TMI Blog2017 (8) TMI 942X X X X Extracts X X X X X X X X Extracts X X X X ..... avour of assessee. - ITA No. 1788/Del/2013 - - - Dated:- 8-8-2017 - SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER For The Assessee : Sh. Salil Aggarwal, Adv Sh. Sailesh Gupta, CA For The Revenue : Sh FR Meena, Sr. DR ORDER PER PRASHANT MAHARISHI, A. M. 1. This is an appeal filed by the assessee against the order of the ld CIT(A)-II, New Delhi dated 31.03.2013 for the Assessment Year 2009-10. 2. The assessee has raised the following grounds of appeal:- 1. The ld CIT(A) erred in fact and in law confirming the addition of ₹ 12500000/- which is not only bad in law but also against the facts and circumstances of the case. 3. The assessee is an individual engaged in the business of architecture services field his return of income 30.09.2009 showing income of ₹ 3075312/- Survey u/s 133A was carried out on 20.10.2008 wherein the assessee made disclosure of income of ₹ 1.25 crores but did not disclose same in the return of income. Therefore, notice u/s 148 of the Act was issued on 02.11.2010. The objections raised by the assessee were also rejected on 12.12.2011 and proceedings were init ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly contested the arguments of the assessee and submitted that there is no bar in initiating proceedings u/s 148 of the Act. 10. We have carefully considered the rival contentions. In the paper book submitted by the assessee at page No. 17 notice u/s 142(1) of the Act is placed for AY 2009-10 dated 16.08.2010 asking the assessee to remain present on 27.08.2010. The page No. 18of PB is a notice u/s 143(2) dated 29.09.2010 asking the assessee to remain present on 18.10.2010. On the same date the notice u/s 142(1) was also issued. The assessee also replied the notice u/s 142(1) which was submitted before the ld Assessing Officer on 15.10.2010. Meanwhile, without disposing off this notices or passing any order the ld Assessing Officer straightway proceeded to issue notice u/s 148 of the Income Tax Act which is placed at page No. 32 of the paper book on 02.11.2010 and ultimately passed an order u/s 147 of the Act. the issue is apparent that AO has invoked the jurisdiction u/s 147 of the Act without completing original enquiry initiated u/s 143(2) of the Act. The above issue is squarely covered by the decision of the Hon'ble Delhi High Court in 292 ITR 49 holding that initiation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficiently empowered to ask for all information necessary for framing the assessment. The only fetter on the amplitude of his discretion is that the assessment must be framed within the time limit set-down by section 153 which, in substance, is two years from the end of the assessment year in which the income was first assessable or one year from the end of the financial year. A perusal of its second sub-section makes it clear that proceedings under section 147 are altogether different to those under section 143. This distinction appears to have escaped the attention of the Revenue. Sub-section (2) stipulates that no order under section 147 shall be made after the expiry of one year from the end of the financial year in which notice under section 148 was served. 12. Section 147 of the Income-tax Act deals with the powers of the Assessing Officer to assess or reassess the income chargeable to tax which has escaped assessment. Section 148 contemplates making the assessment , reassessment or recomputation under section 147. Keeping the factual matrix before us in perspective, it becomes critical to define the word assess since the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Batagol v. Federal Commissioner of Taxation [1963] 109 CLR 243 in these words : assessment means the completion of the process by which the provisions of the Act relating to liability to tax are given concrete application in a particular case with the consequence that a specified amount of money will become due and payable as the proper tax in that case . 13. A clearance or notice or intimation under section 143(1) of the Act clearly falls beyond the parameters of this definition. In Punjab Tractors Ltd. v. Joint CIT [2002] 254 ITR 242 (P H) it was opined that it is not necessary that assessment should have been finalised under section 143(3) before it can be reopened under section 147, since an intimation under section 143(1) operates as an order of assessment unless the Assessing Officer proceeds to give notice under section 143(2) and passes an order under section 143(3). This very understanding of the law has been articulated by the Division Bench of the Allahabad High Court in Pradeep Kumar Har Saran Lal v. Assessing Officer [1998] 229 ITR 46 which, in turn, followed the view of the Calcutta High Court in Jorawar Singh Baid v. CIT (As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tainly be assessment. The filing of a return in the form prescribed under section 139 of the Act along with the application for refund is not an empty formality. It assumes importance if such return had not been filed earlier. We have reproduced the note/order dated November 10, 1965, on the file per taining to the assessment year 1963-64. In the file for the assessment year 1962-63 there is another note which is as under : ' Please see my note in 1963-64 file. Refund to be considered in the hands of the beneficiaries'. A mere glance at this note would show that it could not be said that the Income-tax Officer gave finality to the refund since no refund is granted either in the hands of the trust or in the hands of the beneficiaries. It is an inconclusive note where the Income-tax Officer left the matter at the stage of consideration even with regard to refund in the hands of the beneficiaries. This note was also not com municated to the trustees. When we examine the note dated Novem ber 10, 1965, on the file of 1963-64 nothing flows from that as well. In any case if it is an order, it would be appealable under section 249 of the Act. Since the period of limitat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Officer must have reason to believe that the income, profits or gains chargeable to tax had been underassessed or escaped assessment ; the second is that he must have reason to believe that such escapement or under assessment was occasioned by reason, so far as relevant for the present purpose, to disclose fully and truly all material facts necessary for the assessment of that year. Both these conditions are conditions precedent to be satisfied. See, in this connection, the observations of this court in Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191... As is well-settled now by the several authorities of this court and of several High Courts, there must be materials to come to the conclu sion that there was ' omission or failure to disclose fully and truly all material facts necessary for the assessment of the year'. It postulates a duty on every assessee to disclose fully and truly all material facts necessary for the assessment. Therefore, an obligation is to disclose facts ; secondly, those which are material ; thirdly, the disclosure must be full and fourthly, true. What facts are material and necessary for assessment will differ from case to case. In ever ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench decisions, namely, Jindal Photo Films Ltd. v. CIT (Deputy) [1998] 234 ITR 170 presided over by R. C. Lahoti J. (as the learned Chief Justice of India then was) and Bawa Abhai Singh v. CIT (Deputy) [2002] 253 ITR 83 comprising Arijit Pasayat and D. K. Jain JJ. (as their Lordships then were). It is quite possible that had the court in Consolidated Photo [2006] 281 ITR 394 (Delhi) been made aware of the consistent opinion of this court in Jindal Photo [1998] 234 ITR 170 and Bawa Abhai Singh [2002] 253 ITR 83, their conclusion may have been totally different, notwithstanding the alternative view of the Gujarat High Court. 17. It also needs to be clarified that in Mahanagar Telephone Nigam Ltd. v. Chairman, CBDT [2000] 246 ITR 173, the Division Bench of this court opined that an intimation under section 143(1)(a) cannot be treated to be an order of assessment. Therefore, although the assessment had been completed under section 143(1)(a), recourse could be taken to section 147. In that case while finalising the assessment for the assessment year 1996-97 under section 143 it was found that the claim of licence fee made by the assessee was erroneous and should have been disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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