The Commissioner Of Income-Tax, Jalandhar v. Sh. K.d. Prabhakar (Huf), Phagwara

ITR No. 1 of 2002 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITR No. 1 of 2002 Date of Decision: 9.9.2010 The Commissioner of Income-tax, Jalandhar ....Petitioner. Versus Sh. K.D. Prabhakar (HUF), Phagwara ...Respondent. CORAM:-HON'BLE MR. JUSTICE ADARSH KUMAR GOEL.HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. Vivek Sethi, Standing Counselfor the petitioner-Revenue. AJAY KUMAR MITTAL, J. This order will dispose of six references, namely, Income-tax Reference Nos.1, 4, 19, 21, 25 and 27 of 2002 as the questions oflaw involved therein are common.In order to appreciate the issue,few facts need to be noticed and the same have been taken fromIncome-tax Reference No.1 of 2002. Pursuant to the directions of this Court, in Income-tax CaseNo.46/98 dated 14.11.2000 in the case of C.I.T. Jalandhar Vs. Sh. K.D.Prabhakar (HUF), the Income Tax Appellate Tribunal, Amritsar Bench,Amritsar (in short “the Tribunal”) has referred the following question oflaw that arose out of the consolidated order of the Tribunal dated26.11.1997 in ITA Nos. 487 to 495 (ASR)/1996 in respect of theassessment years 1974-75 to 1982-83 for its opinion: “Whether on the facts and in the circumstances ofthe case, the Ld. ITAT is right in law in reversing the order of the Ld. DCIT(A) who upheld the order of theA.O. passed under Section 154 holding that nomistake was apparent from records in so far ascharging of interest under Section 139(8) wasconcerned, for the assessment year 1975-76?” The assessment, in respect of assessment year 1975-76was originally completed at total income of Rs.11,850/- plus agriculturalincome of Rs.400/-. After about one and half decade during theassessment proceedings for the assessment year 1990-91, it came tothe notice of the assessing officer that the assessee had receivedadditional compensation on account of acquisition of his land, as well asinterest thereon, by virtue of a judgment dated 12.07.1988 of this Court.Consequent upon this, the assessee furnished returns of income for theassessment years 1984-85 to 1990-91 disclosing the fact of interestincome as also the amount of capital gain arising out of the saidacquisition of land. The assessing officer, however, formed a view thatsince the interest was allowed by the Court right from the assessmentyear 1974-75 to the date of payment of additional compensation whichwas received during the assessment year 1990-91, the same wasassessable for the respective assessment years on accrual basis inview of the decision of the apex Court in 181 ITR 400(SC). On the basis of the said view, the assessing officer initiated proceedings under Section 147 and served notices under Section 148upon the assessee, in respect of assessment years 1974-75 to 1983-84. In response to notices, the assessee made returns declaringincome of Rs.36,900/- plus agricultural income of Rs.400/- for the On the basis of the said view, the assessing officer initiated proceedings under Section 147 and served notices under Section 148upon the assessee, in respect of assessment years 1974-75 to 1983-84. In response to notices, the assessee made returns declaringincome of Rs.36,900/- plus agricultural income of Rs.400/- for the assessment year in question i.e. 1975-76 under protest and ultimately,the assessment was completed under Section 143(3) on 19.08.1993 atthe aforesaid total taxable income. The assessing officer chargedinterest under Section 139(8) at Rs.2,948/- and against the charging ofthe interest, the assessee moved an application dated 28.07.1995,under Section 154 of the Act for the assessment years 1974-75 to1982-83 wherein it was stated that interest was not chargeable from himas it was not charged from other similarly situated co-owners, namely,Amrit Lal Prabhakar and Raghunandan Lal Prabhakar. It was submittedthat in the case of these co-owners the CIT(A) had held that suchinterest was not chargeable and, therefore, the same view is applicableto the case of the assessee also. But the submissions made on behalfof the assessee were not given any weight and consequently, theassessing officer rejected the application under Section 154 vide orderdated 12.09.2005. Since the order passed by the assessing officer non-suited the assessee, he preferred appeal before the CIT(A), Jalandhar.The appellate Authority dismissed the assessee’s appeal vide orderdated 30.03.1996 while dismissing the other appeals relating toassessment years 1974-75 to 1982-83. The assessee preferred appeal before the Tribunal. Theappeal of the assessee was allowed vie order dated 26.11.1997 therebysetting aside the order of the CIT(A) and restoring the matter back tothe file of the assessing officer with the directions to decide theapplication of the assessee moved under Section 154 of the Act afresh.It is how the question as noticed above came to be referred to this Courtfor its opinion. We have heard learned counsel for the petitioner andperused the record. Learned counsel for the petitioner-Revenue very fairlysubmitted that this Court in Commissioner of Income Tax V. K.D.Prabhakar (HUF), (2009) 313 ITR 443 (P&H), had decided identicalquestion against the Revenue in the cases of the present assesseeitself relating to the assessment years 1976-77 and 1980-81 wherein itwas held as under:- “It is evident from the impugned order that the Tribunal hasplaced reliance on Expln. 2 to Section 139(8) of the Act,which was added by the Taxation Laws (Amendment) Act,1984, w.e.f. Ist April, 1985. It may be pertinent to make areference to Expln. 2 appended to Section 139(8) of the Actand the same reads as under:- “Explanation 2- Where, in relation to an assessmentyear, an assessment is made for the first time underSection 147, the assessment so made shall beregarded as a regular assessment for the purposesof this sub-section. (b)Where as a result of an order under Section147 or Section 154 or Section 155 or Section 250 orSection 254 or Section 260 or Section 262 or Section263 or Section 264, the amount of tax on whichinterest was payable under the sub-section has beenincreased or reduced, as the case may be, theinterest shall be increased or seduced accordingly, and - (i)in a case where the interest is increased, theITO shall serve on the assessee, a notice of demandin the prescribed form specifying the sum payable,and such notice of demand shall be deemed to be anotice under Section 156 and the provisions of thisAct shall apply accordingly; (ii)in a case where the interest is reduced, theexcess interest paid, if any, shall be refunded. (b)Where as a result of an order under Section147 or Section 154 or Section 155 or Section 250 orSection 254 or Section 260 or Section 262 or Section263 or Section 264, the amount of tax on whichinterest was payable under the sub-section has beenincreased or reduced, as the case may be, theinterest shall be increased or seduced accordingly, and - (i)in a case where the interest is increased, theITO shall serve on the assessee, a notice of demandin the prescribed form specifying the sum payable,and such notice of demand shall be deemed to be anotice under Section 156 and the provisions of thisAct shall apply accordingly; (ii)in a case where the interest is reduced, theexcess interest paid, if any, shall be refunded. The aforementioned, Explanation was added w.e.f. 1[st] April,1985 and the circular issued by the CBDT shows that itwas to apply in relation to the assessment year 1985-86and subsequently. The relevant part of the circular[No.397 dated 16[th] October, 1984-Ed.] issued by the CBDT,as reported in (1985) 152 ITR 29 reads as under: 15.4 Under the existing provisions contained inClause (b) of Section 139(8), interest payable by anassessee for delay or default in furnishing the returnof income is required to be reduced in cases wherethe tax on which the interest was payable has beenreduced as a result of an order under Sections 154,155, 250, 254, 260, 262 or Section 264 of the Act.This clause has been substituted by a new Clause(b) which provides that where as a result of any ofthe orders specified in that clause, the amount of taxon which interest was payable has been increased or reduced, the interest shall be increased or reduced,accordingly. In a case where the interest isincreased, the ITO shall serve on the assessee anotice of demand in the prescribed form specifyingthe sum payable and such notice of demand shall bedeemed to be issued under Section 156 of the Actand the provisions of the Act shall apply, accordingly.In cases where such interest is reduced, the excessinterest paid, if any, shall be refunded to theassessees. 15.5. These amendments take effect from 1[st] April1985, and will, accordingly, apply in relation to theassessment year 1985-86 and subsequent years. There is, thus, no doubt left that no notice withrespect to the assessment years 1976-77 and 1980-81could have been issued and the view taken by the Tribunalis unassailable. Accordingly, we uphold the view taken bythe Tribunal.” In view of the above, the question referred by the Tribunalis decided against the Revenue and in favour of the assessee. The references stand disposed of accordingly. (AJAY KUMAR MITTAL) JUDGE September 9, 2010rkmalik/gbs (ADARSH KUMAR GOEL)JUDGE