9911796707
TMI Blog2012 (9) TMI 584X X X X Extracts X X X X X X X X Extracts X X X X ..... of 2007 has been filed by CIT-I against the judgment of the same day dated 23.2.2007 relating to the assessment year 1997-98. 4. In all the income tax appeals common questions of law arise for consideration, framed in the appeal by the revenue as follows:- "(1) Whether on the facts and in the circumstances of the case, the Hon'ble Income Tax Appellate Tribunal was correct in law in quashing the reassessment proceedings without appreciating that the notice u/s 148 was issued by the Assessing Officer after complying with the condition as provided u/s 151 (2) of the Act. (2) Whether on the facts and in the circumstances of the case, the Hon'ble Tribunal was justified in law in quashing the reassessment proceedings u/s 147/143 (3) of the Act by observing that the notice had been issued by the Income Tax Officer-2 (2) and not by the Joint Commissioner of Income Tax while the said notice u/s 148 was correctly issued by the Assessing Officer namely ITO-2 (2), Kanpur after complying with the conditions laid down in Section 151 (2) of the I.T. Act." 5. The facts relating to the assessment year 1995-96 are that the assessee filed a return of income on 31.3.1996 declaring an income of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns forming belief that the income of assessee had escaped assessment and therefore Assessing Officer issued notice under Section 148 on 1.4.2002. He completed the assessment after considering the assessee's submissions under Section 147/143 (3) on 31.3.2004 on total income of Rs.7,24,260/-. The CIT (A)-II dismissed the appeal on 19.9.2005 . The ITAT has allowed the appeal on the reasoning given in para 7 of the order as follows:- "The Ld. Authorized representative of the assessee submitted that return (s) originally filed by the assessee were processed u/s 143 (1) (a)/143 (1) of the Act both the assessment years under consideration and period of four years have also lapsed from the end of the relevant assessment years, the competent Assessing Officer who could issue notice (s) U/s 148 of the Act was not to be below the rank of Joint Commissioner as per Section 151 (2) of the Act. He submitted that since notice(s)have been issued by the ITO-2 (2), Kanpur, the notice(s) itself were bad and assessment(s) are liable to be quashed. In support of his submission, the ld. authorised representative of the assessee placed reliance on the decisions of the jurisdictional High Court in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mplex language in which section 151(2) has been drafted. We have no doubt that the said provision simply means that where assessment has not been made under section 143(2) or 147 of the Act, notice under section 148 can be issued: 1.either by an assessing officer of the rank of Joint Commissioner or above, or; 2.an officer below that rank provided the Joint Commissioner is satisfied that it is a fit case for the issue of such notice. Because, as stated above, the observation in the underlined portion of the Division Bench is only an obiter observation, therefore, there is no need to refer the matter to a larger Bench. In the case before us, the Income Tax Officer, who is below the rank of Joint Commissioner and who is an assessing officer according to the definition given in the Income Tax Act, 1961, was empowered to issue the notice under section 148 of the Act in the light of the sanction accorded for such issuance of notice by the Commissioner of Income Tax. Learned counsel for the petitioner has argued that the Commissioner could not have given the sanction and only the Joint Commissioner could have given the sanction. We are unable to accept the submission, considering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inisterial staff. Can it be said that any assessment is done by them? The reply is an emphatic no . The intimation under section 143(1)(a) was deemed to be a notice of demand under section 156, for the apparent purpose of making machinery provisions relating to recovery of tax applicable. By such application only recovery indicated to be payable in the intimation became permissible. And nothing more can be inferred from the deeming provision. Therefore, there being no assessment under section 143(1)(a), the question of change of opinion, as contended, does not arise. Additionally, section 148 as presently stands is differently couched in language from what was earlier the position. Prior to the substitution by the Direct Tax Laws (Amendment) Act, 1987, the provision read as follows: "148. Issue of notice where income has escaped assessment. (1) Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice containing all or any of the requirements which may be included in a notice under sub- section (2) of section 139; and the provisions of this Act shall, so far as may be, apply accordingly as if the noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. The function of the Assessing Officer is to administer the statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As observed by the Delhi High Court in Central Provinces Manganese Ore Co. Ltd. v. ITO [1991 (191) ITR 662], for initiation of action under section 147(a) (as the provision stood at the relevant time) fulfillment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is "reason to believe", but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective sati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available. The appeal is allowed without any orders as to costs." 12. Shri R.K. Upadhyay has also relied upon the Income Tax Act (Nani Palkiwala's) in which explaining the provisions of Section 151, it is observed by the writers of the book as follows:- "(b) Law from Assessment Year 1989-90 The effect of the present section is as under: (i) In a case where an assessment under s 143 (3) or 147 has been made for the relevant assessment year, a notice under s 148 can be issued (a) only by an AO not below the rank of assistant commissioner or deputy commissioner (unless the joint commissioner is satisfied about the reasons for issue of the notice), and (b) only with the prior sanction of the commissioner if the four-years period has already expired. (ii) In all other cases, a notice under s 148 can be issued (a) within four years, by an AO of any rank, and (b) after four years, either by an AO of the rank of joint commissioner by an AO of a lower rank with the prior sanction of the joint commissioner." 13. In the present case we find that there is positive finding in the order of CIT (A) that in respect of assessment year 1995-96 the record shows that the Addl. Commissioner of I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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