TaxTMI 
TaxTMI 
1989 (6) TMI 43
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....ar ended December 31, 1966, the petitioner received a further sum towards compensation in respect of the said land acquired by the Government of Assam in 1961. The petitioner filed an appeal before the High Court of Assam and Nagaland for proper valuation of such land. The Government of Assam also preferred an appeal against the enhancement of the valuation of the land passed by the District Judge concerned. Both the said appeals are still pending. The petitioner claims to have shown in its balance-sheet as on December 31, 1966, receipt of the said second total amount of compensation of Rs. 7,85,620 and also that the directors of the petitioner-company, in their report for the said accounting year, had duly made a note of reference due to such sum and of the said appeal. Stating all the above facts in detail, the writ petitioners have come to this court on the ground that, respondent No. 1, Income-tax Officer, has no reason to believe that any income of the petitioner for the said accounting year 1967-68 escaped assessment. It is further alleged that there is no material whatsoever on the basis of which respondent No. 1 could entertain any belief as required by section 147 of th....
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....reopened under section 147(a) of the Income-tax Act, 1961, for assessing the capital gains arising out of the said 5/8ths portion of the total land of 1,885 bighas acquired by the Government as stated hereinbefore. It is also stated that the Fertilizer Corporation of India purchased 307 bighas 2 kathas and 6 chattaks of land for Rs. 275,595 from the petitioner-company. Receipt of the said sum was also shown credited in the accounts of the calendar year 1964 (relevant for the assessment year 1965-66). Rs. 2,30,595 out of the said sum represents the cost of land at Rs. 750 per bigha and Rs. 45,000 represents the amount of compensation for bamboos, trees, etc. The assessment, for the assessment year in which the said sale deed for the said land was executed was reopened under section 147(a) of the said Act. Thereafter, the assesseecompany sold further land to the Fertilizer Corporation of India and it was considered that the assessee-company could not have so much agricultural land. In order to clarify whether all the land was agricultural or not, reference was made to the Law Officer of the Fertilizer Corporation of India on June 27, 1973, by the Income-tax Officer, A-Ward, Dibrugarh....
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....d that the said sum of Rs. 7,85,620 was not liable to capital gains tax or income-tax. Mr. Pal, learned advocate for the respondents-authorities, has produced the relevant records to indicate clearly that there is no dispute as to the submissions on behalf of the petitioner of disclosing the said sum of Rs. 7,85,620 in the balance-sheet, directors' report and in the returns. Mr. Bajoria, learned advocate for the petitioner, has strongly pointed out that it is well-settled that before any proceedings under section 147 of the Income-tax Act can be initiated, two conditions must be fulfilled. Section 147 runs as follows "147. If (a) the Income-tax Officer has reason to believe that by reason of the commission or failure on the part of an assessee to make a return under section 139 for any assessment year to the Income-tax Officer or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year, or (b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Income-tax Officer has in consequence of information in his posses....
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.... Officer to investigate the matter and take a decision. The aforesaid well-settled principles would be evident from several decisions of the hon'ble Supreme Court like Gemini Leather Stores v. ITO [1975] 100 ITR 1 (SC), CIT v. Hemchandra Kay [1970] 77 ITR 1 (SC), CIT v. Bhanji Lavji [1971] 79 ITR 582 (SC) and CIT v. Burlop Dealers Ltd. [1971] 79 ITR 609 (SC), etc. It is held in such cases that if the Income-tax Officer has all the material facts before him when he makes the original assessment, he cannot later on take recourse to section 147(a) of the Act to remedy the error resulting from his own oversight. Another dimension of the case has been brought to the notice of this court by Mr. Bajoria, learned advocate for the petitioner, as regards the appeals pending before the Assam High Court with regard to the amount of compensation and interest thereon. In this regard, the attention of the court has been drawn to the case, Lokendrasingh v. ITO [1981] 128 ITR 450, wherein the Madhya Pradesh High Court in similar circumstances as this one, quashed the reassessment proceedings. Therein also, the assessee had received an additional amount of compensation and that was mentioned in i....