1996, challenging the validity of the said impugned notices on the ground of being barred on limitation. In the meantime as stated at the Bar the reassessment proceedings have also been completed and, therefore, the petitioner has effective alternative remedy provided under the statute to challenge the validity of the said reassessment proceedings before the statutory authorities as well. On the aforesaid grounds, this writ petition appears to us to be not maintainable.

However, since counsel for the petitioner had made elaborate arguments with regard to the validity of the aforesaid notices on the ground that they are time-barred, we feel inclined to look into the aforesaid issues raised before us as well.

Section 147 of the Income Tax Act provides for assessment and reassessment of income, which has escaped assessment. However, such reassessment is always subject to the provisions contained in sections 148 to 153. Section 149 provides the time-limit for issue of notices, i.e, for the initiation of proceedings under section 147. Section 150 appears to be in the nature of a proviso to section 149 whereas subsection (2) of section 150 again appears to be a proviso to the provisions of subsection (1) of section 150. Subsection (1) of section 150 provides that where the reassessment proceedings are initiated in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceedings under the Income Tax Act by way of appeal, reference or revision or by a Court in any proceeding under any other law, the time-limits prescribed in section 149 shall not apply and that notice under section 148 could be issued at any time. Accordingly, by virtue of the aforestated provision, the bar of limitation for reopening of assessment to which certain periods of limitation are prescribed under section 149 gets lifted, as if no period of limitation shall apply for initiation of such proceedings for assessment, reassessment or recomputation. However, subsection (2) of section 150 provides a rider to the aforesaid provision as if in the nature of a proviso to subsection (1) providing that the provisions of subsection (1) shall not apply where by virtue of any other provisions limiting the time within which action for assessment, reassessment or recomputation may be taken such assessment, reassessment or recomputation is barred on the date of the order which is the subject-matter of the appeal, reference or revision in which the finding or direction is contained.

For easy reference the aforesaid provisions of section 150 are required to be extracted:

" 150. Provision for cases where assessment is in pursuance of an order on appeal, etc. ---(1) Notwithstanding anything contained in section 149, the notice under section 148 may be issued at any time for the purpose of making an assessment or reassessment or recomputation in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under this Act by way of appeal, reference or revision or by a Court in any proceeding under any other law .

(2) The provisions of subsection (1) shall not apply in any case where any such assessment, reassessment or recomputation as is referred to in that subsection relates to an assessment year in respect of which an assessment, reassessment or recomputation could not have been made at the time the order which was the subject-matter of the appeal, reference or revision, as the case may be, was made by reason of any other provision limiting the time within which any action for assessment, reassessment or recomputation may be taken."

On a closer reading of the aforesaid provisions the only interpretation that could be given to the aforesaid section is that the bar of limitation as provided for in section 149 shall not apply for reopening of assessments to certain periods of limitation, i.e., in a case where initiation of reassessment proceedings is in consequence of or to give effect to any finding or direction contained in the appellate order, such initiation of reassessment proceedings would be bad if the said proceedings are barred by any other provision of the Act on the date of the order which was the subject-matter of the appeal. It is, however, pertinent to note that the aforesaid provision under section 150(2) which is in the nature of a proviso to section 150(1) does not include within its ambit the expression "any finding or direction contained in an order passed by a Court in any proceedings under any other law" appearing in section 150(1) which was added to the statute with effect from April 1, 1989, and only relates to the subject-matter of the appeal, reference or revision alone. The aforesaid expression "any finding or direction contained in an order passed by a Court in any proceeding under any other law" was not added by the Legislature to the provisions of section 150(2) of the Income Tax Act.

An order passed in a land acquisition proceeding would definitely be included within the ambit of the expression used "any finding or direction contained in an order passed by a Court in any proceedings under any other law". In the present case, the initiation of the reassessment proceedings is based on the findings or directions contained in the order passed by the reference Court in a land acquisition proceeding which, as is held herein above is included within the aforesaid expression used in subsection (2) of section 150 of the Income Tax Act. In view of our aforesaid understanding of the provisions of section 150, the interpretation that could be given thereto is that if there be an order of a Court including an order by a reference Court in a land acquisition proceeding then the bar of limitation is automatically lifted and accordingly, for the years in question for which interest was paid to the petitioner, although initiation of reassessment proceedings could be barred under the provisions of section 149, the same would stand as not barred under the provisions of section 150(1) of the Act and consequently, the question of limitation would not arise for consideration. The provisions of section 150(2) are not applicable to the facts and circumstances of the present case as it does not envisage within its ambit any finding or direction contained in an order passed by a Court in any proceedings under any other law, which in the instant case is the finding or direction contained in the order of award passed by the reference Court in the land acquisition proceeding under the Land Acquisition Act. The decisions of the Supreme court relied upon by learned counsel for the petitioner are distinguishable as those decisions were rendered prior to the amendment of section 150 of the Income Tax Act effective from April 1, 1989, and do not notice the afore said amendments in section 150(1).

For the foregoing reasons we are of the opinion that the impugned notices issued under section 148 of the Income Tax Act are held to be legal and valid and consequently, this writ petition is liable to be dismissed, which we accordingly do. No costs.

M.B.A/1244/FCPetition dismissed.