Deputy Commissioner of Income-tax v. Zuari Estate Development and Investment Company Ltd
[Citation -2015-LL-0417]

Citation 2015-LL-0417
Appellant Name Deputy Commissioner of Income-tax
Respondent Name Zuari Estate Development and Investment Company Ltd.
Court SUPREME COURT
Relevant Act Income-tax
Date of Order 17/04/2015
Assessment Year 1991-92
Judgment View Judgment
Keyword Tags change of opinion
Bot Summary: JUDGMENT The admitted facts are that the income-tax return filed by the respondent-assessee for the assessment year 1991-92 was accepted under section 143(1) of the Income-tax Act, 1961. The assessee's accounts for the year 1991 had disclosed the amount of Rs. 84,47,112 by it as a current liability under the heading advance against deferred sale of building. In the course of assessment proceedings for the assessment year 1994-95, the Assessing Officer raised a query as to why the capital gains arising on the sale of the premises should not be taxed in the assessment year 1991-92. CIT v. Rajesh Jhaveri Stock Brokers Private Ltd. 2008 SCC 208 in the following manner: In the scheme of things, as noted above, the intimation under section 143(1)(a) cannot be treated to be an order of assessment. Under section 143(1)(a) as it stood prior to April 1, 1989, the Assessing Officer had to pass an assessment order if he decided to accept the return, but under the amended provision, the requirement of passing of an assessment order has been dispensed with and instead an intimation is required to be sent. It may be noted above that under the first proviso to the newly substituted section 143(1), with effect from June 1, 1999, except as provided in the provision itself, the acknowledgment of the return shall be deemed to be an intimation under section 143(1) where either no sum is payable by the assessee, or no refund is due to him. There being no assessment under section 143(1)(a), the question of change of opinion, as contended, does not arise.


JUDGMENT admitted facts are that income-tax return filed by respondent-assessee for assessment year 1991-92 was accepted under section 143(1) of Income-tax Act, 1961. After sometime, Assessing Officer came to know that there was sale agreement dated June 19, 1984, entered into between respondent and Bank of Maharashtra to sell building for Rs. 85,40,800 on condition that sale would be completed only after five years of agreement but before expiration of sixth year at option of purchaser and purchaser can rescind same at certain consideration. After bank had paid to assessee-company on June 20, 1984, sum of Rs. 84,47,111, being 90 per cent. of consideration agreed upon, assessee put and handed over possession in part performance of agreement of sale to bank on June 20, 1984, itself. By letter dated June 12, 1990, in terms of clause 5 of agreement of sale dated June 19, 1984, bank called upon assessee to complete transactions and convey property to bank by June 18, 1990. By letter dated June 16, 1993, assessee confirmed that assessee-company had put premises in possession of bank and that assesseecompany would take all necessary steps for transfer of said premises on or before September 30, 1993. Even after said date assessee was unable to complete transaction on pretext that certain dispute had arisen owing to which assessee did not complete transaction. assessee's accounts for year 1991 had disclosed amount of Rs. 84,47,112 by it as current liability under heading "advance against deferred sale of building". In course of assessment proceedings for assessment year 1994-95, Assessing Officer raised query as to why capital gains arising on sale of premises should not be taxed in assessment year 1991-92. On this basis, notice dated December 4, 1996, under section 143 read with section 147 of Income-tax Act was served upon assessee on ground that assessee had escaped tax chargeable on its income in assessment year 1991-92. Challenging validity of this notice, respondent preferred writ petition in High Court of Bombay. High Court has allowed writ petition, vide impugned orders which are subject matter of challenge in present appeal. After going through detailed order passed by High Court, we find that main issue which is involved in this case is not at all addressed by High Court. contention was taken by appellant-Department to effect that since assessee's return was accepted under section 143(1) of Income-tax Act, there was no question of "change of opinion" inasmuch as while accepting return under aforesaid provision no opinion was formed and, therefore, on this basis, notice issued was valid. We find that this aspect is squarely covered by judgment of this court in Asst. CIT v. Rajesh Jhaveri Stock Brokers Private Ltd. [2008] (14) SCC 208 in following manner: "In scheme of things, as noted above, intimation under section 143(1)(a) cannot be treated to be order of assessment. distinction is also well brought out by statutory provisions as they stood at different points of time. Under section 143(1)(a) as it stood prior to April 1, 1989, Assessing Officer had to pass assessment order if he decided to accept return, but under amended provision, requirement of passing of assessment order has been dispensed with and instead intimation is required to be sent. Various circulars sent by Central Board of Direct Taxes spell out intent of Legislature, i.e., to minimise Departmental work to scrutinise each and every return and to concentrate on selective scrutiny of returns. These aspects were highlighted by one of us (D. K. Jain J.) in Apogee International Ltd. v. Union of India. It may be noted above that under first proviso to newly substituted section 143(1), with effect from June 1, 1999, except as provided in provision itself, acknowledgment of return shall be deemed to be intimation under section 143(1) where (a) either no sum is payable by assessee, or (b) no refund is due to him. It is significant that acknowledgment is not done by any Assessing Officer, but mostly by ministerial staff. Can it be said that any'assessment' is done by them? reply is emphatic'no'. intimation under [2007] 291 ITR 500, 509 (SC). [1996] 220 ITR 248 (Delhi). section 143(1)(a) was deemed to be notice of demand under section 156, for apparent purpose of making machinery provisions relating to recovery of tax applicable. By such application only recovery indicated to be payable in intimation became permissible. And nothing more can be inferred from deeming provision. Therefore, there being no assessment under section 143(1)(a), question of change of opinion, as contended, does not arise." offshoot of aforesaid discussion is to hold that judgment of High Court is erroneous and warrants to be set aside. We allow this appeal setting aside impugned judgment of High Court. We find that pursuant to notice issued under section 143 of Income- tax Act, Assessing Officer had computed income by passing assessment orders on merits and rejecting contention of respondent that aforesaid transaction did not amount to sale in assessment year in question. Against that assessment order, respondent had preferred appeal before Commissioner of Income-tax (Appeals) which was also dismissed. Further appeal was preferred before Income-tax Appellate Tribunal. This appeal, however, has been allowed by Tribunal, vide orders dated January 29, 2004, simply following impugned judgment of High Court, whereby assessment proceedings itself were quashed. Since we have set aside judgment of High Court, as result, orders dated January 29, 2004, passed by Income-tax Appellate Tribunal also stands set aside. matter is remitted back to Income-tax Appellate Tribunal to decide appeal of respondent on merits. *** Deputy Commissioner of Income-tax v. Zuari Estate Development and Investment Company Ltd
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