TMI Blog2007 (10) TMI 344X X X X Extracts X X X X X X X X Extracts X X X X ..... at the assessee company filed its return of income on 28th Nov., 1997 declaring a loss of Rs. 30,000. The assessee has also filed Form No. 30 along with the return of income whereby request for refund of Rs. 1,72,000 was made. The AD has processed the return dt. 28th Nov., 1997 under s. 143(1) of the IT Act, 1961 on 15th Nov., 1999 at returned loss of Rs. 30,000. However, the AD issued notice under s. 148 of the Act dt. 27th May, 1999 after recording following reasons on same day: "27th May, 1999-From the perusal of assessment record for the asst. yr. 1986-87, it is found that as per ITNS-150 dt. 10th March, 1997, interest under s. 244 amounting to Rs. 24,60,225 was allowed to the assessee and the same was adjusted along with other refund against the demand for asst. yr. 1988-89. The intimation of interest allowed was sent to the assessee in Form No. 7 which was served on the assessee on 19th March, 1997. Accordingly, the interest amount of Rs. 24,60,225 should have been shown in the return of income for asst. yr. 1997-98, which the assessee has not shown. I have, therefore, reason to believe that by reason of omission or failure on the part of the assessee to disclose fully or t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that return has been filed on 28th Nov., 1997 and the said return has been processed only on 15th Nov., 1999. The reasons for issuing notice under s. 148 have been recorded on 27th May, 1999 and notice under s. 148 was issued on said date. Thus, notice for reassessment under s. 147 has been issued while original return and claim for refund i.e. proceedings under s. 237 of the IT Act were still pending for disposal and hence, there could be no escapement of income from the above facts on the basis of settled principles of law. Accordingly, it was submitted that notice under s. 148 proposing to reassess the income is bad in law. Reliance was placed on the decision of Hon'ble Supreme Court in the case of: (i) Trustees of H.E.H. The Nizam's Supplemental Family Trust vs. CIT (2000) 159 CTR(SC) 114 : (2000) 242 ITR 381 (SC); and (ii) CIT vs. Ved Co. (2007) 209 CTR (Del) 455 : (2007) 162 Taxman 366 (Del). In view of the above, Shri Pradeep Seth, learned counsel for the assessee submitted that assessment proceedings terminated under s. 143(1) of the Act only on 15th Nov., 1999. He further submitted that on 27th May, 1999 when the AO made up his mind to issue notice to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-92 had not been made in terms of s. 143 and only intimation had been sent to the assessee in response to the return filed by him, notice could be issued under s. 148. (iii) Punjab Tractors Ltd. vs. Jt. CIT (2002) 173 CTR (P H) 84 : (2002) 254 ITR 242 (P H) wherein it has been held that the notice under s. 147/148 issued to the petitioner was riot vitiated merely for the reason that notice under s. 143(2) had not been issued to it. (iv) Bharat V. Patel vs. Union of India (2004) 186 CTR (Guj) 639 : (2004) 268 ITR 116 (Guj). (v) Aditya Co. vs. CIT (2005) 195 CTR (P H) 258 : (2005) 279 ITR 47 (P H) wherein writ petition was dismissed stating that it is not on the basis of facts of each case that it has to be decided whether a particular income falls under the heads "Business income" or the "Income from other sources". The assessee was only sent an intimation under s. 143(1) of the Act and the question of examination of material, by the AO did not arise at that stage. Thus, there was no question of change of opinion. The notice under s. 148 was valid. (vi) Pradeep Kumar Har Saran Lal vs. AO (1997) 141 CTR (All) 37 : (1998) 229 ITR 46 (All), wherein it has been held that inti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of S.P. Kochhar vs. ITO (1983) 37 CTR (All) 49 : (1984) 145 ITR 255 (All) wherein it has been held that income cannot be said to have escaped assessment within the meaning of this section of assessment proceedings in respect of that income which are still pending and not yet have terminated in a final order. Therefore, in respect of pending assessment, initiation of reassessment proceedings under s. 147 for assessing income escaping assessment and consequent issue of notice under s. 148 are not valid. As regards the reference to Explanation under s. 2(b) to s. 147 by the learned Departmental Representative, it is stated by the learned counsel for the assessee that the proposition that no notice under s. 148 can be issued against the assessee so long as a return validly filed by him remains pending and not disposed of, is not effected by c1. (b) of Expln. 2 to the amended s. 147. Shri Pradeep Seth, learned counsel for the assessee also submitted that the above view is also supported by the Circular No. 549 dt. 31st Oct., 1989 [(1990) 82 CTR (St) 1] issued by the CBDT clarifying the amendments by the Direct Tax Laws (Amendment) Act, 1987 relating to new procedure for assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Non-resident during the previous year. Relevant to the assessment year to which this claim relates and that what is stated in the application is correct. Sd. (B.K. Gupta) Director dt. 28th Nov., 1997 (Signature)" Thus, it is clear that when the original return was filed by the assessee on 28th Nov., 1997 along with Form No. 30, the assessment proceedings had commenced. Therefore, no reassessment proceedings could be taken until the said proceedings terminated, as held by Hon'ble Supreme Court in the case of Trustees of H.E.H. The Nizam's Supplemental Family Trust. In the instant case not only assessment proceedings but proceedings under s. 237 of the Act for determination of the claim for refund made vide application in Form No. 30 were pending. It is apparent from the record that order under s. 237 was passed by the AD on 15th Nov., 1999 when an intimation of refund was issued. In the case of Trustees of H.E.H. The Nizam's Supplemental Family Trust, it has been held as under: "It is settled law that unless the return of income already fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could not have done directly." 15. In our considered view, the decisions of Hon'ble Supreme Court in the case of H.E.H. The Nizam's Supplemental Family Trust and the decision of Hon'ble Delhi High Court in the case of Ved Co., are directly applicable to the facts of the present case. We agree with this contention of learned counsel for the assessee that the principle laid down by the Hon'ble Supreme Court in the case of H.E.H. 'The Nizam's Supplemental Family Trust, it is to be noticed that the crucial words in s. 147, namely, "has reason to believe that income chargeable to tax has escaped assessment" were also present in the original section as enacted by IT Act, 1961 which came into force w.e.f. 1st April, 1962. Thus, the asst. yr. 1962-63 which was involved in the above case before the Hon'ble Supreme Court was the first year under the present IT Act, 1961. It is relevant to state that we have already reproduced the provisions of s. 147 (hereinabove) as it stood in above assessment year. Learned Departmental Representative referred to Expln. 2(b) to s. 147 of the Act, which says that where a return of income has been furnished by the assessee but no assessment has been made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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