INCOME TAX OFFICER Vs. ATCHAIAH

JUDGEMENT

(1.) This appeal is directed against the judgment of the Andhara Pradesh High Court allowing the writ petition filed by the respondent and issuing a writ of prohibition restraining the appellant (respondent in the writ petition) from taking any action pursuant to the notice dated March 17, 1972 issued under Section 148 of the Income Tax Act, 1961 (1961 Act).

(2.) The respondent in this appeal, Sri Atchaiah, and another person, Sri Kondal Reddy, purchased an extent of 454.11 acres in a village in Medak District in Andhra Pradesh from Sri Ikramuddin and Smt. Azizunnisa Begum under a sale deed dated October 20, 1962 for a consideration of Rupees seventy five thousand. Even prior to the execution of the sale deed, the said lands had been notified for acquistion under the Land Acquisition Act. The respondent and Kondal Reddy appeared before the Land Acquisition Officer Claiming compensation. By award dated February 4, 1964, the Land Acquisition Officer determined the compensation at Rs. 1,38,794,12 annas which amount was received by the respondent and Kondal Reddy on December 4, 1964, in equal shares. At their instance, a reference was made under Section 18 of the Land Acquisition Act. The learned District Judge enhanced the compensation by Rs. 3,95,026.00 (according to the appellant, the figure is Rs. 4,17,477/-). The enhanced compensation was also shared between the respondent and Kondal Reddy in equal proportion.

(3.) In the assessment proceedings relating to Assessment Year 1965-66, the Income Tax Officer included a sum of Rs. 35,397/-, treating it as the capital gain, in the income of the respondent. (This figure was arrived at after deducting the amount contributed by the respondent towards the purchase of the said lands.) Again, in the assessment relating to Assessment Year 1968-69, the enhanced compensation falling to the share of respondent was brought to tax as capital gain. Sri Kondal Reddy was also taxed in the same manner for both the said assessment years.