- (1.) AT the centre of controversy in these nine petitions, being disposed of together by this common judgment, is the receipt of an amount of Rs. 99,95,929 received on 2nd April, 1991 and sought to be assessed as 'receipt of arrear rent' under the head 'Income from business' for the previous year ending 31st March, 1992 corresponding to the asst. yr. 1992-93. Respondent No. 1, the AO, passed the order on 28th Feb., 1995 whereby he assessed the aforesaid amount of Rs. 99,95,929 as arrears of rent as the 'income from business'. This order was challenged by the petitioner before the CIT(A) who vide his order dt.22nd Dec., 1995, while disagreeing with the assessment order passed by respondent No. 1 and allowing the appeal of the petitioner, held that the action of respondent No. 1 in including the aforesaid amount as being arrears of rent and as 'business income' of the petitioner for the asst. yr. 1992-93, was not in order and, accordingly, the Appellate Commissioner deleted the aforesaid amount from the assessment in the aforesaid assessment year and granted appropriate relief to the petitioner. Even though the Revenue has filed an appeal against the order of the CIT(A) before the Tribunal and the said appeal is still pending consideration, a notice under S. 148 of the IT Act, 1961 ('the Act') was issued on 26th March, 1996 whereby the respondent No. 1 observing that he has reasons to believe that the income of the petitioner for the assessment year in question chargeable to tax has escaped assessment within the meaning of S. 147 of the Act, he proposed to reassess the income, and accordingly, required the petitioner to deliver to him a return in the prescribed form and other documents in support thereof. Identical notices were issued in respect of the first assessment year in all the nine petitions. These are the notices which are impugned in all these petitions. This also is the subject- matter of challenge by the petitioner.
(2.) SOME facts relevant to the controversy between the parties may be briefly stated as below : Dejoo Tea Co. India (P) Ltd. had purchased the property situated at No. 31, Shakesspeare Sarani, Calcutta, from its previous owner in terms of a registered deed of conveyance executed on 30th Nov., 1987 subject to the then existing lease for an unexpired period of 4 years which lease was in favour of the Consulate General of U.S.S.R. in Calcutta. The total lease period was 23 years out of which four years were still existing as on the date of purchase of the property by Dejoo Tea Co. India (P) Ltd. because the original lease deed by the erstwhile owner of the said property was executed on 14th Dec., 1957 in favour of the Consulate General of U.S.S.R. in Calcutta. The lease had commenced on 15th Jan., 1958 and was to expire on 15th Jan., 1981. As is noticed, since Dejoo Tea Co. Ltd. had purchased the property on 30th Nov., 1977, about 4 years of unexpired term of the lease still remained. On the expiry of the lease period as on 15th Jan., 1981, the lessee refused to vacate the property in question. In view of the protection enjoyed by the lessee under s. 86 of the CPC, 1908, it was not possible for the owner of the property to evict the lessee by filing a suit against it and, accordingly, the owner, i.e., Dejoo Tea Co. (P) Ltd., filed various petitions before this Court and the Supreme Court contending that S. 86 was unconstitutional and ultra vires, etc., etc. However, this is not relevant for our purposes except to say that after a protracted litigation between the parties for a number of years of settlement was finally arrived at between Dejoo Tea Co. India (P) Ltd. and the Consulate General of U.S.S.R. through the intervention of the Central Government and in pursuance of such settlement two agreements were executed between the parties on 2nd April, 1991 which, inter alia, provided that the Consulate General of U.S.S.R. shall vacate the premises latest by 14th Jan., 1996 and that from 15th Jan., 1991 it shall be paying monthly rent at the rate of Rs. 2,83,246, and that it shall pay an aggregate sum of Rs. 90 lakhs calculated at the rate of Rs. 9 lakhs per year by way of compensation for continued occupation of the property for the period 15th Jan., 1981 till 14th Jan., 1991. It is this clause of the agreement which has given rise to this petition. Admittedly, by the force of this agreement the aforesaid amount of Rs. 90 lakhs plus a further sum of Rs. 95,929 was received by the petitioner on 2nd April, 1991. Dejoo Tea Co. India (P) Ltd. got merged and amalgamated with Jasmine Commercials Ltd., petitioner No. 1 in this petition, w.e.f. 1st April, 1991 in pursuance to an order dt. 4th May, 1992 passed by this Court in Company Petition No. 81 of 1992. Consequent upon the aforesaid merger and amalgamation, all assets and liabilities of the said Dejoo Tea Co. India (P) Ltd. w.e.f. 1st April, 1991 stood vested in the petitioner-company. Because of the aforesaid taking over of the assets and liabilities of Dejoo Tea Co. India (P) Ltd., the petitioner has now come up in this Court against the impugned notices issued under S. 147, r/w S. 148. The reason cited by respondent No. 1 in support of the impugned notices are that since the aggregate amount reflected arrears of rent at the rate of Rs. 9 lakhs per month and because the CIT(A) refused to agree with respondent No. 1 that the aggregate amount can be assessed as 'income from business' for the asst. yr. 1992-93, the rent at the rate of Rs. 9 lakhs per year being arrears of rent for the past 10 years be assessed as income for the previous year for which the rent was meant, relevant to the assessment year in question and, therefore, since this amount of Rs. 9 lakhs for each previous year relevant to the assessment year had escaped assessment, the AO desired to reassess the income on this ground and, accordingly, asked the petitioner to furnish returns in the prescribed forms. Main challenge to the impugned notice is based upon the ground that under S. 147 four years is the maximum period of limitation provided whereby an AO can initiate action for reassessment in a case where income has escaped assessment. It is alleged and contended that in this case since the impugned notices were issued on 26th March, 1996, in respect of all the relevant assessment years for which reassessments were sought to be done, the limitation period of 4 years already stood expired and, therefore, the AO had no jurisdiction to initiate action under S. 147 and, hence, the notices impugned were bad in law. It is also contended by the learned advocate for the petitioners that the proceedings under s. 147 can be initiated after the expiry of 4 years from the end of the relevant assessment year only if two conditions are satisfied, viz., firstly, that the AO has reasons to believe that income chargeable to tax has escaped assessment and secondly, that such assessment had escaped by reasons of the omission or failure on the part of the assessee to make a return under S. 139 of the Act or in response to a notice issued under sub-s. (1) of S. 142 or S. 148 or to disclose fully and truly all material facts necessary for the assessment for the relevant assessment year.
(3.) UNDER S. 14 of the Act, all income for the purposes of charging income-tax and computation of total income has been classified under different heads of income and 'Income from house property', is one of such heads finding mention in cl. (c) of S. 14. Part (c) of Chapter IV of the Act containing ss. 22 and 24 and S. 27 deal with the chargeability of the income-tax arising out of income from house property. Annual value of house property has been defined in S. 23. The contention of the learned advocate for the petitioners is that a combined reading of ss. 22 and 24, r/w S. 27, clearly establishes that it is only the annual value of the property which is assessable to income-tax for any particular assessment year arising out of the income received in the previous year relevant to such assessment year.;