TMI Blog2005 (7) TMI 537X X X X Extracts X X X X X X X X Extracts X X X X ..... onsent of both the parties, we have heard the appeal on this limited issue and we deem it fit and proper to decide this issue first. As we do so, we must also mention that learned CIT(DR) strongly opposed the admission of this additional ground. Reliance was placed on the judgment of Hon ble Supreme Court in the case of Jute Corpn. of India Ltd. v. CIT [1991] 187 ITR 688 1 , in support of the proposition that the assessee has to establish his bona fides and the reasons for not taking up this grievance earlier. Learned counsel for the assessee, on the other hand, relied upon the judgment of Hon ble Supreme Court in National Thermal Power Corpn. Ltd. v. CIT [1998] 229 ITR 383 in support of the proposition that a legal ground can be taken up at any point of time and on Hon ble Bombay High Court in the case of Inventors Industrial Corpn. Ltd. v. CIT [1992] 194 ITR 548 in support of the proposition that the stage at which the grievance is taken up is immaterial inasmuch as grievance against the reopening can be taken even in the appellate proceedings in order following the remand. Rival contentions are duly considered. There is nothing before us to suggest any mala fides ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded that in case the return filed under section 139 is treated as a return filed in response to notice under section 148 at the end of the notice period for filing of the said return, the assessment is time barred in view of Special Bench decision in the case of Raj Kumar Chawla ( supra ). It is also contended that in case it is only on receipt of letter dated 12th November, 1998 from assessee s tax consultant that the notice is deemed to be complied with, the assessment is vitiated in law in view of the fact that no notice under section 143(2) is issued by the Assessing Officer thereafter, and, therefore, following the Tribunal s decision in the case of Jyoti Pat Ram v. ITO [2005] 92 ITD 423 the assessment is vitiated in law. It is also contended that in case the return is not deemed to have been filed at all, again the assessment is vitiated in law because the Assessing Officer could not have completed the assessment under section 147 itself and, for that purpose, he had to take recourse to section 142, 143 or section 144. The issue for consideration thus is that for the above reasons, whether the impugned assessment can be said to be vitiated in law and liable to be cance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rendered illegal. It is contended that after the notice under section 147 was served upon the assessee, the assessee was required to file a return in response to the notice within the prescribed period and unless that return is filed the Assessing Officer cannot assume jurisdiction to proceed with the assessment under section 143(2). It is pointed out that the powers to issue notice under section 143(2) come into play only when a return has been filed under section 139, or in response to notice under sub-section (1) to section 142'. It is thus contended that the filing of return is a condition precedent for issuance of notice under section 143(2) and that a notice under section 143(2), without existence of a return under section 139 or 142(1), is bad in law. It is pointed out that as at the time of issuance of notice under section 143(2), the only return in existence was the return filed under section 139 on 31st December, 1999. There is nothing on the record to establish, or even suggest, that this return was required to be treated as a return in response to the notice under section 143(2). It is contended that the return already filed must have been treated as a return in respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer can also requisition production of such accounts and documents as he may require, and he can also seek, in writing and duly verified, information in such form and on such points as he may require. The Assessing Officer can also, after giving an opportunity to show cause as to why should he not complete the best judgment assessment under section 144, complete the assessment on the basis of material on record. None of these options have, however, been exercised. The Assessing Officer has simply framed an assessment under section 143(3) read with section 147 but without complying with the requirements which are sine qua non for framing this assessment. Learned counsel for the assessee also addressed us on the merits of the reopening but for the present purposes, it is not necessary to go into that aspect of the matter. 6. Shri V.S. Singh, learned CIT(DR) has strongly opposed the submissions of the assessee mainly on legal grounds. On the question as to whether notice under section 143(2) has to be issued within one year of issue of notice under section 147, revenue s contentions are like this. As per the provisions of section 148, according to the learned CIT(DR), the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice under section 143(2) of the Act within 12 months of the date on which return of income had been filed in response to notice under section 148, the Hon ble Tribunal observed that "The proviso is applicable to a valid return and not to an invalid return". It is pointed out that since there was no valid return in existence, the question of compliance with section 143(2) does not arise. Further, the Tribunal has observed that it is a settled principle that a legal fiction has to be taken to its logical conclusion and "therefore, what is valid for a return under section 139 will be valid with equal force to a return filed under section 148". According to the revenue, the issue that need to be considered in the facts of the case is whether a letter of November 12, 1998 signed as "Malpani and Associates" (not by the Managing Director or any other Director) that the original return be taken as the return in response to notice under section 148 can be treated as a valid return under section 148. As per section 140A of the Act, a return under section 139 is to be signed and verified, in the case of a company by the Managing Director or by any Director thereof. Therefore, the issue is wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e under section 143(2). It is argued that this scheme of the Act is also evident from the fact that some sections, e.g. 234A(3), 215(6), 246(1)( b ) and 246A(1)( b ), refer to assessment under section 147 of the Act. Section 147 is claimed to be a complete code by itself, and in support of this proposition, reliance is placed on the judgments in CIT v. Simson Mc Conechy Ltd. [1989] 177 ITR 526 1 ; CIT v. Usha Aggarwal [1989] 178 ITR 406 2 (Punj. Har.) and D. Swarup, ITO v. Gammon India Ltd. [1983] 141 ITR 841 3 . Without prejudice to this line of argument, it is submitted that even if the letter of 12th November, 1998 is treated as a valid return, it is noted that the assessee regularly attended the assessment proceedings in response to notice under section 144 issued earlier. Therefore, assessee acquiesced to the proceedings by participating in the subsequent to the filing of its letter. The theory of acquiescence is that a conduct, which is evidence of an intention of a party to abandon an equitable right from which the another party will be justified in inferring such an intention, will deprive a person from raising a ground at a subsequent stage that he has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee was required to file return in response to notice in a period of thirty days from the date of service of notice. Learned counsel contends that in case there was no valid income-tax return in existence, there could not have any basis for the issuance of notice under section 143(2) at all. It is contended that a plain reading of the assessment order would indicate that the assessment was based on the income-tax return. It is also submitted that an assessment under section 143(3) can only be on the basis of an income-tax return. Learned counsel submitted that the interpretation canvassed by the CIT(DR) would require violence to the language of section 143(2) which is not permissible in law. It was also contended that the connotation of so far as may be in section 148 in fact requires that the time limit under section 139(1) is required to be read as time limit under section 148(1). It was also contended that there was no need for any specific authority for tax consultant s submission that the return already filed may be treated as return in response to notice. It was also submitted that in case authority is required for each submission from the authorized tax consultant, alm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to, section 139 will apply in toto". That means as a result of successful reopening of an assessment, the Assessing Officer only gets back to the point of time when the time for starting the normal assessment proceedings was available to him. To that extent, the clock is set back for him. However, if even after this advantage, he does not complete the assessment in accordance with the law and within the time limits available to him under these procedures, he misses the bus again. The main effect of the reopening of an assessment, in our humble understanding, is that despite the fact that the Assessing Officer does not have the jurisdiction to take up the assessment proceedings because of the fact that the time frame allowed to the assessee to initiate and complete the assessment by scrutinizing the return has expired, the Assessing Officer by the virtue of a legally valid reopening of assessment, can still initiate and frame the assessment. The procedure under section 142, 143 or 144, as the case may be, is, however, to be followed. It is also not necessary that in each of the case of successful reopening of assessment, the assessment of the return filed in response to notice is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of thirty days time limit allowed to file the income-tax return. So far as filing of an income-tax return is concerned, nothing is to be inferred; nothing is to be implied. Either there has to be a return filed by the assessee or there has to be a request from the assessee to treat the original return as one filed in response to notice. When there is no valid return in existence, there cannot be any valid issuance of notice under section 143(2) either. The issuance of notice under section 143(2) presupposes existence of a valid income-tax return. When there is no return in existence, no notice under section 143(2) can be validly issued. Section 143(3) unambiguously refers to the "notice specified under sub-section (2) [of section 143]" and, therefore, it is a sine qua non for assessment under section 143(3) that there has to be a notice under section 143(2). When there is no valid notice under section 143(2) in existence, there cannot be any valid assessment under section 143(3). Since there was no valid return in existence at the time of issuance of notice, the notice has to be held as non est. The impugned assessment has to be cancelled for this reason itself and without go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e see no reasons to take any other view of the matter than the view so taken by the Co-ordinate Bench. Therefore, even if one is to proceed on the basis that by the virtue of assessee s tax consultant s letter dated 12th November, 1998, the original return could be treated as return in response to notice, the assessment will still have to be treated as a legally invalid assessment because, as is the well settled law, there cannot be a legally valid assessment under section 143(3) without a legally valid notice under section 143(2). The notice issued prior to 12th November, 1998, on the facts of this case, has to be treated as non est . For this reason also, the impugned assessment order is liable to be cancelled. As regards learned CIT(DR) s arguments on the lines that the additions made in the course of these reassessment proceedings were fully justified on merits, that the assessee is taking cover of technicalities and that once the assessee participates in the assessment proceedings, he is to be treated as acquiesced the jurisdiction, we may only add that, as is well settled in law, there cannot be acquiescence to jurisdiction and since we have decided the appeal on the questio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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