CIT Vs. C.V. JAYACHANDRAN

JUDGEMENT

(1.) THE question raised in the appeal filed by the revenue is whether the Tribunal was justified in holding that the income 'escaping assessment completed under Section 147, 260A of the Income Tax Act in the case of respondent assessee for the year 1989 -90 is invalid. An item of property belonging to the assessee was notified for acquisition on 3 -6 -1986. The possession was taken over on 24 -10 -1987 and the initial compensation was paid to the assessee on 17 -1 -1989. Even though assessee filed IT return for the year 1988 -89 assessee did not include any income from capital gain. Though the transfer took place in the previous year relevant for the said assessment year, by Finance Act, 1991, amendment was introduced to Section 45(5)(a) providing for levy of income -tax on capital gains arising out of compulsory acquisition of land on receipt of initial compensation. Since assessee received initial compensation only on 17 -1 -1989 and under the amended provisions which came into force retrospectively with effect from 1 -4 -1988 the income by way of capital gain was assessable for the assessment year 1989 -90. The assessing officer issued notice under Section 147 and completed the assessment for the assessment year 1989 -90. The assessee filed appeal against assessment which was allowed by Commissioner (Appeals) holding that amendment of the statute will not justify reopening of assessment under Section 147. This order is confirmed by the Tribunal in the second appeal filed by the revenue against which this appeal is filed under Section 260A of the Income Tax Act.

(2.) WE have heard senior counsel appearing for the revenue and Shri P. Balakrishnan appearing for the respondent.