TMI Blog2015 (1) TMI 569X X X X Extracts X X X X X X X X Extracts X X X X ..... return under s. 139 of the Act for any assessment year, income chargeable to tax has escaped assessment for that year - The assessee filed returns, but they did not include certain particulars regarding the profits and gains of his business. It were signed and verified by the assessee - when a return has been filed by an assessee, it cannot be ignored by the ITO and he will have no jurisdiction to issue a notice u/s 148 without completing the assessment on the return filed by the assessee - Even though a return is invalid in the sense that it is not correct and complete within the meaning of s. 139 of the I.T. Act, 1961, the ITO cannot ignore or disregard the same for the purpose of issuing a notice under s. 148 of the Act, unless the return can be regarded as not a return in the eye of law - the ITO acted on the returns filed by the appellant, issued notices u/s 143(2) and heard the appellant u/s 143(3), but without completing the assessments he took recourse to reopen the assessments u/s 147 by issuing the notices u/s 148 of the Act - the notice issued u/s. 148 of the Act for initiation of reassessment proceedings u/s. 147 of the Act for escapement of income is bad in law ans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50 ITR 333 and Kailash Auto Finance Ltd. Vs. ACIT (ITAT, Lucknow) 32 SOT 80 it was held that issue of notice u/s. 148 is valid even when time to issue 143(2) was there. In view of prevailing decisions of Hon. High Court I hold that the issue of notice under section 148 within time limit available for issue of notice under section 143(2) has not vitiated the assessment. 5. Since I have held that issue of notice under section 148 as valid, the notice under section 143(2) is held to be one pursuant to reassessment notice. The notice under section 143(2) issued on 22.5.08 is valid. 6. As I had held that the notice under section 143(2) and 148 to be valid. I dismiss grounds 1.0 to 3.0. Aggrieved, assessee came in appeal before me. 4. I have heard rival submissions and gone through facts and circumstances of the case. I find from the facts of the case as narrated above that a valid return of income submitted by assessee u/s. 139(4) of the Act was pending assessment. On this pending return, AO is empowered to issue notice u/s. 143(2) of the Act as the time limit has not expired. If a valid return of income has been submitted by an assessee within the period fixed u/s. 139(4) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the presence of the assessee or the production by him of any evidence that the return is correct and complete, he shall assess the total income or loss of the assessee, and shall determine the sum payable by him or refundable to him on the basis of such return. (2) Where a return has been made under section 139, but the Incometax officer is not satisfied without requiring the presence of the assessee or the production of evidence that the return is correct and complete, he shall serve on the assessee a notice requiring him, on a date to be therein specified, either to attend at the Income-tax Officer's office, or to produce, or to cause to be there produced, any evidence on which the assessee may rely in support of the return, (3) On the day specified in the notice issued under sub-section (2) or as soon afterwards as may be, the Income-tax Officer, after hearing such evidence as the assessee may produce and such other evidence as the Incometax Officer may require on specific points, and after taking into account all relevant material which the Income-tax Officer has gathered, shall, by an order in writing, assess the total income or loss of the assessee, and determine t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iculars of the profits and gains of the business of the assessee they were invalid and should be regarded as non-existent. If it is laid down that an incorrect and incomplete return is not a return in the eye of law and should be ignored or disregarded, then s. 143 would become nugatory. If that was the intention of the Legislature, there would not have been any necessity for it to provide for the procedure which the ITO is to follow when a return is not correct and complete. In the case of CIT v. S. Raman Chettiar [1965] 55 ITR 630 (SC), a return was filed pursuant to a notice under s. 34 of the Indian I.T. Act, 1922. The said notice was invalid as the sanction of the Commissioner was not obtained. The income shown by the assessee in the return was below the taxable limit and, consequently, the assessment proceeding was dropped as infructuous. Subsequently, another notice was issued under s. 34 of the said Act and the ITO made the assessment assessing the assessee to tax. It was held by the Supreme Court that although the first notice under s. 34 was invalid, the return submitted by the assessee pursuant to that notice was a return within the meaning of s. 22(3) of the said Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turn at all and the ITO would be justified in making an assessment to the best of judgment under s. 23(4) of the I.T. Act, 1922. It thus appears to be well-settled that when a return has been filed by an assessee, it cannot be ignored by the ITO and he will have no jurisdiction to issue a notice under s. 148 without completing the assessment on the return filed by the assessee. Even though a return is invalid in the sense that it is not correct and complete within the meaning of s. 139 of the I.T. Act, 1961, the ITO cannot ignore or disregard the same for the purpose of issuing a notice under s. 148 of the Act, unless the return can be regarded as not a return in the eye of law as in the case of the two illustrations given above. In the instant case, the ITO acted on the returns filed by the appellant, issued notices under s. 143(2) and heard the appellant for the assessment years in question under s. 143(3), but without completing the assessments he took recourse to reopen the assessments under s. 147 by issuing the impugned notices under s. 148 of the Act. In our view, the ITO has acted without jurisdiction in issuing the impugned notices. In view of the above facts and ci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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