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income-tax Officer Vs. Gantuboina Apparao - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Hyderabad
Decided On
Judge
Reported in(1982)1ITD692(Hyd.)
Appellantincome-tax Officer
RespondentGantuboina Apparao
Excerpt:
.....is not justified in holding that the evidence produced before the ito is sufficient to treat the lands as agricultural lands in the absence of adangal extract.6. on the other hand, the learned counsel appearing for the assessee supported the order passed by the aac.7. we have heard the rival submissions made by the parties. it was the case of the assessee that the original compensation allowed by the land acquisition officer was to the extent of rs. 14,410 only, and if the value of the land as on 1-1-1954 was taken at rs. 10,000 as adopted by the ito, there will be no taxable income. therefore, the assessee contended that he had not filed any return for the assessment year 1967-68. it was further argued that since no return was filed, there cannot be a reopening of the assessment under.....
Judgment:
1. This appeal is directed against the order of the AAC dated 3-10-1980 passed in appeal No. VSP. 13 of 1980-81. The assessment year involved in this appeal is 1967-68.

2. According to the facts of this case, the Land Acquisition Officer acquired the half share of land belonging to the assessee in TS No.367/A1 admeasuring Ac. 4-17075 sq. ft. and passed an award No. 6/66 dated 8-8-1966. Not satisfied with that, the assessee requested for a reference under Section 18 and he was granted additional compensation of Rs. 50,240 in O.P. No. 64/67 in Sub-Court, Vizag. The ITO reopened the assessment under Section 147(a) of the Income tax Act, 1961 ("the Act"), and assessed the additional compensation in that year, , since according to the ITO the date of award was within the accounting period relevant to the assessment year 1967-68.

3. Before the ITO the assessee contended that the land acquired by the Municipality was agricultural land and in support of his claim he filed a letter dated 6-2-1977 obtained from the Village Munsiff, stating that the lands in Survey No. 367/A were classified as agricultural lands.

The assessee also filed a copy of the order passed by the District Munsiff in order to support his claim that the lands in question were of agricultural nature. Since the assessee did not produce the adangal as claimed by the (TO, he came to the conclusion that the assessee's contention that the lands were of agricultural nature cannot be accepted.

4. The assessee further contended that the provisions of Section 147 are not applicable in his case since he had no taxable income to file a return under Section 139(2) for the assessment year 1967-68 as per the original award. Basing upon the Sub-Judge's order granting additional compensation and also since the ITO was of the view that the said order relates back to the year in which the land was acquired by the Municipality, the ITO negatived the contention put forward by the assessee. On appeal, by following the decision of the Supreme Court in the case of ITO v. Lakhmani Mewal Das [1976] 103 ITR 437 and another decision of the Supreme Court in the case of Modi Spg. & Wvg. Mills Co.

Ltd. v. ITO [1970] 75 ITR 367, the AAC came to the conclusion that since there is no default on the part of the assessee under Section 139(1) of the Act, Section 147(a) is not applicable to the facts of the present case. Even on merits, the AAC came to the conclusion that the lands in question were of agriculture in nature and, accordingly, he directed the ITO to delete the entire income assessed on the basis of additional compensation received by the assessee.

5. Aggrieved, the department filed the present appeal before the Tribunal and contended that the AAC is not justified in holding that there is no case for issue of notice under Section 148 in the present case, following the decisions cited therein, since the cases cited in the appellate order were not applicable to the present case, ft was further contended that the AAC is not justified in holding that the evidence produced before the ITO is sufficient to treat the lands as agricultural lands in the absence of adangal extract.

6. On the other hand, the learned counsel appearing for the assessee supported the order passed by the AAC.7. We have heard the rival submissions made by the parties. It was the case of the assessee that the original compensation allowed by the Land Acquisition Officer was to the extent of Rs. 14,410 only, and if the value of the land as on 1-1-1954 was taken at Rs. 10,000 as adopted by the ITO, there will be no taxable income. Therefore, the assessee contended that he had not filed any return for the assessment year 1967-68. It was further argued that since no return was filed, there cannot be a reopening of the assessment under Section 147(a). In order to reopen the assessment under Section 147(a) two conditions are required to be satisfied. They are (i) that the ITO must have reason to believe that the income arising to the assessee has escaped assessment, and (ii) that he must have reason to believe that such income escaped assessment by reason of omission or failure on the part of the assessee to make a return under Section 139 for the relevant assessment and to disclose fully and truly all material facts necessary for his assessment for that year. Therefore, it was pointed out that in a case where the assessee is not liable to file return, the question of omission or failure on the part of the assessee either to make the return or to disclose fully and truly all material facts necessary for his assessment does not arise. The asesssee further argued that the liability to file the return under Section 139 is a prerequisite for reopening the assessment under Section 147(a). The learned AAC followed two decisions of the Supreme Court in Modi Spg. & Wvg. Mills Co. Ltd. v. ITO (supra) and ITO v. Lakhmani Mewal Dax (supra) in order to support his view.

8. Apart from these two decisions, the learned counsel appearing for the assessee had also drawn our attention to an order of the Income-tax Appellate Tribunal, Hyderabad Bench 'SMC', in IT Appeal No. 83(Hyd.) of 1981 for the assessment year 1967-68 in the case of ITO v. Smt. P.Seethamma, dated 30-9-1981, wherein in similar circumstances the Tribunal came to the conclusion that : It is now a well settled proposition that from the mere fact that ultimately the assessee's income has been assessed at a figure which is taxable, the inference cannot be drawn that the assessee was under an obligation to have furnished a return.

A similar view was also adopted by the Income-tax Appellate Tribunal, Hyderabad, Bench 'B', in IT Appeal No. 1719 (Hyd.) of 1980 for the assessment year 1967-68 in the case of ITO v. Smt. Thammana Sanyasamma, dated 30-1-1982. Now in the present case the question whether there was an obligation on the part of the assessee to have filed return should be decided with reference to the state of affairs on the due date for filing the return. According to the facts of the case, the amount of compensation that was awarded by the Land Acquisition Officer was Rs. 14,140 on 8-8-1966 and if the value of land is taken at Rs. 10,000 as on 1-1-1954, adopted by the ITO, this amount was below the taxable limit. Therefore, it is quite clear that since on the due date for filing the return for the assessment year under consideration the assessee did not have any taxable income, there was no obligation on the part of the assessee to file the return under Section 139(1).

Therefore, the necessary conclusion is that there was no omission or failure on the part of the assessee to file the return under Section 139. It also follows that since the assessee had no obligation to file return under Section 139, the question of furnishing material facts necessary for completion of the assessment does not arise. In that view of the matter, we are in entire agreement with the view taken by the learned AAC in coming to the conclusion that as there is no default on the part of the assessee under Section 139(1), Section 147(0) is not applicable.

9. However, for the sake of completeness we would also like to deal with this appeal on merits. Before the ITO the assessee claimed that the lands acquired by the Municipality were agricultural in nature. In support of his claim he filed a letter dated 6-2-1977 from the Village Munsiff according to which the lands were classified as agricultural lands. The assessee also filed a copy of the order passed by the District Munsiff in which the lands were classified as agricultural lands. But, however, the ITO requested the assessee to produce the adangal extract and since the adangal extract was not produced, he came to the conclusion that the lands were not agricultural in nature.

However, the AAC relying upon a notice signed by the Special Tahsildar, Land Acquisition, addressed to the assessee, where the lands were described as, "ryotwari lands", came to the conclusion that the lands were agricultural in nature and, therefore, question of capital gains does not arise.

10. Before us the learned departmental representative submitted that the documents produced by the assessee relates to earlier years and, therefore, these documents cannot hold good for the relevant assessment years, since according to him during the relevant period it is not known whether the lands were agricultural in nature. In support of his argument he relied upon a decision of the Madras High Court as reported in M. Ranganatha Sastri v. CIT [1979] 119 ITR 488. But according to the facts of this case the letter from the Village Munsiff and a copy of the order passed by the District Munsiff clearly supports the assessee's contention that the lands in question were of agricultural in nature. When one competent court has already come to the conclusion that the lands were agricultural in nature, in our view, it is not open to the department again to agitate the question whether the lands were agricultural in nature or not. Further the assessee also produced a notice signed by the Special Tahsildar, Land Acquisition, addressed to the assessee, wherein the lands were described as ryotwari lands.

Therefore, in the absence of evidence on the part of the department to show that the character of land was later on changed from agricultural to non-agricultural, we are of the opinion that the decision cited by the department will not support the view taken by the department.

Accordingly, we hold that the view taken by the AAC on this point appears to be quite correct and reasonable and, hence, his order is confirmed.


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