RAM BAI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The appellant owned certain lands in Nacharam village near Hyderabad. The government of A. P. acquired the same under the provisions of the Land Acquisition Act. A sum of Rs. 25.240. 00 was awarded as compensation by the Land Acquisition officer on 20-11 -65. On a reference at the instance of the appellant, the civil court enhanced the compensation to Rs. 2,72,136. 00 including solatium and interest. The same was affirmed on appeal by the High court on 16-10-70. The appellant filed a return under Section 139 (4 of the Income-Tax Act (hereinafter referred to as the 'act') on 17-2-72 disclosing the interest on belated payment of compensation as her income. The I. T. O. rejected it as invalid as it was filed beyond the period prescribed under Section 139 (4 of the Act. The I. T. O. initiated proceedings under section 147 (a) of the Act for the year ending 31-3-6 5/03/1973 and issued a notice under Section 148 on 21-4-73. He sought the sanction of the Commissioner on the ground that the land as it had not been subjected to agricultural operation and the capital gains thereon were chargeable to income-tax.

(2.) On 4-9-78, the I. T. O. made an order of assessment holding that a sum of Rs. 2,43,934. 00 was payable as tax and initiated penalty proceedings. On appeal by the assessee, the Commissioner of Income-tax (Appeals) held that the I. T. O. could not have had any reason to believe that there was escapement of income as there was no material whatever at that time to indicate that the lands were non-agricultural. The Commissioner allowed the appeal and cancelled the order of assessment under Section 147 (a). The Department approached the Income-tax Appellate Tribunal with an appeal but in vain as the Tribunal agreed with the Commissioner and confirmed his order.

(3.) The Revenue applied for reference to the High court on the following three questions: