TMI Blog2009 (7) TMI 1097X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Revenue. The chronological events as provided by the learned authorised representative are enumerated as follows: Sl. No. Date Events 1. 17-3-1993 Search took place at the business and residential premises of the firm and partners. 2. 25-10-1993 Return of income showing an income of Rs. 39,720 was filed under section 139(1). 3. 29-3-1996 An assessment was made determining the income of Rs.15,55,539 including the following additions. 4. 24-5-1996 An appeal was filed against the said order. Additions on tendu patta account Rs. 15,08,439. 5. 26-2-1998 The Commissioner of Income-tax (Appeals) cancelled the assessment on the ground that no notice was served on the assessee under section 143(2) before October 31, 1994. How ever, he directed the Assessing Officer to take remedial action under section 147 or any other provisions of the Act to tax the escaped income. That order was accepted by the Commissioner of Income-tax and no appeal was filed. It became final and conclusive. 6. 3-8-19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld the order of the Assessing Officer dated September 25, 2006. The learned authorised representative in the above backdrop of the case challenged the issue of notice under section 147 by the Assessing Officer on the direction of the Commissioner of Income-tax (Appeals). According to him, the issue before the Commissioner of Income-tax (Appeals) was that notice under section 143(2) was served after one year and, therefore, the assessment order dated March 29, 2006 was illegal. That was a jurisdictional point. The Commissioner of Income-tax (Appeals) accepted this plea and cancelled the order. Once he held that the order is illegal and cancelled the order, he had no power to go into any other aspect of the matter. According to the learned authorised representative the direction is mandatory for positive compliance and the Commissioner of Income-tax (Appeals) should be empowered to give a direction, this is what has been held by the Supreme Court in the case of Rajinder Nath v. CIT [1979] 120 ITR 14 (SC). Therefore, the direction and finding by the Commissioner of Income-tax (Appeals) in his order dated March 29, 2006 is without jurisdiction and beyond the powers and did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs. The reasons recorded by the Assessing Officer nowhere stated that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment for that assessment year. Hence the Assessing Officer had no jurisdiction to reopen the assessment proceedings. The notice was not valid and was liable to be quashed. (ii) Devidayal Rolling Mills v. Y. R. Saini, Asst. CIT [2006] 285 ITR 514 (Bom) : The same hon ble Bombay High Court held in this case that where an assessment order passed under section 143(3) of the Income-tax Act, 1961 is sought to be reopened beyond four years from the end of the relevant assessment year, the Revenue must establish that there was failure on the part of the assessee to disclose fully and truly all material facts relevant for the assessment. (iii) Raghubar Dayal Ram Kishan v. CIT [1967] 63 ITR 572 (All) : This decision given by the hon ble Allahabad High Court pertains to the 1922 Act where it has been held that the power to take action in respect of escaped income under section 34 vests exclusively in the Incometax Officer and does not vest in the Appellate Assistant Commissioner or the Tribunal. Not only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment. Learned counsel further relied on the decision reported in Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191 (SC) and submitted that it is also a case under the old Act where the hon ble apex court has viewed the application of section 34 as it cannot be merely a question of interpretation of evidence by an Income-tax Officer from whom nothing has been hidden and to whom everything has been fully disclosed, then the assessee cannot be subjected to section 34 but it is otherwise if a contention which is contrary to fact is raised and the Income-tax Officer is said to discover the hidden truth for himself. On the other hand, the learned Departmental representative cited two cases, one in Hotel Ganges Ltd. v. ITO [1991] 190 ITR 660 (All) and another in Kamlapat Moti Lal v. CIT [1992] 193 ITR 338 (SC) which are also analysed hereunder : (i) Hotel Ganges Ltd. v. ITO [1991] 190 ITR 660 (All): In this case the hon ble Allahabad High Court has held the initiation of reassessment proceeding as valid because the Assessing Officer found escapement of income in the promoter s case. (ii) Kamlapat Moti Lal v. CIT [1992] 193 ITR 338 (SC): In this case the hon ble apex cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en. 151. (1) In a case where an assessment under sub-section (3) of section 143 or section 147 has been made for the relevant assessment year, no notice shall be issued under section 148 by an Assessing Officer, who is below the rank of Assistant Commissioner or Deputy Commissioner unless the Joint Commissioner is satisfied on the reasons recorded by such Assessing Officer that it is a fit case for the issue of such notice : Provided that, after the expiry of four years from the end of the relevant assessment year, no such notice shall be issued unless the Chief Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer aforesaid, that it is a fit case for the issue of such notice. (2) In a case other than a case falling under sub-section (1), no notice shall be issued under section 148 by an Assessing Officer, who is below the rank of Joint Commissioner, after the expiry of four years from the end of the relevant assessment year, unless the Joint Commissioner is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice. Explanation-For the removal of doubts, it is hereby declared that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted as under : It is held that assessment proceedings are bad in law and hence cancelled. The Assessing Officer should take remedial action under section 147 or any other provisions of the Act to tax the income escaping assessment. Accordingly notice under section 148 of the Income-tax Act, 1961 was issued and sent by RPAD on March 27, 1998, but the assessee denied about the receipt of notice vide his letter dated January 12, 1999. Considering the legal aspect at the initial stage and considering the large amount of income to be taxed, an approval under section 147 may kindly be granted. (Sd/-) Asst. Commissioner of Income-tax, Circle-1(3), Nagpur." The direction of the higher authority including that of the Commissioner of Income-tax (Appeals) will not confer power to assume jurisdiction to the Assessing Officer to initiate reassessment proceeding. With this considered view, on a total in-depth study of the case law and considering the rival submissions, we allow the assessee's appeal and cancel the order of the Commissioner of Income-tax (Appeals). Before parting with the order it is to be pointed out that the notice issued under section 143(2) was also barred by tim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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