Reassessment on appellate findings is allowed, but time-barred years cannot be reopened once limitation has expired.

Reassessment notice under section 148 can be issued to give effect to an appellate finding that interest on enhanced compensation accrues year to year and is not assessable only in one assessment year, because such a finding falls within section 150(1) read with Explanation 2 to section 153(3). However, section 150(2) preserves the limitation bar under section 149: where limitation had already expired when the appellate order was made, reassessment cannot be revived for those years. Accordingly, proceedings were barred for assessment years 1967-68 to 1978-79, but could continue for assessment year 1979-80, which was still within limitation.

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Issues: (i) Whether reassessment notices issued under section 148 could be sustained under section 150(1) of the Income-tax Act, 1961 on the basis of the appellate finding that interest on enhanced compensation was assessable on accrual basis from year to year; (ii) whether section 150(2) barred initiation of reassessment for assessment years for which limitation had already expired on the date of the appellate order, while permitting action for the assessment year still within limitation.

Issue (i): Whether reassessment notices issued under section 148 could be sustained under section 150(1) of the Income-tax Act, 1961 on the basis of the appellate finding that interest on enhanced compensation was assessable on accrual basis from year to year.

Analysis: The appellate order had recorded a finding that the entire interest received in the relevant accounting period was not assessable only in assessment year 1980-81, because interest accrued year to year and the portion relating to earlier years stood excluded. Such a finding fell within section 150(1) read with Explanation 2 below section 153(3) of the Income-tax Act, 1961 and could support reassessment proceedings to give effect to that finding.

Conclusion: The reassessment notices were capable of being justified under section 150(1), subject to the limitation exception in section 150(2).

Issue (ii): Whether section 150(2) barred initiation of reassessment for assessment years for which limitation had already expired on the date of the appellate order, while permitting action for the assessment year still within limitation.

Analysis: For assessment years 1967-68 to 1978-79, the four-year limitation under section 149 had already expired before the appellate order dated 19 July 1983. Those years therefore fell within the exception in section 150(2), so section 150(1) could not revive barred proceedings. For assessment year 1979-80, limitation was still available when the appellate order was passed, so section 150(2) did not apply and reassessment could proceed.

Conclusion: The reassessment notices were barred for assessment years 1967-68 to 1978-79 and valid for assessment year 1979-80.

Final Conclusion: The reassessment proceedings were quashed for the years already barred by limitation, while they were sustained for the year still open on the date of the appellate order, resulting in partial relief to the assessee.

Ratio Decidendi: A reassessment notice issued to give effect to a finding in an appellate order is controlled by section 150(1), but that provision cannot be used to reopen an assessment year that was already time-barred when the appellate order was made, because section 150(2) preserves the limitation bar under section 149.

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