K.M SHARMA versus INCOME TAX OFFICER, WARD 13 (7) NEW DELHI

Citation: [2002] 2 S.C.R. 1047 · Decided: 11-04-2002 · Supreme Court of India · Bench: S.P. BHARUCHA · Disposal: Appeal(s) allowed

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Judgment (excerpt)

--- . 
K.M. SHARMA 
A 
.. 
v . 
INCOME TAX OFFICER, WARD 13 (7) NEW DELHI 
APRIL 11, 2002 
[S.P. BHARUCHA, CJ., N. SANTOSH HEGDE AND D.M. 
B 
DHARMADHIKA13J, JJ.] 
j 
Income Tax Act, 1961 : Sections 147, 148 and 149. 
Section 150(1) [As amended with effect from 1.4.1989} and Section c 
150(2). 
Income Tax-Assessee---Receipt of interest on compensation for· land 
acquisition-Assessment-Limitation-Reassessment to levy tax-Permissibility 
o~Held amendment to Section 150(1) does not empower authorities to reopen 
' 
assessment which have become final due to bar of liniitation prior to D 
amendment~Section 150(2) is also applicable to court orders apart from 
' 
income-tax proceedings. 
Fiscal statute-Interpretation of-Provision imposing liability-Held such 
a law is not retrospective in the absence of contrary intendment. 
E 
Section 150(1) of the Income Tax Act, 1961, as amended by Direct Tax 
Laws (Amendment) Act, 1987 w.e.f. 1.4.1989 provides that the period of 
limitation prescribed in Section 149 is not applicable, if the reassessment is 
proposed on the basis of any Order passed by any 'authority in any 
proceedings under the Act by way of appeal, reference or revision or by a 
F 
Court in any proceedings under any other law.' The question involved in this 
appeal is whether Section 150(1) can be availed for re-opening assessments, 
which have attained finality and could not be re-opened due to bar of 
limitation, that was attracted at the relevant time to the proposed reassessment 
proceedings under the provisions of Section 149. For acquisition of his land 
the appellant was paid between 15.10.1992 and 26.5.1993 compensation and G 
' _J 
interest thereon. Revenue issued notices to the appellant for reassessment to 
levy tax on the increased amount of interest for the assessment years 1968 to 
1969 to 1971-72 and 1981-1982. The appellant-assessee challenged the validity 
of these notices contending that the provision contained in sub-section (2) of 
Section 150 is in the nature of clarification or explanation to sub-section (I). 
H 
1047 
1048 
SUPREME COURT REPORTS 
[2002] 2 S.C.R. 
A Sub-section (2) makes it clear that i~he embargo of period of limitation lifted 
under sub-section (1) for proposed reassessments based on Order in 
proceedings, appeal, reference or revision, as the case may be, would not apply 
to assessments which have attained finality due to bar of limitation applicable 
at the relevant time. The High Court upheld the validity of the assessment 
proceedings on the ground that on the amendment introduced with effect from 
B 1.4.1989 in sub-section (1), which enables reopening of assessment based on 
any Order of 'Court in any proceedings in any law', there is no corresponding 
amendment made in sub-section (2) of Section 150 to bar reassessment based 
on Order of Court passed in any proceedings in any law in cases where 
prescribed period of litigation for reassessment had already expired. 
c 
D 
In appeal to this Court it was contended on behalf of the appellant-
assessee that the provisions contained in Section 150(1) and (2) do not permit 
the authorities to reopen assessments, which have become final and 
reassessment of which had become barred by time before 1.4.1989 when 
Section 150(1) was amended. 
Allowing the appeal and setting aside the impugned judgment, the Court 
HELD: 1. Sub-section (1) of Section 150 of the Income Tax Act, 1961 
as amended with effect from 1.4.1989, does not enable the authorities to reopen 
assessments, which have become final due to bar of limitation prior to 1.4.1989 
E and this position is applicable equally to reassessments proposed on the basis 
of Orders passed under the Act or under any other law. [1056-D) 
2. On a combined reading of sub-section (1) as amended with effect from 
1.4.1989 and sub-section (2) of section 150, it is clear that the authority under 
the Act has been emppwered only to reopen assessments, which have not 
F already been closed and attained finality due to the operation of the bar of 
limitation under Section 149. The High Court, therefore, was in error in not 
reading whole of amended sub-section (1) into sub-section (2) and coming to 
the conclusion that reassessment, proposed on the basis of order of Court in 
proceedings under Land Acquisition Act, could be commenced even though 
G the original assessments for the relevant years in question have attained 
finality on expiry of period of limitation under Section 149 of the Act. 

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