Law: Income Tax Act, 1961

Section: 147(a)

Income Tex--Re-assessment-Validity of Income from house, property-House oc�cupied by Government-----Subsequent requisitioning of house by Govern�ment-Compensation for use in previous years fixed by agreement� Assessee previously not aware of compensation becoming payable-Entitled only to standard rate-Whether assessment of earlier years can he reopened.The assessee owned a house which was in the occupation of the Government. The Government paid a rent of Rs. 484 per month which was the standard rent fixed under the Rent Control Act. Subsequently, the Government requisitioned the house and on November 11, 1965, entered into an agreement with the assessee whereby it agreed to pay compensation at the rate of Rs. 2,128 per month from 1962. The Income-tax Officer sought to reopen the assessments under sec�tion 147(a) of the Income-tax Act, 1961, for the years 1963-64, 1964-65 and 1965-66. The assessee applied for a writ to quash the notices--held, that when a challenge is thrown, the Income-tax Officer must satisfy the Court that the conditions precedent for the initiation of the proceedings under section 147 (a) of the Income-tai: Act, 1961, were fulfilled. Prior to 11th November, 1965, the assess was not aware of the compensation money becoming payable. He was not guilty of any failure or omission to disclose any material facts for the assessment years 1963-64 and 1964-65, the returns for which were filed and assessment completed by September, 1964. For the assessment year 1965-66, the assessee had produced the agreement with the Government before the Income-tax Authorities. The assessee was not then entitled to realise anything in excess of the standard rent of Rs. 484 as it would be contrary to the provisions of the Calcutta Municipal Act and the Rent Control Act. There was, therefore, no material for the Income-tax Officer to form a reason� able belief under section 147 (a) that income had been assessed. The notices issued under section 148 were invalid.Ahmed Allahdin & Sons (Khan Bahadur) v. C. I. T. (1969) 74 I T R 651 A F); C. I. T. v. Chunilal V. Irfehta &, Sons (P.) Ltd. (1971) 82 I T R 54 (SC,); C. I. T. v. Gajapathy Naidu (A.) (1964) 53…