TMI Blog2002 (10) TMI 239X X X X Extracts X X X X X X X X Extracts X X X X ..... calling the assessee to file the return for assessment year 1997-98 was issued on28-1-2000, it was barred by limitation. 3. In support of the above contention, he has relied on the scheme of the Act under Chapter XIV. According to him, before the amendment effective from1-4-1990, section 142(1) authorized the Assessing Officer to call for the return of income where a person had failed to file the return till the end of the assessment year. After the amendment, the time for calling the return under section 142(1) was preponed and the return could be called if the person failed to file the same before the expiry of time under section 139(1). Sub-section (5) provided the time of one year from the end of the assessment year to revise such return. Section 139(4) provides the time limit of one year from the end of the assessment year where assessee has failed to file the return under section 139(1) or in response to notice under section 142(1). According to him, if harmonious construction of these provisions is made, then notice under section 142(1) can be issued only before the expiry of one year from the end of the assessment year. 4. Proceeding further, it is contended that after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be the period provided for completion of assessment under section 153. According to him, the purpose of section 142(1) is only for making assessment and that purpose can be served till the end of the two years from the end of assessment year. Therefore, according to him, so long as the purpose is served, the notice can be issued at any time. 7. It was then contended that section 139(4) permits the assessee to file the return up to expiry of the one year from the end of the assessment year where no notice under section 142(1) has been issued but there is no prohibition for issuance of notice under section 142(1) after the expiry of the period prescribed under section 139(4) and such notice can be issued till the purpose of assessment is served. Reliance is placed on the Calcutta High Court decision in the case of Satyanarayan Bhalotia. Proceeding further, he submitted that provisions of section 142(1) are in the nature of power conferred on the Assessing Officer whereas the provisions of section 139(4) are merely in the nature of right conferred on the assessee who wishes to file the return after the expiry of the period under section 139(1). So there is no conflict between the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Sahara Airlines Ltd. v. Dy. CIT [2002] 83 ITD 11 (Delhi). Following the same, it is held that though there is no express provision for issuance of notice under section 142(1), it should be issued within reasonable period considering the scheme of the Act. 10. In the above background, let us now examine the provisions of section 142(1) along with the scheme of the Act. For the benefit of this order, the relevant portion of section 142(1) is being reproduced as under: "Section 142(1).--For the purpose of making an assessment under this Act, the Assessing Officer may serve on any person who has made a return under section 139 or in whose case the time allowed under sub section (1) of that section for furnishing the return has expired a notice requiring him, on a date to be therein specified,-- (i) where such person has not made a return within the time allowed under sub-section (1) of section 139, to furnish a return of his income or the income of any other person in respect of which he is assessable under this Act, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed, or (ii) to produce, or cause to be p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the end of the assessment year. That means, the notice under section 142(1) can be issued where the return has been filed after the end of the assessment year but before the expiry of one year after the end of the assessment year. Therefore, the contention of the learned counsel for the assessee that notice under section 142(1) cannot be issued after the expiry of assessment year, cannot be accepted. 12. Proceeding further, let us examine the alternate contention of assessee's counsel where such notice can be issued after the expiry of one year from the end of the assessment year. This contention also, in our opinion, cannot be accepted. As already stated by us, that return under section 139(4) can be filed within one year from the end of the assessment year. But the assessment of such assessee can be made by the Assessing Officer before the expiry of two years from the end of the assessment year. For the purpose of making an assessment, the Assessing Officer has to issue notice under section 143(2) within a period of 12 months from the end of the month in which the return is filed. If notice under section 143(2) has been issued within time then certainly the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. In view of such scheme of the Act, notice under section 142(1) would certainly be beyond the period of one year from the end of the assessment year. Therefore, in our considered opinion, the contention of the assessee's counsel has to be rejected. 14. At this stage, we may observe that construction of the provisions of a section has to be made considering the entire provisions of the section as a whole and no part of it can be ignored. If the outer limit for issuance of such notice is to be seen then it is necessary to consider both the purposes mentioned in clauses (i) and (ii) of sub-section (1). According to these clauses, the notice can be issued with a view either to direct the assessee to file the return, who has failed to comply with the provisions of section 139(1) or with a view to direct the assessee to produce or cause to produce such books of account or documents as may be required by Assessing Officer. Both these directions are to facilitate the assessment which would serve the ultimate, object of this section provided in the opening words "For the purpose of making an assessment under this Act". The direction to produce the books of account or document ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n has expired" contained in section 142(1). Such construction would mean that notice can be issued even after the end of one year from the end of the assessment year. This view is, in our opinion, fortified by the provisions of the second proviso to section 144 which clearly suggests that notice under section 142(1) can be issued before making assessment under this section. In view of such discussion, the contention of assessee's counsel that no assessment can be made in such cases without the issue of notice under section 148 cannot be accepted. Having held so, it is not necessary for us to express any opinion on the issue whether non-filing of the return within the period prescribed under section 139 amounts to escapement of income or not. 16. Before concluding this issue, we would like to mention few words about the various decisions relied upon by the learned counsel for the assessee. The decision of the Tribunal Delhi Bench in the case of Dr. K.C. Verma is distinguishable on facts and rather supports the case of revenue. In that case, the returns were filed by the assessee under section 139(4) and the time limit prescribed for issuance of notice under section 143(2) had alre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y issued. 18. The assessment for assessment year 1997-98 has also been challenged on the ground that order under section 143(3) could not be made by the Assessing Officer without issuing notice under section 143(2). We are unable to accept this argument of the assessee's counsel since in fact the order passed by the Assessing Officer was under section 144 and by mistake, it was mentioned as an order under section 143(3). The defect, if any, in our opinion, would not invalidate the assessment order in view of the provisions of section 292B. 19. It has also been contended by the learned counsel for the assessee that even if the order of assessment was under section 144, the same was bad in law since the opportunity provided in the second proviso to section 144 was not given to the assessee. This argument too cannot be accepted since notice under section 142(1) had already been issued to the assessee and the second notice is not permissible in view of the clear language of the second proviso to section 144. 20. Now we come to the main issue arising out of these appeals. The issue to be considered is whether the amount received by the assessee, who is a non-resident, from the Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer. Aggrieved by the same, the assessee is in appeals for both the years before the Tribunal. 24. Both the parties have been heard at length. After going through the orders of authorities below and considering the arguments of the parties, we are of the view that the issue had not been dealt with in the right perspective inasmuch as the Assessing Officer as well as CIT(A) had proceeded on the assumption as if the covenants of DTAA authorises the levy of tax on the income of the non-resident. The parties before us also have not addressed any argument as to whether the income of non-resident assessee is chargeable to tax under the provisions of Income-tax Act, 1961 or not. They simply have proceeded on the same footings on which lower authorities decided the issue. We are unable to uphold such approach adopted by the lower authorities for the simple reason that taxability of the income of non-resident has to be first determined in the light of the charging provisions of Income-tax Act. The scheme of the Act is that taxability of the income of the non-resident has to be determined with reference to the charging provisions of sections 4, 5 and 9. However, section 5 is su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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