What the courts have decided on section 142, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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ACIT v Hotel Blue Moon
Supreme CourtCuts both ways
Is a notice under s.143(2) a jurisdictional precondition, or merely a procedural step the Assessing Officer can skip?
The Revenue argued that in a block assessment under Chapter XIV-B the words 'so far as may be' in s.158BC(b) made the s.143(2) notice optional. The Supreme Court rejected this and held that where the Assessing Officer repudiates the return and proceeds to enquire, the s.143(2) notice must be issued within the prescribed time. Omission to issue it is not a curable procedural irregularity.
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K.M. Sharma v ITO — the 1989 widening of s.150(1) does not revive a year already barred
Supreme CourtHelps taxpayer
The officer says a court's order in my land acquisition case lets him reopen years going back to the sixties, because s.150(1) says the notice may be issued at any time. Can he?
No, not for a year that was already beyond assessment before 1 April 1989. Section 150(1) was widened with effect from that date to cover a finding or direction in an order of a court in a proceeding under any other law. The Supreme Court held that the widening is not expressed to be retrospective and so operates only from 1 April 1989: it reaches assessments that had not become final by then, and it does not reach assessments that had. Sub-section (2), the Court said, insulates proceedings that have attained finality on the expiry of the prescribed period of limitation, and it refers to the whole of sub-section (1), so it applies to a reassessment proposed on a court's order under another law just as much as to one proposed on an appellate order under the Act. The appeal was allowed with costs, the Delhi High Court's judgment of 24 May 1996 was set aside, and the notices under ss.148 and 142 for assessment years 1968-69 to 1971-72 and 1981-82 were quashed.
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M/s. Jayanti Botanical Gardens v ITO, Bangalore
ITATHelps departmentNo later treatment found
I run a nursery. Explanation 3 to s.2(1A) says income from saplings or seedlings grown in a nursery is agricultural income. The Assessing Officer has treated half my receipts as business income because my contracts also cover planting and landscaping at the customer's site. Can he?
Yes. The Bangalore Tribunal held that by virtue of Explanation 3 to s.2(1A) only income derived from the sale of saplings and seedlings grown in the assessee's OWN nursery is deemed to be agricultural income, and that receipts under a composite contract that also covers preparing the client's site, supplying soil and fertiliser, making pits, planting, engaging horticulturists and insuring the plants are not. The ad hoc split of 50 per cent made by the Assessing Officer and confirmed by the Commissioner (Appeals) was upheld and the appeal was dismissed.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.
