TMI Blog2005 (1) TMI 334X X X X Extracts X X X X X X X X Extracts X X X X ..... rn filed pursuant to section 148 of the Income-tax Act, 1961?" 2. Shri K. Sampath appearing for the appellant contends that proviso to section 143(2) of the Act enjoins a duty upon the Assessing Officer to serve notice on the assessee before expiry of twelve months from the end of the month in which return is furnished. Procedure for making assessment is prescribed under Chapter XIV of the Income-tax Act. Cases where income has escaped assessment, the law mandates that the Assessing Officer has to serve a notice on the assessee requiring him to furnish a return of his income and provisions of the Act shall so far as may be, apply accordingly as if such return were a return required to be furnished under section 139 of the Act. Section 148 thus envisages a return as if such return was a return under section 139. The words "so far as may be" as appearing in section 148 has always been construed to mean that those provisions may generally be followed to the extent possible. A notice having been issued under section 148, the procedure set out in the sections subsequent to section 139 has to be followed "so far as may be". For this principle, reference was made to the Apex Court judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reading of the statutory provisions. In Keshavji Ravji Co. v. CIT [1990] 183 ITR 1 (SC), it was stated that as long as there is no ambiguity in the statutory language, resort to any interpretative process to unfold the legislative intent becomes impermissible. The supposed intention of the Legislature cannot then be appealed to whittle down the statutory language which is otherwise unambiguous. If the intendment is not in the words, it is nowhere else. The need for interpretation arises when the words used in the statute are, on their own terms, ambivalent and do not manifest the intention of the Legislature. When words acquire a particular meaning or sense because of their authoritative construction by superior courts, they are presumed to have been used in the same sense when used in a subsequent legislation in the same or similar context. In Prakash Nath Khanna v. CIT [2004] 266 ITR 1(SC), the Apex Court has said that while interpreting a provision, the court only interprets the law and cannot legislate it. The legislative casus omissus cannot be supplied by judicial interpretative process. Reference was made to the judgments of Asstt. CIT v. Velliapa Textiles Ltd. [2003] 263 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Kangadharan, CA, interveners advanced the same arguments as that of the appellant and contended that the assessment made on the strength of a notice served beyond the period prescribed under the proviso to section 143(2) of the Act shall be vitiated and needed to be annulled. 9. Shri V.S. Rastogi, intervener appearing for Cray Research (I) Ltd. contends that section 148 of the Act applies to assessment as well as reassessment cases and no different treatment is prescribed for either of the cases when return is required to be furnished by issuance of a notice under section 148. He seeks to refer that section 148 mandates that the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139. He, therefore, makes four propositions:- (i) That this provision has employed the word "shall". By use of the word "shall", the provision has been made mandatory and it cannot be construed as directory. (ii) What has been made applicable by this provision is the provision of this Act. (iii) The word "accordingly" used in this provision is to be interpreted to mean and used in a similar manner. (iv) Deemin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT v. S. Teja Singh [1959] 35 ITR 408 (SC), 413 by stating that deeming provisions are to be extended to the legitimate purpose for which they are enacted. Furthermore, there is no inconsistency between section 143(2) and section 148, the same procedure has to be followed in an assessment or reassessment under section 147. Reference was made to the decision of Andhra Pradesh High Court in CIT v. Supreme Construction Co. [1995] 213 ITR 137. 13. CBDT Circular No. 549, dated 31-10-1989 reported in 182 ITR (St.) 1, para 5.13, has also been referred to where it is stated that the department must serve the notice on the assessee as required by the proviso to section 143(2) of the Act, within the period specified therein. If the assessee does not receive the notice, he can take it that the return filed by him had become final. The Circulars of Board are binding on the revenue authorities. Reliance was placed on the judgments in CCE v. Dhiren Chemical Industries [2002] 172 CTR (SC) 670, Dabur India Ltd v. CCE, Meerut [2003] 157 ELT 129 (SC) and UOI v. Azadi Bachao Andolan [2003] 263 ITR 706 (SC). 14. It has further been contended that the proviso has to be treated as mandatory. The rol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. 17. Shri Ajay Vohra, Advocate appearing as intervener for Jayco India (P.) Ltd. contends that after a notice under section 148 is issued, four courses are open to the Assessing Officer, (i) the Assessing Officer may drop the notice, (ii) if assessee files the return he may process the same under section 143(1) of the Act, (iii) if he wants to scrutinize the return, notice under section 143(2) has to be issued, and (iv) if the assessee does not file the return, an assessment under section 144 is made to the best of his judgment. Procedure is also prescribed for making assessment. Broad propositions have been set out in the written note filed. The Full Bench of the Allahabad High Court had occasion to consider the true meaning and import of the similar expression in Jai Kishan Srivastava v. ITO [1960] 40 ITR 222, 226-228, where under section 34(1) of the Indian Income-tax Act, 1922, corresponding to section 148 of the Income-tax Act, 1961 also used the similar expression, i.e., "and provision of this Act shall, so far as may be, apply accordingly as if the notice issued were a notice issued under that sub-section". The relevant observations are reproduced below: 17.1 Constru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding section of the Cochin or Travancore Act), all the relevant provisions of that Act apply as effectively as where the assessment starts with a notice under section 22(2)." 19. In the light of the judicial precedents in Tribunal and cases cited at the bar by other counsel and the history of section 148 so traced, Shri Vohra submits that the return filed pursuant to a notice under section 148, for all intent and purposes of the Act, must be assumed and treated to be a return filed under section 139 of the Act. The assessment must, thereafter be made under section 143 or 144 of the Act after complying with all the mandatory provisions of the Act. As a necessary corollary, if the Assessing Officer seeks to verify/scrutinize the return, he must issue notice under section 143(2) of the Act in order to assume valid jurisdiction. 19A. Mr. B. Ramakrishnan and Mr. R. Krishnamurthy, interveners, in their joint written submissions have also stated that if the statutory notice is not served within the time stipulated under proviso to section 143(2), it has to be presumed that the matter has become final and the scrutinizing of the return is not possible after the expiry of time-limit as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l income or loss by an order in writing determining the sum payable by him or refund of any amount on the basis of such assessment. 20.7 The Assessing Officer may not take recourse of section 143(2) of the Act in respect of the returns furnished under section 139 or 142(1) of the Act. In that event, the intimation becomes final. The intimation is not an assessment order as is evident from the provisions of section 143(1)(a)(i) where it is deemed to be a notice of demand under section 156 of the Act. Further insertion of clause (b) in section 154(1) and insertion of "or an intimation under sub-section (1) or sub-section (1B) of section 143, where the assessee objects to the making of adjustments", in section 246(1)(a) clearly indicate that the process laid down in sub-section (1) of section 143 from 1-4-1989 cannot be termed as making an assessment under section 143(1) upto 31-3-1989. 20.8 Section 147 mandates the Assessing Officer to assess or reassess "such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and should be given a restricted meaning. The applicability of other provisions of the Act would be limited to wherever and whatever is necessary to make the assessment under consideration. In the case of proceedings under section 147, the Assessing Officer is under obligation to make an assessment as is indicated in the opening line of section 148 which read as "Before making the assessment, reassessment or re-computation under section 147,...". The Assessing Officer does not have a choice here to accept the return without making an assessment, an option available to him in respect of returns furnished under section 139 or 142(1) of the Act. 20.13 The proviso to section 143(2) has no application to the proceedings under section 148 as it has no contribution in making the assessment under section 148. The Assessing Officer assumes jurisdiction under section 148 to issue notice only after recording reasons for doing so. The limitation to pass the order is laid down in section 153(2). The proviso to section 143(2) cannot come in way and frustrate the entire exercise in spite of the clear indication that the provisions of the Act only to the extent necessary may apply. The Kerala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the issue of the notice under section 148 and non-issue or late issue of notice under section 143(2) would not take away the said jurisdiction to complete the assessment. The jurisdictional foundation is validly laid and another procedural provision cannot take away the jurisdiction to make the assessment. The text and context have to be considered while analyzing the relevant provisions. (Para 23 of Nawal Kishore Sons Jewellers v. Dy. CIT [2003] 87 ITD 407 (Lucknow) (SB) may kindly be referred to). Further, reliance has been placed on the decision in the case of CIT v. Banshidhar Jalan Sons [1994] 207 ITR 488 (Cal.) and Vishwanath Prasad Bhagwati Prasad v. CIT [1993] 202 ITR 469, 473 (All.) 21. Submissions in respect of question No. 2 made by Ld. CIT-DR are as under: "Where the assessee has participated in the proceedings so initiated, the doctrine of waiver/acquiescence is attracted. While the want of inherent jurisdiction cannot be cured or made good by consent, where there is only an irregularity in the exercise of jurisdiction, it could be waived. If assessee has participated in the proceedings initiated by the Assessing Officer, then later there can be no complai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard the parties with reference to material on record and precedents referred. The relevant provisions of section 148 as it stood in the relevant year are reproduced hereunder: "Section 148: Issue of notice where income has escaped assessment - (1) Before making the assessment, reassessment or re-computation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, not being less than thirty days as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139. (2) The Assessing Officer shall, before issuing any notice under this section, record his reasons for doing so." 23. Prior to 1-4-1989, the only difference in the provisions was that a notice calling for the return was to be issued contain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer feels it necessary or expedient, making sure that the assessee has not understated the income or has not computed excessive loss or has not underpaid the tax in any manner, serve on the assessee a notice requiring him on a date to be specified therein, either to attend his office or to produce or cause to be produced therein evidence where the assessee may rely in support of the return. This section has a proviso, which says that no notice under this section shall be served on the assessee after the expiry of twelve months after the end of the month in which the return is furnished. 26. The purpose of serving the notice has been explained in Circular No. 545, dated 31-10-1989 as reported in 182 ITR (St.) as under:- "A proviso to sub-section (2) provides that a notice under the subsection can be served on the assessee only during the financial year in which the return is furnished or within six months from the end of the month in which the return is furnished, whichever is later. This means that the Department must serve the said notice on the assessee within this period, if a case is picked up for scrutiny. It follows if an assessee, after furnishing the retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id in pursuance of section 140A(1) shall be deemed to have been paid towards the regular assessment under section 143 or section 144. It is pertinent to note that section 140A(1) deals with a return required to be furnished under section 139 or section 148. That makes the provision clear that an assessment made under section 147 also will be a regular assessment under section 143 or section 144. Accordingly, we hold that any assessment made for the first time by resort to section 147 will also be a regular assessment for the purpose of invoking section 217 of the Act. With great respect, we dissent from the view expressed in certain decisions referred to earlier in this judgment which take a contrary view." Essentially, therefore, there is no choice to apply part of the section and leave the other part when the effect has to be given to the scheme contained in the whole section i.e. section 143(2) of the Act along with the proviso. Proviso, therefore, cannot be divorced from the main section. It has to be construed with reference to the preceding parts of the section to which it is appended and as subordinate to the main provisions of the Act. It has been said that there is no ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciation allowance or any other allowance as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year)." 30. Now it should be appreciated that there is vast difference between an assessment made under section 148 and the assessment made under section 158BC of the Act. They are as under: 1. Chapter XIV-B is a complete code for assessment of search cases. Reassessment under section 148 falls under Chapter XIV which prescribes the procedure for making assessment and incorporates sections 139, 142, 143, 144, 147, 148 and 153 etc. Thus the two falls under different chapter. 2. Sub-section (1) of section 158BA clearly spells out that where search takes place, the Assessing Officer shall proceed to determine the undisclosed income of the person in accordance with the procedure laid down in this chapter. 3. Explanation to sub-section (2) of section 158BA provides that assessment made under this chapter shall be in addition to the regular assessment. 4. The procedure of completing the block assessment has been laid down under section 158BC. 5. 158BE provides the limitation of completing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submission has pointed out that there is a marked difference in the return filed pursuant to notice under section 148 and a return under section 139 or one required to be filed under section 142(1). This difference was highlighted by pointing out that time-limit of filing return under both the provisions are different. The appeal provisions under section 246 and limitation provision under section 153 are different. These are trite arguments and have already been considered in numerous judgments, some of which are as follows:- a. Mrs. Rama Sinha v. CIT [2002] 256 ITR 481, 486-487 (Punj. Har.) b. R.B. Seth Shreeram Durga Prasad Fateh Chand Nursing Das (Export Firm) v. CIT [1989] 168 ITR 619 (Bom.) c. R. Dalmia (AOP) v. CIT [1992] 194 ITR 700 (Delhi) d. R. Dalmia v. CIT [1999] 236 ITR 480 (SC) e. Mrs. Lally Jacob v. ITO [1992] 197 ITR 439 (Ker.) (FB) f. K. Govindan Sons v. CIT [2001] 247 ITR 192 (SC) g. CIT v. Usha Aggarwal [1989] 178 ITR 406 (Punj. Har.). Suffice to say that answer to all these lay in the following passage of the Apex Court as stated in R. Dalmia v. CIT [1999] 236 ITR 480 (SC), a judgment strongly relied by Shri Sampath, the counsel for the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice under section 148 is served in July 2001, then assessment would be required to be completed by 31-3-2003. However, assessee may choose to file return on 31-1-2003. Then as per section 153(2) assessment has to be completed by 31-3-2003 whereas as per the proviso Assessing Officer still has time to issue notice under section 143(2) upto 31-1-2004. We are afraid, this argument is erroneous on its face. The proviso is applicable to a valid return and not to an invalid return. Whenever a notice is issued under section 148 calling for a return, a time-limit of filing return will be prescribed (normally a period of 30 days from the date of receipt of notice is allowed). Assessing Officer will never issue a notice granting the assessee unlimited period to file the return. If he does so, he would be doing so at his own peril. If the return is not filed within that period, that would not amount to a return pursuant to notice under section 148. Therefore a situation envisaged by the ld. D.R. would not arise. Although a situation is quite possible where the period available for filing the return and the period available to complete the assessment may overlap. But this overlapping is base ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it applied only to "an assessment to be made under sub-section (3) of section 143". The submission cannot be accepted because the words we have quoted from section 148 cannot be ignored. A notice having been issued under section 148, the procedure set out in the sections subsequent to section 139 has to be followed "so far as may be". Section 144B is a procedural provision. It fits into the procedural scheme as hereinbefore noted and, therefore, it cannot be excluded by reason of the use of the words "so far as may be". Nor is there any other good reason to exclude it from the procedure to be followed subsequent to notice under section 148." On the same analogy the provisions of section 143 cannot be ignored. 35A. Finally, by placing reliance on the Apex Court decision in Ujagar Prints v. Union of India [1989] 179 ITR 317 (SC), the ld. DR has argued that it being a referential legislation only machinery provision of section 143 will be applicable and nothing more. This argument of the ld. D.R. is misplaced. By reading the whole judgment, it will be clear that the said judgment does not advance the case in their favour. Before adverting to the same, it is relevant to understand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the terms of an earlier statute which are to be made applicable. In this case, any modification, repeal or re-enactment of the earlier statute will also be carried into the later, for here, the idea is that certain provisions of an earlier statute which become applicable in certain circumstances are to be made use of for the purpose of the later Act also. Examples of this type of legislation are to be seen in Collector of Customs v. Nathella Sampathu Chetty [1962] 3 SCR 786, New Central Jute Mills Co. Ltd v. Assistant Collector [1971] 2 SCR 92 and Special Land Acquisition Officer, City Improvement Trust Board v. P. Govindan [1977] 1 SCR 549. Whether a particular statute falls into the first or second category is always a question of construction. In the present case, in my view, the legislation falls into the second category. Section 3(3) of the 1957 Act does not incorporate into the 1957 Act any specific provisions of the 1944 Act. It only declares generally that the provisions of the 1944 Act shall apply "so far as may be", that is, to the extent necessary and practical, for the purposes of the 1957 Act as well." Later on at page 362, the Court held as under:- "There is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arma v. ITO [2002] 254 ITR 772:- "A fiscal statute more particularly a provision such as the present one regulating period of limitation must receive strict construction. The Law of limitation is intended to give certainty and finality to legal proceedings and to avoid exposure to risk of litigation to litigants for an indefinite period on future unforeseen events." If limitations are not followed strictly chaotic situation would follow. 40. In the light of the analysis of the relevant provisions of law and judicial precedents, we are of the considered view that the return filed pursuant to notice under section 148 of the Act must be assumed and treated to be a return filed under section 139 of the Act and the assessment must thereafter be made under section 143 or 144 of the Act after complying with all the mandatory provisions. Accordingly, it is incumbent upon the assessing authority to issue notice under section 143(2) of the Act within the period as stipulated in the proviso thereunder. In this view of the matter, the first question before the Special Bench is answered in affirmative. 41. So far as the issue on question No. 2 is concerned, we hold that no assessment ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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