Exempt capital gains cannot be taxed merely because no revised return was filed; tax authority must follow law.

Capital gains arising from land acquired under the Land Acquisition Act remained exempt from tax, and the assessing officer could not assess them merely because the assessee had not filed a revised return. Where exempt income was included in the original return by mistake or ignorance, the officer was bound to complete the assessment according to law and could not treat the absence of a revised return as a technical bar to relief. The ruling distinguished Goetze (India) Ltd. as involving a fresh claim for deduction, not the officer's duty to refrain from taxing income exempt in law. The assessment was quashed to the extent it taxed the exempt compensation.

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Issues: Whether, in proceedings under Section 143 of the Income-tax Act, 1961, the assessing officer can assess capital gains arising from acquisition of land when the underlying compensation is exempt from tax under Section 96 of the Land Acquisition Act, 2013, merely because the assessee did not file a revised return.

Analysis: The compensation received for land acquired under the Land Acquisition Act was held to be exempt from tax, and the assessing officer was bound to complete the assessment according to law. Where it is apparent on the record that an assessee has included exempt income in the return by mistake or ignorance, the officer cannot insist on a revised return as a technical bar to granting relief. The principle that no tax shall be levied or collected except by authority of law, together with the duty of the assessing authority to act fairly in a quasi-judicial capacity, required the officer to ignore the mistaken disclosure and not impose tax on exempt capital gains. The decision in Goetze (India) Ltd. was held inapplicable because the issue was not a fresh claim for deduction but the officer's power and duty to refrain from taxing exempt income.

Conclusion: The assessing officer could not validly tax the exempt capital gains on the ground that no revised return had been filed.

Final Conclusion: The assessment order was quashed to the extent it brought the exempt compensation to tax, and the writ petition succeeded on the merits.

Ratio Decidendi: An assessing officer must not levy tax on income that is exempt in law merely because the assessee, by mistake or ignorance, included it in the return and did not file a revised return.

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