TMI Blog2008 (2) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... o the one filed u/s. 17, as in the instant case?" 2. The appeal is in respect of the assessment year 1989-90. It is the contention of the Revenue that the reassessment proceedings under Section 17 are entirely different from the regular assessment proceedings. The notice under section 16(2) is necessarily and compulsorily to be issued only in a regular assessment. In the instant case, it is submitted that on notice dated 19.8.1997 being issued under Section 17, the assessee had filed return of wealth on 14.10.1997. The assessment had to be completed within two years from the end of financial year in which notice was issued which in the instant case would be 31.3.2000. The Assessing Officer issued notice under Section 16 (2) on 24.9.1999 which is after the expiry of one year from filing of the return. The assessment notice under section 16(3) read with section 17 was issued on 29.3.2000. It is therefore, submitted that considering the terminology of section 17, there is no requirement that notice under section 16(2) has to be served to proceed with the assessment as the assessment under section 17 is independent. It is therefore, submitted that the impugned order of the tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 147, the I.T.O. can invoke section 144(B) and thereby extend time limit for completion thereof. The assessee had contended that section 144(B) did not apply to assessment made under section 147 and applies only to assessments made under section 143. The contention of Revenue on the other hand was that section 147 by itself did not permit assessment and determination of tax due and therefore, recourse to section 143 was necessary. It was argued that the assessment or reassessment was not under section 147 but under sections 143/147. The argument of the assessee was rejected. The Supreme Court noted that the submission of Assessee cannot be accepted because the language of section 148 cannot be ignored. Section 144(B) the court held is a procedural provision. It fits into the procedural scheme and, therefore, it cannot be excluded by reason of the use of the words "so far as may be" Nor was there any other good reason to exclude it from the procedure to be followed subsequent to notice u/s. 148. The court then observed as under : "As to the argument based upon sections 144A, 246 and 263 we do not doubt that assessments under section 143 and assessments and re-assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 16 or this section or to disclose fully and truly all material facts necessary for his assessment for that assessment year." 7. The crucial words are "and the provision of this Act shall so far as may be apply as if the return were a return required to be furnished under section 14". 8. Would these words "as far as may be" mean thereby that section 17 is the assessing section and for that purpose the provisions of section 14 to 16 to the extent they are applicable only would apply. In other words does section 17 confer power on the Assessing Officer in case where section 17 is invoked to independently make an order of assessment in a case where a return is filed under Section 14 after notice and after the period of twelve months have expired from the date of filing the return. 9. Section 16(2) reads as under : "Where a return has been made under section 14 or section 15, or in response to a notice under clause (i) of sub section (4) of this section the Assessing Officer shall, if he considers it necessary or expedient to ensure that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 15 or to comply with the terms of a notice under section 16(2) to make a best judgment assessment. 13. Section 17A provides a time limit for making an order of assessment both under Section 16 and Section 17. The normal period for assessment under Section 16 is two years from the end of the assessment year in which the net wealth was first assessable and for an assessment under Section 17 within two years from the end of the financial year in which the notice under sub section (1) of Section 17 was served. 14. Section 17 can be invoked when the Assessing Officer has reason to believe that the net wealth chargeable to tax in respect of an assessee has escaped assessment for any assessment year for the reasons set out therein. The A.O. may serve on such person a notice. If on the notice being served the assessee fails to file a return, there is no independent provision in section 17 to make a best judgment assessment like in section 16(5). The language used in fact is that the A.O. may proceed to assess or reassess such net wealth. If the argument of the Revenue has to be accepted, it must mean that once Section 17 has been invoked and the notice served on the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ked under section 17. Further the expression "as far as may be" in the context of the returns being treated as a return under Section 17 would be rendered meaningless. 17. In our opinion, it will not be possible to construe the provisions as are sought to be contended on behalf of the revenue. All the provisions of Chapter IV will have to be read in tandem so as to bring about an uniformity and certainty to an order of assessment. Proviso to Section 16(2) is in the nature of an embargo on the Assessing Officer, if the period has expired not to issue notice after that period. In other words, the Assessing Officer is bound to accept the return as filed. Though the notice under Section 16(2) may be procedural, the proviso is not merely procedural but is in the nature of a limitation on the power of the Assessing Officer not to proceed further in a case where return has been filed under section 14 or under section 15. That will have to read as applicable to a case of re-assessment under Section 17. 18. Let us now examine Sections 143 and 148 of the provisions of the Income Tax Act, where similar language had been employed. Under Section 143(2)(ii) there is a limitation on the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he two High Courts reflects the language of Section 147. Therefore, even in a case of re-opening of assessment under Section 147, the A.O. is bound to comply with the requirement of Section 143(2) of the I.T. Act. 20. Even independently, we have examined the scope and effect of sections 14 to 16 on the one hand and section 17 on the other. In our opinion, there is no escape from arriving at the conclusion that when the Assessing Officer invokes section 17, the provision of section 14 and 16 to the extent applicable, for the purpose of making an order of reassessment will have to be followed which will include the time limit for notice under section 16(2). Once the language of section 17 itself requires that other provisions to the extent applicable would apply considering the return as filed under Section 14, it contemplates that both procedural and substantive provisions will apply. In our opinion, therefore, while invoking powers under section 17, the Assessing Officer is bound by the mandate of the proviso to Section 16 (2) and on failure the order of re-assessment will be without jurisdiction and consequently the order of reassessment will have to be set aside. 21. Hav ..... X X X X Extracts X X X X X X X X Extracts X X X X
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