TMI Blog2006 (9) TMI 228X X X X Extracts X X X X X X X X Extracts X X X X ..... ued under certificate of posting and, therefore, the Hon'ble High Court held that there was nothing on record to indicate the proper and valid service of the notice. However, their Lordships observed about applicability of s. 27 of the General Clauses Act and held that the service of the notice shall be deemed to be effected properly if a correctly addressed and stamped letter containing the document is despatched by the registered post. Thus, the Revenue has to prove that (i) the envelope was correctly addressed; (ii) it was stamped; and (iii) it was despatched by registered post. In the case before me, the Revenue has not brought any evidence with regard to above ingredients which would amount to deemed service of notice u/s 27 of the General Clauses Act. Only evidence furnished before me is the copy of the notice issued u/s 148. I also found that the learned AM also at his order has recorded that Even the proof of sending the notice through registered post AD was not filed before the Tribunal so as to prove that the notice was sent through registered post at the address of the assessee company. Thus, there was difference amongst the learned Members even with regard to the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s case, I find that there was no failure on the part of the assessee to disclose any material facts which were necessary for the purpose of its assessment. Accordingly, with regard to question No. 2, I agree with the finding of the learned AM that there was no failure on the part of the assessee to disclose fully and truly all material facts and, therefore, reopening of assessment after 4 years from the end of relevant assessment year was not valid. Therefore, in accordance with the majority view, the issues stand decided in favour of the assessee. Accordingly, the appeal filed by the Revenue stands dismissed and the cross-objection filed by the assessee is rejected being infructuous. - HON'BLE G. D. AGARWAL. VICE PRESIDENT, P. K. BANSAL., A.M., U. B. S. BEDI., A.M. AND DINESH K. AGARWAL , J.MS For the Appellant : S. K. Gupta For the Respondent : A. P. Srivastava ORDER U.B.S. BEDI, J.M. 1. This appeal of the Revenue and cross-objection of the assessee arise out of the order passed by learned CIT(A), Jabalpur dt. 20th Sept., 2002 relevant to asst. yr. 1993-94. 2. In the appeal of the Revenue, the following effective grounds have been raised: On the facts and in the circumstanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company Ltd. relied on by the appellant is not applicable to the present case as no loss is carried forward from asst. yr. 1992-93. 8. The decision of CIT vs. Canara Workshops (P) Ltd. relied on by the appellant does not help the assessee (sic) as deduction under s. 80-I has been computed from income of Unit II only. 4. Ground Nos. 1 and 2 of the Revenue's appeal relate to challenge about learned CIT(A)'s order in holding that there was no proper service of notice under s. 148. Brief facts are that the assessee filed return of income for asst. yr. 1993-94 on 31st Dec., 1993 accompanied with audited copy of accounts and audit report with various prescribed particulars. The assessment was completed on 23rd Nov., 1994 under s. 143(3). Having aggrieved with this order, the assessee company filed appeal before learned CIT(A), Jabalpur which was disposed of by him on 7th Feb., 1995. Subsequently order under s. 263 of the IT Act was passed on 25th March, 1998 by the CIT, Jabalpur. Against this order, the Tribunal accepted the appeal and quashed the order of CIT against which appeal was preferred by the Department before the High Court of Madhya Pradesh which is registered as IT Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re within the knowledge of the Department and after appreciating the same only the assessment was completed on 23rd Nov., 1994 and as there was no failure on the part of the assessee to disclose fully and truly all the material facts necessary for the purpose of assessment, the reopening of assessment beyond the period of 4 years was contrary to the provision of s. 147. This exercise undertaken by the AO was in the nature of re-examination of same set of facts, which had already been examined by his predecessor and even by the CIT in his order under s. 263 of the IT Act. It was also contended that the assessment was reopened at the instance of the audit party which was against the judicial pronouncement by the Hon'ble Supreme Court in the case of CIT vs. Lucas T.V.S. Ltd. (2001) 168 CTR (SC) 311 : (2001) 249 ITR 306 (SC). 7. So far as the service of the notice under s. 148 upon the assessee is concerned, the learned CIT(A) observed that as per assessment order it was sent to the assessee by registered post on 23rd Oct., 2000. By this it was concluded by the AO that the notice was served upon the assessee. It was argued by the AO in his assessment order as under: It is, therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice to be not proper is not legally correct and his order in this regard deserves to be vacated. It was urged for vacation of the order of learned CIT(A) in this regard. 10. Learned counsel for the assessee while relying upon the basis and reasoning as given by learned CIT(A) has pleaded for confirmation of the impugned order. It was further contended that since acknowledgement is not placed on record so learned CIT(A) has rightly observed the service of notice was not proper because it is not known to whom this notice was served or who was the person who received this notice on behalf of the assessee company. It was thus urged for confirmation of the impugned order on this point. 11. After hearing both the sides and considering the material on record as well as precedent relied upon, we find that service of notice generally as per s. 282(1) provides that a notice or requisition under the IT Act may be served on the person therein named either by post or as if it were a summons issued by a Court under the CPC, 1908 (5 of 1908) and in this case notice under s. 148 has been sent by registered post and s. 27 of the General Clauses Act gives meaning of service by post as under: Where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmation on certain points in connection with the returns. Thereupon the appellant filed writ petitions challenging the notices. The High Court dismissed the writ petitions holding that the petitions were premature and the appellant could raise its objections to the notices by filing reply to the notices before the AO [GKN Driveshafts (India) Ltd. vs. ITO (2003) 179 CTR (Del) 13 : (2002) 257 ITR 702 (Del)]. The appellant preferred appeals and the Supreme Court dismissed the appeals, observing that since the reasons for reopening of assessments under s. 148 had been disclosed in respect of five assessment years, the AO had to dispose of the objections, if filed, by passing a speaking order before proceeding with the assessments for those years. 14. Therefore, taking into consideration the entirety of facts and circumstances and the authoritative pronouncement of Hon'ble Supreme Court as reproduced above, we are of the view that the AO was duty bound to consider and dispose of objection filed against notice under s. 148 before proceeding further in the matter for reassessment. Since said procedure has not been adopted by the AO, so his order cannot be held to be valid and proper o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the Hon'ble High Court of Madhya Pradesh at Jabalpur. It is registered as IT Appeal No. 112 of 1999 and is pending before Hon'ble High Court. 21. Subsequently, the Asstt. CIT (Circle), Satna has issued notice under s. 148 dt. 28th Oct., 2000 to the assessee by recording the following reasons: 1. Original assessment was completed under s. 143(3) on 23rd Nov., 1994 at an income of Rs. 8,24,56,810/- and deduction under s. 80-I was allowed after reducing the amount of deduction under s. 80HH of the IT Act. The assessee preferred an appeal before the CIT(A), Jabalpur. The CIT(A) directed to allow deduction under s. 80-I on gross income vide order dt. 7th Feb., 1995. 2. On perusal of record shows that the AO has debited in P L a/c at Rs. 12.17 lakhs on account of expenditure of issue of right shares. This expenditure is not allowable being of capital nature. Further it has not been noticed that the positive income of Rs. 8,85,59,094/- was offered from Unit II on which deduction under s. 80HH at Rs. 1,77,11,819/- and s. 80-I at Rs. 2,21,39,774/- totalling Rs. 3,98,51,597/- was allowed without reducing earlier years' losses amounting to Rs. 3,89,87,498/-. This resulted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s predecessor and even by the CIT in his order under s. 263 of the IT Act. The CIT(A) held the assessment passed to be bad in law and invalid. In respect of the service of notice the CIT(A) observed as under: Now so far as the service of the notice under s. 148 upon the assessee is concerned, the assessment order says that it was sent to the assessee by registered post on 23rd Oct., 2000. By this, it was concluded by the AO that the notice was served upon the assessee. It was argued by the AO in his assessment order as under: 'It is, therefore, the matter of maintenance of the record of the assessee company and it should have traced out the notice from its own record. Since the notice was issued to the assessee, it must have been received by it which should have been traced out by it and compliance to it should have been made. It is, therefore, clear that it was not the mistake of the Department but of the assessee who failed to trace out the notice under s. 148 from its record.' From the above, it appears that the AO did not try to bring out on record as to on whom and when the notice was effectively served. It was only the presumption of the AO that since the notice was i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this section would not be valid. Similar view has been taken by the Hon'ble Madhya Pradesh Court in the case of H.H. Maharaja Martand Singh Ju Deo vs. WTO Anr. (1997) 141 CTR (MP) 228 : (2000) 242 ITR 229 (MP) further confirmed the same view and has held that since there was no failure on the part of the assessee, it did not give jurisdiction to the AO to reopen the assessment under s. 147 read with its proviso. Thus ignoring the proviso to s. 147, reopening of the assessment was not in accordance with the law and hence it was not valid. Further the matter is still sub judice before the Hon'ble Madhya Pradesh High Court. Even if the order of the Hon'ble Tribunal, Jabalpur Bench, Jabalpur is reverted and it is held by the Hon'ble High Court that the order under s. 263 was not barred by limitation, both these issues, because of which the assessment was reopened, would be examined by the Hon'ble Tribunal, Jabalpur Bench, Jabalpur on merits and decision would finally be given. Under the circumstances, invoking the provisions of s. 147 was not proper. Even reopening of assessment at the instance of audit party is not permissible under the law and is against the judi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the order of the CIT(A) be confirmed on this issue. 27. I have carefully considered the rival submissions and have also gone through the order of the CIT(A). Sec. 148 which requires service of notice before making reassessment under s. 147 lays down as under: 148(1) Before making the assessment, reassessment or recomputation under s. 147, the AO shall serve on the assessee a notice requiring him to furnish within such period, 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 s. 139. 28. In view of the aforesaid provisions to s. 148, I am of the view that the service of the notice under s. 148 is mandatory for upholding the proceedings initiated under s. 148. Mere issuance of notice will not suffice. The legislature does not want that the AO should issue noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on the assessee as was necessary for the validity of the proceedings under s. 148. The service of the notice is simply been presumed by the AO. Sec. 282 which prescribes the mode of service, although mentions that the notice may be served on the person therein named either by the post or as if it were a summon issued by the Court under CPC, 1908 but it further states under sub-s. (2) that in the case of the company, it must be addressed to the principal officer thereto. 29. I have also gone through the case law of the Hon'ble Delhi High Court in the case of R.L. Narang vs. CIT as relied by learned Departmental Representative. The Hon'ble Delhi High Court in this case has held as under: The IT Act is a Central Act and s. 282 provides for service by post. As such the provisions of s. 27 of the General Clauses Act, 1897, are applicable. A perusal of s. 27 of the General Clauses Act shows that in order to presume service having been effected, the document or letter should be sent by registered post. A notice sent under certificate of posting and not by registered post would not amount to proper service. Where a notice is served through a process server and there is neither a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en asked for thereafter at the stage of the Tribunal, we think that the lack of an affidavit is not material. 31. In the case before us the CIT(A) accepted the contention of the assessee that the notice was not served without the affidavit. The Bench has not given an opportunity to the assessee to file affidavit. Therefore, I am of the view that the Revenue has not discharged its onus to prove that the notice was served on the assessee in the absence of proving that the notice was properly addressed. I, therefore, confirm the order of the CIT(A) on this issue that under these facts and circumstances of this case it cannot be said that there was any effective service of notice under s. 148 and accordingly, in the absence of effective service of notice, the entire assessment is held to be bad in law and the grounds relating to this issue stand dismissed. 32. Now coming to the other issue in this appeal which also relates to the legality of the proceeding, the learned Departmental Representative contended that the reopening of the assessment was valid. The assessment was not time barred as the reopening was done within the time as laid under s. 147 of the IT Act. The AO noticed that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r s. 263 on the same issues could not be upheld by the Tribunal, the AO invoked the provision of s. 147. Thus the proceedings were initiated on the basis of belief formed by the CIT and not on the basis of independent belief of the AO. The Revenue has gone against the order of the Tribunal before the Hon'ble Madhya Pradesh High Court and the matter relating to s. 263 is sub judice before the Hon'ble Madhya Pradesh High Court and in case the Hon'ble High Court set aside the order of the Tribunal, the order passed under s. 263 will get survived and there will be two parallel proceedings on the same issues which is not permitted in law. Even if it is considered that there was omission on the part of the AO in considering the claim of the assessee for the right issue expenses as well as the deduction under s. 80-I. the power for reopening cannot be exercised on the basis of the error of judgment. The belief entertained by the AO must be based on the reasonable ground. It must be bona fide belief. It should not be the product of imagination and speculation. The assessee is responsible to disclose only primary fact and if the AO draws wrong conclusion on such primary facts, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the same issue will not serve any purpose as the AO has already taken his decision which he cannot review. 34. I have considered the rival submissions and the facts and entire materials relating to the issue involved in the ground relating to the validity of the reopening of the assessment. I consider it appropriate to formulate following issues on the basis of the submissions made before us in respect of validity of the reopening of the assessment: (i) Whether the assessment should be set aside and restored to the file of the AO with the direction that the AO should first dispose of the objection of the assessee by passing speaking order? (ii) Whether there was failure on the part of the assessee to disclose the material fact truly and fully, etc. in view of the provisions contained under s. 147 of the IT Act? (iii) Whether the notice issued under s. 148 was time barred in view of the provision contained in proviso to s. 147? (iv) Whether the order of reassessment can be treated as illegal and invalid? Issue No. (i) 35. I find from the assessment order that the assessee has objected before the AO about the legality of the proceedings initiated under s. 147. It was contended that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osed of the objections raised by the assessee in the assessment order itself and held the initiation of the proceedings under s. 147 to be valid one. If the plea of the learned Departmental Representative in this case is accepted and the matter is set aside and restored to the file of the AO with the direction that the AO should pass a speaking order on the objection raised by the assessee, I am of the view that no fruitful purpose will be served with such direction because the AO has already discussed all the objections raised by the assessee in the assessment order itself. It is not a case where this Tribunal is hearing the appeal of the assessee in which the objections for the validity of the initiation of the reassessment proceedings had been raised before the appellate authority for the first time. The judgment of Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. vs. ITO Ors. in our opinion will not assist the Revenue for obtaining the direction for the restoration of the order to the file of the AO. From the judgment of the Hon'ble Supreme Court, I noticed that the assessee has challenged the validity of the issue of notice under s. 148 by way of writ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be merged in the order passed under s. 143(3) for filing the appeal. The order passed under s. 143(3) is already in appeal before us. This will only delay the justice. This is the cardinal principle of natural justice that the justice delayed is justice denied. Thus this plea of the learned Departmental Representative stands dismissed. Issue No. (ii) 38. Now for examining the contention of the learned Authorised Representative that the notice for the reassessment was not issued on the failure on the part of the assessee to disclose the material fact truly and fully, I have gone through the reasons recorded by the AO reproduced hereinabove. In the reasons, nowhere it has been mentioned that there is a failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. The para 2 of the reason rather clearly states that perusal of the record shows that the assessee company has debited in P L a/c. This means that the assessee has disclosed the fact about the claim made by the assessee in respect of expenditure incurred on right issue as well as the claim made for deduction under s. 80-I. I have also gone through the computation statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder: From the documents on record, it was clear that the petitioner had submitted complete returns and the statement of foreign shares and stocks. If the officer had accepted those details and made the assessment order, then any other officer could not ordinarily unsettle the assessment orders unless the three requisite conditions of s. 17 of the Act were satisfied. In the instant case, there was no material to show that the exercise of the powers under s. 17 was in accordance with the provisions of law. The notices of reassessment were liable to be quashed. 42. In view of these facts I hold that there was no failure on the part of the assessee to disclose the material facts fully and truly and the notice was not issued by the AO on that basis under s. 147 of the IT Act. Thus this issue is decided accordingly that there was no failure on the part of the assessee to disclose the material facts truly and fully. Issue No. (iii) 43. For deciding this issue which relates to the time barring of the proceedings, we find that the proviso to s. 147 lays down as under: Provided that where an assessment under sub-s. (3) of s. 143 or this section has been made for the relevant assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I am of the firm view that the proceedings initiated by the AO under s. 147 were barred by limitation and accordingly I hold that the proceedings initiated under s. 147 in this case are time barred. Issue No. (iv) 45. So far as the issue No. 4 is concerned the submission of the learned Authorised Representative was that the notice was issued by the AO merely on the basis of surmises and conjectures and not on the basis of any specific information came to his notice. On the facts it was submitted by the learned Authorised Representative that all the facts relating to the claim of the deduction in respect of right issue shares expenses as well as deduction available under s. 80-I were already submitted by the assessee and were available to the AO at the time of original assessment and when the proceedings were initiated under s. 263. Even the proceedings initiated under s. 154 on these very issues were also dropped. No further material or change in law was brought to his notice or came to his notice for initiating the assessment proceedings. Even the reasons also do not speak of the same. Thus the notice issued under s. 148 cannot be considered to be a valid notice. The assessment fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question Nos. 2 and 3 were not correctly drafted, because the said questions presuppose that the AO has not disposed of the objection of the assessee filed against the issuance of notice under s. 148 of the IT Act, 1961 (hereinafter will be referred as the Act) while, in fact, the AO has disposed of the objection of the assessee. The learned AM has recorded the finding that the AO has considered and rejected the assessee's objection raised against the issuance of notice under s. 148 of the Act. Therefore, he suggested that the question Nos. 2 and 3 should be modified and replaced by one question reading as under: Whether on the facts and in the circumstances of the case, the Hon'ble JM was justified in setting aside the matter back to the file of the AO for readjudication as per the decision of the Supreme Court in GKN Driveshafts (India) Ltd. vs. ITO Ors. (2003) 179 CTR (SC) 11 : (2003) 259 ITR 19 (SC) or the Hon'ble AM was justified in holding that as there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for the purpose of assessment, the reopening of assessment beyond the period of four years was contrary to the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not properly served upon the assessee and, therefore, reopening of assessment is bad in law. 54. The learned counsel for the assessee, on the other hand, relied upon the order of the learned AM. He stated that during the course of assessment proceeding itself, the assessee has claimed that notice under s. 148 was not served. The Revenue has not brought on record any proof of the service of the notice or even of the posting of the notice by registered post. That during the course of first appellate proceeding, the CIT(A) called for the remand report in which also the AO has not given any evidence of either the service of the notice or of the posting of the notice by registered post. He further contended that as per s. 148 it is not only the issuance of notice but the service of the notice upon the assessee is essential. The onus is upon the Revenue to prove that the notice was served on the assessee. He further stated that the decision of Hon'ble Delhi High Court relied upon by the learned Departmental Representative is, in fact, in favour of the assessee. He, therefore, submitted that the order of the learned AM should be upheld. 55. During the rejoinder, the learned Departme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessarily amount to disclosure within the meaning of the foregoing proviso. Explanation 2.-For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely: (a) where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax; (b) where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the AO that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return; (c) where an assessment has been made, but- (i) income chargeable to tax has been underassessed; or (ii) such income has been assessed at too low a rate; or (iii) such income has been made the subject of excessive relief under this Act; or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed 148. (1) Before making the assessment, reassessment or recomputation under s. 147, the AO shall ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under s. 147 of the Act. The burden is upon the AO to prove that the notice was duly served upon the assessee after issuing the same within the prescribed period under s. 149. In the case under consideration before me, the notice under s. 148 was issued on 23rd Oct., 2000. However, except mentioning RPAD at the top of the notice, no other evidence is brought on record by the Revenue about the service of the notice upon the assessee. When the notice is issued by RPAD, the postal authorities would return the acknowledgement of serving the notice upon the assessee to the sender of the notice, i.e. AO. Apart from this, whenever any Dak is sent by RPAD, the postal authorities give the receipt for receiving such Dak. The Revenue is unable to produce either the acknowledgement of the service of the notice upon the assessee or even the receipt issued by the postal authorities proving the sending of the notice by RPAD. The learned Departmental Representative was also asked to produce the despatch register wherein the sending of the notice to the assessee is recorded. However, he expressed his inability to do so on the ground that the notice was issued by Jt CIT (Asstt.), Spl. Range, Jabalpu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , but was issued under certificate of posting and, therefore, the Hon'ble High Court held that there was nothing on record to indicate the proper and valid service of the notice. However, their Lordships observed about applicability of s. 27 of the General Clauses Act and held that the service of the notice shall be deemed to be effected properly if a correctly addressed and stamped letter containing the document is despatched by the registered post. Thus, the Revenue has to prove that (i) the envelope was correctly addressed; (ii) it was stamped; and (iii) it was despatched by registered post. In the case before me, the Revenue has not brought any evidence with regard to above ingredients which would amount to deemed service of notice under s. 27 of the General Clauses Act. Only evidence furnished before me is the copy of the notice issued under s. 148, the address thereupon reads as under: M/s Vindhya Tele Links (P) Ltd., Rewa. Whether this address is full and correct address is doubtful because Rewa is a District place and no address of the office of the company is mentioned in this notice. In the memo of appeal filed by the Revenue, at col. No. 11 which provides the address ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce during reassessment proceeding cannot be said to be valid service of the notice, because it should be served before initiation of such reassessment proceeding. In view of the above, I hold that the notice under s. 148 was not properly served upon the assessee. 61. Before answering the question No. 1, in my opinion, question No. 1 also needs modification because the question presupposes that the notice was sent by registered post which is factually not correct. I also found that the learned AM also at p. 9 of his order has recorded that Even the proof of sending the notice through registered post AD was not filed before the Tribunal so as to prove that the notice was sent through registered post at the address of the assessee company. Thus, there was difference amongst the learned Members even with regard to the factual finding of the sending of the notice by registered post. Therefore, the question with the presumption that the notice was sent by RPAD does not bring out the correct factual finding reached by both the learned Members. Accordingly, I modify question No. 1 as under: Whether, on the facts and in the circumstances of the case, notice under s. 148 was properly served ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. ITO (1961) 41 ITR 191 (SC); (iii) Indian Oil Corporation vs. ITO (1986) 58 CTR (SC) 83 : (1986) 159 ITR 956 (SC); (iv) Parashuram Pottery Works Co. Ltd vs. ITO 1977 CTR (SC) 32 : (1977) 106 ITR 1 (SC); (v) ITO vs. Lakhmani Mewaldas 1976 CTR (SC) 220 : (1976) 103 ITR 437 (SC); (vi) Indo-Aden Salt Mfg. Trading Co. (P) Ltd. vs. CIT (1986) 58 CTR (SC) 9 : (1986) 159 ITR 624 (SC); (vii) CIT vs. Major Tikka Khushwant Singh (1995) 126 CTR (SC) 160 : (1995) 212 ITR 650 (SC); (viii) R.K. Upadhyaya vs. Shanabhai P. Patel (1987) 62 CTR (SC) 17 : (1987) 166 ITR 163 (SC); (ix) CIT vs. Miss Eather P. Carvalho (1999) 153 CTR (Bom) 272 : (1999) 237 ITR 549 (Bom); (x) Phool Chand Bajrang Lal vs. ITO (1993) 113 CTR (SC) 436 : (1993) 203 ITR 456 (SC); (xi) Zohar Siraj Lokhandwala vs. M.C. Kamat, Asstt. CIT (1994) 121 CTR (Bom) 283 : (1994) 210 ITR 956 (Bom). In view of the above, it is submitted by the learned Departmental Representative that the reopening of assessment was valid and the same should be upheld. 64. The learned counsel for the assessee, on the other hand, stated that the assessee is manufacturing insulated cable. In the original assessment the AO has considered the issue of comput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less there is failure on the part of the assessee to disclose fully and truly all material facts, the assessment cannot be reopened. Since there is no failure on the part of the assessee to disclose fully and truly all material facts, the learned AM was fully justified in holding that the reopening of assessment was not valid. His order should be upheld. 65. I have carefully considered the arguments of both the sides and perused the material placed before me. The first issue to be decided is whether the AO has considered and decided the assessee's objection against the validity of the reopening of assessment. I find that at p. 5 of the assessment order the AO has recorded the following finding: As regards legality of initiation of proceedings is concerned the action under s. 147 can be initiated even after expiry of four years subject to the conditions laid down in ss. 149 and 151 of the IT Act. Since the conditions laid down in these sections were satisfied the initiation of proceedings under s. 147 was correct. At p. 7 of the assessment order, again he reiterated that the assessee's contention against the initiation of the proceedings under s. 147 is not accepted. Thus, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffect that the party is totally debarred from approaching this Court under Art. 226 of the Constitution of India when an exercise of powers by the authority under s. 148 ex facie appears to be without jurisdiction. Undoubtedly, whether such an exercise is with or without jurisdiction will have to be revealed from the notice and reasons on the face thereof. At the same time, it is also well-settled that mere availability of an alternative relief can be no bar for exercise of a writ jurisdiction when the authorities seek to assume jurisdiction which they do not possess or act in totally arbitrary manner. The decision in GKN's case certainly reminds the assessee that when a notice under s. 148 is issued, the proper course of action is to file a reply with his objections including those in relation to the absence of jurisdiction. However, it does not lay down the law to the effect that when such an objection is in relation to absence of jurisdiction and the same is revealed ex facie or apparent on the face of a notice or reasons in support thereof, the assessee has compulsorily to invite an order from the AO in relation to the absence of jurisdiction. 67. Let us examine the facts o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the validity of the reopening of assessment, I find that as per proviso to s. 147, where original assessment was completed under s. 143(3), no action for the reopening of assessment can be taken after the expiry of 4 years from the end of relevant assessment year unless any income chargeable to tax has escaped assessment by the reason of failure on the part of the assessee to make a return of income or to disclose fully and truly all material facts necessary for his assessment. Admittedly, in this case, the original assessment was completed under s. 143(3) and 4 years have expired from the end of relevant assessment year. It is also admitted position that there was no failure on the part of the assessee to furnish the return of income under s. 139. Therefore, the assessment can be reopened only if there was failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. The AO has recorded the reasons for reopening of assessment, which are given at p. 3 of his order and it is reproduced below for ready reference: The reasons recorded under s. 148(2) were as under: 1. Original assessment was completed under s. 143(3) on 23rd Nov., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, when the loss is determined by the AO, the question of disclosing the same by the assessee in its return of income does not arise. The learned Departmental Representative has relied upon several decisions to support his contention that there was failure on the part of the assessee to disclose fully and truly all material facts. I have gone through those decisions and found that facts in all those cases were quite distinguishable than the facts in the assessee's case and, therefore, they are not applicable to the case under consideration before me. Moreover, whether the assessee has failed to disclose all material facts or not would depend on the facts of each case. After considering the facts in the assessee's case, I find that there was no failure on the part of the assessee to disclose any material facts which were necessary for the purpose of its assessment. Accordingly, with regard to question No. 2, I agree with the finding of the learned AM that there was no failure on the part of the assessee to disclose fully and truly all material facts and, therefore, reopening of assessment after 4 years from the end of relevant assessment year was not valid. 70. The matt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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