Court rules petitioner in Kochi Metro case; assessing officer must act fairly; excess tax refund duty emphasized.

The court ruled in favor of the petitioner in a case involving the assessment of capital gains for compensation received for land acquired for the Kochi Metro Rail Project under the Income Tax Act. The court held that the assessing officer must act fairly and refrain from levying tax on exempted income, even without a revised return. The court quashed the order assessing capital gains on the acquired land, emphasizing the duty of the revenue to refund excess tax paid due to mistakes or exemptions.

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Issues involved:
1. Assessment of capital gains for compensation received for land acquired for Kochi Metro Rail Project under the Income Tax Act.
2. Validity of the notice issued under Section 143(2) of the Act for scrutiny of the return filed by the petitioner.
3. Exemption from tax under Section 96 of the Land Acquisition Act for compensation received for land acquired.
4. Challenge to the order raising a demand based on cost indexation of the land.
5. Allegation of pre-dated order issued maliciously to defeat a pending writ petition.
6. Jurisdiction of the assessing officer to consider the contention of the assessee without a revised return in a Section 143 proceeding.
7. Duty of the assessing officer to act fairly and refrain from levying tax on exempted income.
8. Applicability of the decision in Goetze (India) Ltd case to the present case.

Detailed Analysis:
1. The petitioner received compensation for land acquired for the Kochi Metro Rail Project and disclosed capital gains in the return filed under the Income Tax Act. The petitioner claimed deduction based on indexed cost of the land. The first respondent issued a notice for scrutiny of the return, focusing on the deduction claimed under capital gains.
2. The petitioner responded to the notice reiterating the fair market value of the land as on 01.04.1981. The petitioner cited Section 96 of the Land Acquisition Act, which exempts compensation for acquired land from tax. The petitioner requested to drop the proceedings, leading to a writ petition challenging the continuation of the proceedings under Section 143.
3. A subsequent order was issued raising a demand based on a different valuation of the land. The petitioner alleged the order was pre-dated to defeat the pending writ petition. The petitioner challenged the order on the grounds of being unsustainable and not considering the exemption under the Land Acquisition Act.
4. The first respondent argued that the order was issued after the petitioner's representative appeared and submitted a written statement. The petitioner's contention of the order being pre-dated was disputed.
5. The court examined the circumstances and concluded that the order was not issued maliciously. However, considering the pending writ petition and the alternative remedy of appeal, the court decided to review the correctness of the order in the current proceedings.
6. The main issue was whether the assessing officer could consider the petitioner's contention of non-taxability without a revised return. The court emphasized the duty of the assessing officer to act fairly and refrain from levying tax on exempted income, even without a revised return.
7. The court referenced a Supreme Court decision emphasizing the obligation of the revenue to refund excess tax paid due to mistakes or exemptions. In this case, the petitioner had paid tax based on ignorance of the exemption. The court held that the order penalizing the petitioner for paying tax on non-taxable income was unjust.
8. The court distinguished the present case from the Goetze (India) Ltd case, as it dealt with a different issue of deduction claim. The court allowed the writ petition and quashed the order assessing capital gains on the acquired land.

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