COMMISSIONER OF INCOME TAX Vs. TCM LTD

JUDGEMENT

(1.) The question raised is whether the Tribunal was justified in holding that the revision of respondents assessment for the year 1979-80 by the assessing officer under Section 150 of the Income Tax Act (hereinafter called "the Act") on 24-7-1998 is beyond the period of limitation prescribed under Section 150(2) read with Section 149 of the Act. We have heard standing Counsel appearing for the appellant and advocate Sri S. Arun Raj, appearing for the respondent-assessee. The facts in this case are quite peculiar and unique because the very same income i.e., refund due to the assessee from KSEB, though assessed in 1977-78, was offered for payment of tax by the assessee by voluntarily filing return for the assessment year 1979-80. The assessing officer initially took the stand that the amount was assessable on accrual basis based on declaration of eligibility for refund by the Supreme Court in the Electricity Tariff case and therefore, it was assessed for the assessment year 1977-78. However, the assessee contested the assessment for 1977-78 on the ground that refund is assessable only for the assessment year 1979-80. The assessee consistent with their own stand filed return for the assessment year 1979-80, wherein the refund received from KSEB of Rs. 5,58,598 was returned for assessment. However, by the time assessment for 1979-80 was taken up, the Commissioner (Appeals) decided the appeal for 1977-78 in favour of the department i.e., by sustaining the assessment of the very same amount for the assessment year 1977-78. This prevented the assessing officer from including the very same income in the assessment for 1979-80, even though assessee had returned the income and offered to pay the tax. It is pertinent to note that the assessment for 1979-80 was completed by the assessing officer excluding the income returned by the assessee by stating as follows:

(2.) While the assessee pursued appeal against assessment sustained for the assessment year 1977-78 before the Tribunal, they did not challenge the conditional order passed by the assessing officer for 1979-80 wherein the assessing officer left freedom to himself to revise the assessment to include the very same income based on return filed by the assessee for the assessment year 1979-80 in case assessment of the very same amount for 1977-78 gets cancelled in the course of proceedings under the statute. Ultimately, the assessees claim for exclusion of the income for the assessment year 1977-78 was upheld by this Court in reference case decided on 22nd May, 1998 and the said decision is Travancore Chemical & Manufacturing Co. Ltd. V/s. CIT, 1999 237 ITR 821 .

(3.) After this Court rendered the judgment on 22-5-1998, the assessing officer issued notice under Section 148 to the assessee on 24-7-1998 within the time prescribed under Section 149 with reference to the judgment rendered by this Court for the assessment year 1977-78. Even though revised assessment was passed based on the condition stated in the original assessment order and based on the income returned by the assessee, assessee contested the revised assessment on the ground that the same having been passed beyond four years from the end of the year, is time-barred under Section 150(2) of the Income Tax Act. The Commissioner (Appeals) in first appeal dismissed the assessees contest on limitation by holding that the order of the Tribunal which was the subject-matter of reference before this Court for the assessment year 1977-78 was the first order dated 30-1-1982, with reference to which, the revision of assessment for 1979-80 was within time. However, the final judgment of this Court in the reference case was in fact rendered against the Tribunals revised order (second order) dated 30-12-1992. Therefore, the assessee filed second appeal against the order of the Commissioner (Appeals) contending that limitation has to be reckoned with reference to second order of the Tribunal. The Tribunal by relying on decision of this Court in ITO V/s. Ilatsu Takayanagi and Ors,2001 249 ITR 19 ; (sic) CIT V/s. Vaikundam Rubber Co. Ltd, 2002 253 ITR 417 (Ker)) and that of the Supreme Court in KM. Sharma V/s. ITO, 2002 254 ITR 772 held that assessment is not tenable under Section 150(1) of the Act as the officer has not established that the assessment was within time prescribed under Sub-section (2) of Section 150. It is against this order the revenue has filed this appeal.