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Motichand Virpal Shah Vs. Income-tax Officer - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Ahmedabad
Decided On
Judge
Reported in(1984)8ITD392(Ahd.)
AppellantMotichand Virpal Shah
Respondentincome-tax Officer
Excerpt:
.....not refer to section 155(7a). in the above context the assessee's appeal has to be 'allowed' rather than 'dismissed' as wrongly stated in paragraph 7 of the tribunal's order. i, therefore, agree with the learned accountant member that the order of the ito should be quashed though not for the reasons stated by him and the tribunal's order should be corrected by substituting in para 7 of its order 'allowed' instead of 'dismissed'.4. it requires to be mentioned that even at the time of the original appeal and along with the appellate grounds, the assessee had made three prayers, namely, that section 155(7a) was not applicable until the matter became final, the rectification proceedings had become time barred and the capital gain derived from agricultural lands would not be taxable. since.....
Judgment:
1. By this miscellaneous application, the assessee has brought to our notice that the ITO had passed the order under Section 155(7A) of the Income-tax Act, 1961 ('the Act') to give effect to the order of the district judge. Therefore, the mistake is apparent in para 2 of the order of the Tribunal. His second objection was that the limitation in respect of the order of the ITO under Section 155(7A) was not considered by the Tribunal. His third objection was that the Tribunal be pleased to consider the question whether the capital gains derived from the acquisition of agricultural land was taxable or was exempt as agricultural income.

2. We have heard the learned counsel for the assessee, Shri Kaji, and the learned departmental representative, Shri Vaidya. We find some force in the submission of Shri Kaji. The ITO had passed the rectification order to add additional compensation on the basis of the order of District Judge dated 19-11-1975 and added Rs. 67,667. In view of this fact, we correct our order as under: In this case, the ITO has added Rs. 67,667 for the purpose of capital gain tax which the assessee received as additional compensation by the order of District Judge. The assessee further approached the High Court and received some more additional compensation by the High Court and that compensation, determined by the High Court, is no more in dispute and that has become final. Therefore, following the ratio of the decision of their Lordships of the Gujarat High Court in the case of Topandas Kundanmal v. CIT [1978] 114 ITR 237, the order of the AAC was confirmed. Therefore, in our view, there is no apparent mistake on record.

1. I have gone through very carefully the order made by my learned brother in Miscellaneous Application No. 8 (Ahd. of 1983. With utmost respect, I am unable to agree with the conclusion reached by him that there is no mistake apparent from record, which would require rectification. I give my reasons in the succeeding paragraphs: 2. At para 6 of the original order of the Tribunal in IT Appeal No.2252 (Ahd.) of 1981 for the assessment year 1972-73, it was, inter alia, observed 'the ITO has not rightly invoked the provisions of Section 155(7A), as assessment year involved is 1972-73'. It, therefore, follows that the ITO could not take recourse to the said provisions in order to rectify his original order which was made on 25-9-1972. In other words, the rectification powers were only exercisable under Section 154 of the Act. Now the said section permits the ITO to rectify his order within a period of 4 years from the date of the original order. Thus, the original order would have been rectified on or before 24-9-1976. Thus, even on the basis of the District Judge's order, which was made on 19-9-1975, the order for rectification under Section 154 could have been made as stated above before 24-9-1976.

3. In the instant case, however, the order is made by the ITO on 17-10-1980 under Section 155(7A). The said order, therefore, must be held to be without jurisdiction in the light of the finding that provisions of Section 155(7A) had no application for the assessment year under appeal, namely, 1972-73.

4. In my opinion, therefore, the order made by the ITO, which is beyond the period of limitation prescribed under Section 154, is required to be quashed on this ground and the original order of the Tribunal would require modification, accordingly.

1. As we have differed in our conclusion about the disposal of the Miscellaneous Application No. 8 (Ahd.) of 1983. We hereby refer the following question to the learned Hon'ble President for being referred to a Third Member under Section 255(4) of the Act.

Whether, on the facts and in the circumstances of the case, the miscellaneous application filed by the assessee bearing No. 8 (Ahd.) of 1983 dated April 1983 deserves to be allowed on the ground stated therein ?" 1. Certain lands belonging to the assessee were acquired by the State Government under the Land Acquisition Act, 1894. The Land Acquisition Officer (LAO) passed an award on 30-7-1973 for a compensation of Rs. 71,474, which was enhanced by the district judge by his judgment-award dated 19-11-1975 to Rs. 1,36,299. The assessee as well as the State Government having preferred appeals to the High Court, the High Court by its judgment dated 22-10-1980 fixed the further compensation inclusive of interest at Rs. 2,67,667. The ITO had completed the original assessment for the assessment year 1972-73 on 25-9-1972 without including any compensation for the land. By a rectification order dated 28-4-1975, he fixed the capital gains of the assessee on the footing of the award of the LAO. Subsequent to the award of the district Court and on 17-10-1980, he passed an order under Section 155(7A) to tax the capital gains on the footing of the award of the District Court. On appeal, the AAC upheld the order of the ITO. In the further appeal before the Tribunal, several contentions were raised on behalf of the assessee. The Tribunal by its order in IT Appeal No. 2252 of 1981 dated 26-2-1983 decided the appeal as under: "It is true that the ITO has not rightly invoked the provisions of Section 155(7A) as assessment year involved is 1972-73. But following the observations of their Lordships of the Gujarat High Court the ITO had right to tax the additional compensation in the year of transfer. In the result the appeal is dismissed.

2. The assessee came up with a miscellaneous application claiming that the order under Section 155(7A) was passed to give effect to the District Court's order and not to the High Court; that the Tribunal should consider the question of limitation in respect of the ITO's order under Section 155(7A) and the Tribunal also should consider the question of taxability of the capital gains derived from agricultural lands on the ratio of the Bombay High Court decision in Manubhai A.Sheth v. N.D. Nirgudkar, Second ITO [1981] 128 ITR 87. In disposing of the miscellaneous application, the learned Judicial And Accountant Members passed differing orders, the former holding that there was no mistake apparent from record other than the wrong mention of the High Court and not the District Court in the context of the award and the latter holding that the order must be quashed firstly, because the provisions of Section 155(7A) had no application for the assessment year under appeal and because the order of the ITO was beyond the period of limitation prescribed under Section 154. The following question of difference was, therefore, referred to me for resolution: Whether, on the facts and in the circumstances of the case, the miscellaneous application filed by the assessee bearing No. 8 (Ahd.) of 1983 dated April 1983 deserves to be allowed on the ground stated therein ?" 3. The parties were heard. I find that the ITO had passed the order under Section 155(7A). The portions of the Tribunal's order extracted above clearly indicated that the Tribunal had come to the conclusion that for the year under appeal, viz., 1972-73, the provisions of Section 155(7A) would not apply. Neither the ITO nor the AAC or the Tribunal had made any reference to Section 154 in their orders. Though the assessee's miscellaneous application, therefore, has referred to this section, in my view, it has no relevance in the present context.

Reference is made to the Tribunal's order in Gujarat High Court's decision in Topandas Kundanmal's case (supra) but this laid down only a criteria for assessability of capital gains and does not refer to Section 155(7A). In the above context the assessee's appeal has to be 'allowed' rather than 'dismissed' as wrongly stated in paragraph 7 of the Tribunal's order. I, therefore, agree with the learned Accountant Member that the order of the ITO should be quashed though not for the reasons stated by him and the Tribunal's order should be corrected by substituting in para 7 of its order 'allowed' instead of 'dismissed'.

4. It requires to be mentioned that even at the time of the original appeal and along with the appellate grounds, the assessee had made three prayers, namely, that Section 155(7A) was not applicable until the matter became final, the rectification proceedings had become time barred and the capital gain derived from agricultural lands would not be taxable. Since the Tribunal did not apply its mind to these questions, the appeal being disposed of on the short ground of the applicability of Section 155(7A) to the matter, it is not necessary to deal with these matters referred to in the assessee's miscellaneous application.

5. The matter will now go back to the original Bench which heard the miscellaneous application for disposal according to law.


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