TMI Blog2011 (1) TMI 1450X X X X Extracts X X X X X X X X Extracts X X X X ..... .10.2007. The assessee has taken this plea before the lower authorities that the assessment made u/s 143(3) read with s.147 is bad in law as the notice u/s 148 dated 17.10.2007 was issued even before the expiry of the period for issue of notice u/s 143(2) of the Act i.e., one year from the end of the month in which the return of income was filed. This was rejected by the lower authorities. Hence the assessee is in appeal before us. 4. The learned authorized representative for the assessee submitted that when the time limit is available to the assessing officer to complete the regular assessment by issue of notice u/s 143(2) within the period of 31.10.2007, since there is no necessity to reopen the assessment when the original assessment has not been completed by this time. Accordingly, he submitted that reopening of the assessment itself is bad in law and the assessment has to be quashed. For this purpose he relied on the following judgements: 1. CIT Vs. Ved Co. (302 ITR 328) (Del.) wherein held that: Unless the return of income already filed is disposed of, notice for reassessment u/s 148 of the IT Act, cannot be issued, i.e. no reassessment proceedings can be init ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It does not envisage a situation where a return is filed and the time limit for issue of a notice u/s 142(2) has not expired. Unless the return filed by the assessee is scrutinized by the assessing officer, he cannot come to the conclusion of any escapement. If the assessing officer issue notice u/s 143(2), then quite obviously, he would scrutinize the return and frame the assessment u/s 143(3) of the Act. Subsequently, he may notice escapement and issue notice u/s 148 of the Act. 7.3. Besides this, in the above two situations also he will have to look into the return to see whether there is escapement or not. If he notices any escapement, it can be called an escapement only, if it is noticed after the proceedings have been terminated either by way of some assessment, either u/s 143(1) or 143(3) or when the time limit for issue of a notice u/s 143(2) has expired. But if such time limit has not expired, it cannot be termed as escapement and he cannot resort to proceedings u/s 147. In that event he will have to issue notice u/s 143(2) of the Act. In a nutshell, as per the principles laid down by the SC in several cases, a) The proceedings are said to have commenced once the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Madras High Court when the return filed for the assessment year 1997-98 was on 30.3.1999, processed u/s 143(1) on 15.3.2000, the time available for issue of notice is 31.3.2000. Notice u/s was issued on 15.3.2000. 9.2. In the case of K.M Pachhayappan Vs. CIT (311 ITR 31), placing reliance on the decision of Supreme Court in the case of Rajesh Jhaveri Stock Brokers (P) Ltd. (supra) upheld the action of the assessing officer initiating the proceedings u/s 147. The particular of this case is as follows: 9.3. Return filed for the assessment years 1994-95 on 28.3.1996 and the same was processed u/s 143(1). Later 148 Notice was issued on 18.6.1996 though time available for issue of notice u/s 143(2) was upto 31.3.1997. 9.4. In the case of CIT Vs. Qatalys Software Technologies Ltd. (308 ITR 249), the Madras High Court held that reopening is improper when the time limit is available to issue notice u/s 143(2). As seen from the above, in the case of K M Pachayappan (304 ITR 264) and Qatalys Software Technologies Ltd. (308 ITR 249) Madras HC by placing reliance on the judgement of SC in the case of Rajesh Jhaveri (supra) held that the assessing officer was barred from ini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) the return is processed u/s 143(1) and the time to issue notice u/s 143(2) is over (ii) assessment is made u/s 143(3) or, (iii) the assessment is no longer possible u/s 143(3). Processing u/s 147 can be initiated only after the earlier proceedings have terminated as mentioned above. Order u/s 147 r/w.s. 143(3) was therefore liable to be quashed. 10. In view of the above discussions, we are inclined to hold that unless the return filed by the assessee is scrutinized by the assessing officer u/s 143(3), we cannot come to the conclusion of any escapement, the assessing officer cannot initiate proceedings u/s 147 when the time for issuance of notice 143(3) has not expired. The case law relied by the assessee s counsel laid down the same proposition of law. Accordingly, we allow the first ground of the appeal of the assessee by holding that this reopening of assessment by issue of notice u/s 148 dated 17.10.2007 is bad in law. 11. The assessee raised the second ground in its appeal as follows: The CIT(A) ought to have seen that the assessing officer is not justified in bringing to tax an amount of ₹ 2,25,33,030/- out of ₹ 2,49,92,963/- given to Ramakrishna M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emed to be income applied for charitable purpose. He averred that since the assessee has exercised such option on 5.5.2005 and filed the same along with the return of income on 1.11.2005, which was before the due date for the assessment year 2005-06, it is to be held that the donations received during the financial year 2004-05 were utilized for charitable purpose of constructing houses for T-sunami affected people through Ramakrishna Mutt during the assessment year 2006-07, i.e. assessment year immediately after assessment year 2005-06 as provided in explanation. According to the assessee s counsel there is no prescribed form under the Income Tax Rules for exercising such option and the provision only requires that such option has to be exercised in writing before the due date of filing the return of income. Therefore, in the absence of any specific form prescribed in the IT Act for exercising option u/s 11(1) explanation, the assessee had utilized form No.10 prescribed iun the Rules for the purpose of section 11(2). 13. On the other hand the learned departmental representative relied on the order of the CIT(A) on this issue. 14. We have heard both the parties on this issue. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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