TMI Blog1998 (9) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... ged the service of these notices issued under section 148. Taking this fact into consideration that notice under section 148 dated 27-5-1988 for both these years were not admitted to have been served upon the assessee, therefore, subsequently, on 1-9-1989, Assessing Officer issued fresh notices under section 148 again for each of the two assessment years after obtaining necessary approval from the competent authority. The assessments for both these years were completed on 28-2-1990 after giving due opportunity to the assessee and the assessee aggrieved by these assessments had filed appeal before the CIT(A) and challenged legal aspect of issuance of second notice under section 148 during the pendency of re-assessment proceedings in pursuance of first notice dated 27-5-1988. Besides this it challenged assessment of merits also and following pleas were raised : 1. Assessment orders by ITO are illegal and bad in law, and same should be quashed. 2. Re-opening of assessment is without application of mind, arbitrary and illegal, therefore, should be quashed. 3. Addition made by Assessing Officer are based on surmises and conjectures. 4. Additions made in respect of bogus purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e issue of a notice under section 148 and find that there is no definite material for coming to the conclusion that income had escaped assessment. The reasons recorded are merely on certain surmises and conjectures. In view of the above discussion, I would hold that the assessments completed for each of the two years namely, 1984-85 and 1986-87 are illegal and, therefore, these are annulled. Since the assessments are being annulled, therefore, it is not considered necessary to go into the merits of other grounds from S. Nos. 4 to 8 as given in the grounds of appeal." 4. Department aggrieved by this order of learned first appellate authority challenged the same and raised following two common grounds : "On the facts and in the circumstances of the case, the ld. CIT(A) has erred in law and on facts in annulling the assessment on the ground that on the date of issue of notice under section 148 on1-9-1989, earlier proceedings under section 148 were pending. The ld. CIT(A) has not appreciated the fact that the assessee had itself admitted that notice under section 148 issued originally on27-5-1988had not been received by it. On the facts and in the circumstances of the case, the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge the same. Therefore, his order is not valid on this count and is liable to be set aside. It was thus pleaded for setting aside order of CIT(A) and restoration of the order of Assessing Officer. 6. Learned counsel for the assessee while relying upon basis and reasoning as given by ld. CIT(A) pleaded for confirmation of his order. It was submitted that re-opening has been done purely on suspicion and there was no proper material or basis on which ITO could have believed that income had escaped assessment. The learned counsel for the assessee has also pointed out various inaccuracies and contradictions in the proceedings for each of the two years. For example, in the order sheet entry for assessment year 1984-85, the Assessing Officer has stated on 1-9-1989 that 'Notices under section 148 issued and served' but in fact these notices were served on 7-9-1989. Therefore, the order sheet entry dated1-9-1989mentioning the services of the notice is an inaccurate proceeding noted in the order sheet. While recording the reasons for re-opening the assessment on1-9-1989for the assessment year 1984-85 the Assessing Officer wrote that the assessee had challenged the validity of service of no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment proceedings in respect of income are still pending and have not terminated in the shape of a final order. It was also stated that since Assessing Officer had not dropped the assessment proceedings before issue of notices on1-9-1989, re-assessment based on subsequent notices are not valid. Relying upon these authorities and submissions as made above, it was pleaded that issuance and service of notice dated1-9-1989are illegal and bad in law. Assessee's counsel further stated that fishing and roving enquiries as not permitted before arriving at a conclusion that income chargeable to tax has escaped assessment and in this context assessee's counsel stated that statement of Shri Gokal Dev recorded on 12-2-1990 was at the back of the assessee and no opportunity of cross-examination of the said person was permitted to the assessee. Assessee's counsel relied upon decision of the Punjab and Haryana High Court as reported in 180 ITR 390 (sic) wherein re-assessments were cancelled by Tribunal and this action of the Tribunal was upheld by High Court on the ground that both the grounds on which re-assessment notices were issued were not found to exist. It was thus strongly pleaded that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee. Here, admittedly, first notice under section 148, in each of these cases has not been served upon the assessee and this specific denial of service of first notice by the assessee itself has prompted the Assessing Officer to record reasons afresh to obtain approval of competent authority as provided under law and to issue fresh notice dated1-9-1989. Therefore, in our view, first notice under section 148 in each of the years, dated 28-5-1998 is held to have not been served and no proceedings can be said to be pending at the time of issuance and service of second notice under section 148 dated 1-9-1989 in each of these years. Our view is supported by Hon'ble Supreme Court's judgment in the case of CWT v. Kundan Lal Behari Lal [1975] 99 ITR 581 wherein it has been held that issue means service and expression "issued" takes in the entire process of sending notices as well as service thereon. The said word used in section 34(1) of the Act itself was interpreted by Courts to mean served. The judgment of Supreme Court is reproduced hereunder : "The order of the court was delivered by Jaganmohan Reddy, J. --- We have heard the learned Additional Solicitor-General who assails t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving not served the notices, no valid assessment could have been made under the earlier proceedings. The contention that the earlier proceedings could not also be treated as void, illegal or non est without adjudication by an authority competent to do so could not be accepted. The test to find out as to whether the proceedings for reassessment are pending or not is to ascertain whether the ITO had assumed valid jurisdiction to make reassessment, which, in fact, the ITO had, in this case, since no assessments were pending on the date of initiation of reassessment proceedings. The AAC was thus not justified in annulling the impugned assessments." 10. Therefore, in view of facts and circumstances, we are of the view that notice under section 148 dated1-9-1989was validly issued by the Assessing Officer and proceeding concluded on the basis of these notices are proper and valid. Since ld. CIT(A) could not go into the sufficiency or adequacy of reasons which stood duly recorded after going through these reasons as produced before us, we are of the considered opinion that Assessing Officer could reasonably form belief for initiation of reassessment proceedings, therefore, he was not jus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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