Delhi High Court
Commissioner Of Income-Tax vs S. Avtar Singh Sandhu on 28 October, 1993
Equivalent citations: 1994 210 ITR 1038 Delhi
Bench: A Madan, B Kirpal
JUDGMENT
1. Heard. The assessed had filed a return on June 29, 1978, in respect of the assessment year 1978-79, inter alia, disclosing a capital gain arising out the sale of a property No. 18, Tilak Marg, New Delhi. This property was sold on November 7, 1977, for a total consideration of Rs. 27,65,827. Out of this amount a sum of Rs. 22,65,827 was paid to the Land and Development Office as its share of unearned increase and a sum of Rs. 5,03,149 was invested in the prescribed securities under section 54E of the Income-tax Act, 1961.
2. It appears that in September, 1978, the assessed filed a writ petition in the Supreme Court challenging the extent of the unearned increase.
The assessment was completed on October 7, 1980, and thereafter on November 3, 1983, the Supreme Court directed refund of Rs. 10,19,401. It is thereafter that notice under section 147(a) of the Income-tax Act was issued to the assessed seeking to reopen the assessment.
3. The Tribunal came to the conclusion that there was no failure on the part of the assessed in disclosing the material facts and as such the action under section 147(a) was not warranted.
4. The petitioner thereafter filed an application under section 256(1) requiring the Tribunal to state the case and refer the following three questions to this court :
"(i) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is right in annulling the reassessment order dated March 23, 1989, on the ground that there was no failure on the part of the assessed to disclose fully and truly all material facts necessary for his assessment and as such notice under section 148 was invalid?
(ii) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is legally correct in holding that the refund of part of the amount paid by the assessed to the Land and Development Office out of sale proceeds of a property, in terms of the Supreme Court order, would not go to reduce the deduction on this score, for the purpose of computation of capital gains, because the amount was paid ex gratia?
(iii) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is legally correct in holding that the amount having been paid ex-gratia could not even be treated as the income of the assessed taxable under the Income-tax Act?"
5. The Income-tax Appellate Tribunal dismissed the said application and took note of the fact that the Supreme Court had ordered refund of the aforesaid amount by stating that it was to be regarded as an ex gratia payment. It was observed by the Tribunal that the answer to the second question was concluded by the orders of the Supreme Court and the first question also could not be referred because the answer to the same was academic.
6. It is contended by learned counsel for the petitioner that the assessed was under a duty to mention all relevant facts before the assessing authority till the time of assessment and as this was not done action under section 147(a) could be validly taken. Reliance in this behalf is placed by counsel for the petitioner on the decisions of CIT v. Deepchand and Family [1991] 192 ITR 632 (Delhi) and Mrs. Khorshed Shapoor Chenai v. Asst. CED . In the present case, it is not as if a wrong amount had been paid to the Land and Development Office. The Tribunal has found that the Supreme Court had directed refund of Rs. 10,19,401 to be made as ex gratia payment. It was observed by the Supreme Court in this order that the Government had regard to refund the aforesaid amount on ex gratia basis and the said order was not to be treated as a precedent in any other case. This payment was made by way of full and final settlement between the parties.
7. We find ourselves in agreement with the Tribunal that no question of law arises and in any case the answer to the same is self-evident. It is not in dispute that when the return was filed on June 29, 1978, the amount of capital gains arising out of the sale of the house had been correctly stated in the return. The assessment was completed on October 7, 1980, and it is no doubt true that a writ petition had been filed in the Supreme Court, but that was only a claim for refund which was made and even if that fact was disclosed it could have made no difference as far as the assessment is concerned because as on that date the amount of unearned increase as claimed by the Government had in fact been paid by the assessed.
8. In our opinion the primary facts had been disclosed by the assessed and, therefore, the Tribunal rightly came to the conclusion that proceedings under section 147(a) could not have been initiated and the answer to the question was self-evident. This petition is accordingly dismissed.
9. There will be no order as to costs.
