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TMI Blog2006 (11) TMI 166X X X X Extracts X X X X X X X X Extracts X X X X ..... above question is in the affirmative then on the facts and circumstances of the case was the Appellate Tribunal right in law in holding that the appellant filed its return of income by its letter dated December 18, 2004, itself, whereas the appellant filed its return only on January 17, 2005, which was admitted by the Assessing Officer in his assessment order ? 3. Whether, on the facts and circumstances of the case, the Appellate Tribunal was right in law in concluding that a notice under section 143(2) can be issued before the assessee files a return of income? 4. Whether, on the facts and circumstances of the case, the Appellate Tribunal was right in law in concluding that the letter dated December 20, 2004, of the respondent had not disclosed any one of the options to the appellant, namely, (i) to attend his office ; (ii) to produce any evidence ; and (iii) cause to be produced any evidence on which the assessee may rely in support of the return as held by the Allahabad High Court in the case of Rajmani Devi v. CIT [1937] 5 ITR 631? 5. Whether, on the facts and circumstances of the case, the Appellate Tribunal was right in law in concluding that valuation of closing net as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e had escaped assessment. This was issued on November 17, 2003, and the time- limit to complete the reopened assessment expires on March 31, 2005. Later, reassessment was completed under section 143(3) read with section 147 of the Act, on March 28, 2005. While completing the reassessment, the Assessing Officer disallowed the loss claimed by the assessee and made additions and disallowances and finally determined a taxable income of Rs.6.06 crores under the normal provisions of the Income-tax Act and Rs.15.9 crores, being book profits under the special provision under section 115JA and demanded a tax of Rs. 7.69 crores which is inclusive of Rs.3.59 crores being the interest levied under sections 234A and 234B and further interest under section 234D of Rs. 60.77 lakhs, in all totalling Rs.9.94 crores. Aggrieved by the order, the assessee filed an appeal to the Commissioner of Income-tax (Appeals), disputing the reopening of the assessment as well as various disallowances and additions made by the Assessing Officer. The Commissioner of Income-tax (Appeals) confirmed the order of the Assessing Officer. Aggrieved, the assessee filed an appeal before the Income-tax Appellate Tribunal (he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the Tribunal is in conformity with law. 7. Let us now examine the merits of the rival contentions. The assessee filed a return of income dated December 22, 1999, on December 31, 1999. The said return was processed under section 143(1)(a) of the Act on March 29, 2000. Later, the Assessing Officer issued a notice under section 148 of the Act dated November 17, 2003, directing the assessee to file return on the ground that he has reason to believe that income which is chargeable to tax for the assessment year 1999-2000, has escaped assessment within the meaning of section 147 of the Act. The assessee, by letter dated December 19, 2003, objected to the reopening of the assessment and requested the Assessing Officer to furnish reasons for reopening. The Assessing Officer sent a letter dated December 24, 2003, stating that the provision of law does not make it necessary to communicate the reasons to the assessee but the same would be definitely communicated during the course of the reopening proceedings. The Assessing Officer, by letter dated December 7, 2004, further directed the assessee to file the return and produce records on December 16, 2004. In consequence of the said notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 148 of the Act for initiation of reassessment proceedings and issue of such notice is not in dispute. Not sending the notice under section 143(2) of the Act as well as not considering the reasons given by the assessee to the reopening of the assessment, will make the reassessment order null and void or it will amount to only irregularity in completing the reassessment. If it is nullity, the whole assessment made by the Assessing Officer is bad and the same has to be annulled. If it is mere procedural irregularity, the reassessment will have to be set aside and the same must go before the Assessing Officer for reconsidering the matter afresh for following the procedure contemplated under the provision. Section 148 of the Act reads as follows: " Issue of notice where income has escaped assessment. 148. (1) Before making the assessment, reassessment or re-computation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he statement of assessable income and other relevant annexures." 13. From the above facts, it is clear that the Assessing Officer issued the notice dated December 20, 2004, to the assessee requesting the assessee to appear on December 24, 2004 at 3.30 p.m. The above hearing notice was served because of the assessee\qs reply dated December 18, 2004, requesting the Assessing Officer to treat the return dated December 22, 1999, filed on December 31, 1999, as return filed in response to the notice under section 148 of the Act. Another factor in this case is that the assessee had continuously appeared and participated in all the reassessment proceedings. It is not the case of the assessee that no proper opportunity was given in this case. The only contention is that there was no notice under section 143(2) of the Act before completing the reassessment. Another relevant factor that must be taken into account is that the assessee, by letter dated January 17, 2005, sent a letter enclosing the return in response to the notice under section 148 of the Act stating that the contents of the said return are exactly the same as per the original return. Since there was no difference in the conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Khanna v. CIT [2002] 255 ITR 220 held where no notice under section 143(2) of the Act had been served on the assessee within the stipulated period and the return as such had become final, in view of the amendment made in section 147 of the Act with effect from April 1, 1989, the Assessing Officer could not only assess or reassess the escaped income in respect of which proceedings under section 147 of the Act have been initiated, but also any other income chargeable to tax which may have escaped assessment and which comes to his knowledge subsequently, in the course of such proceedings. In the instant case, admittedly, no notices under section 143(2) of the Act were served on the assessees within the stipulated period of twelve months and, therefore, the proceedings under section 143 of the Act come to an end and the matter becomes final. Hence, applying the ratio laid down by the Punjab and Haryana High Court in Vipan Khanna v. CIT [2002] 255 ITR 220, we are of the view that no substantial question of law arises for our consideration in these appeals." 17. It is evident from the fact that this court was of the view that no substantial question of law arises out of the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 501, relied on by learned standing counsel for the Revenue, considered a similar issue and have taken a view that any irregularity committed by the Assessing Officer will not make the assessment nullity in law. 19. The said Allahabad High Court judgment in Sant Baba Mohan Singh v. CIT [1973] 90 ITR 197 considered the scope of completing the assessment without issuing notice under section 23(2) under the old Act corresponding to section 143(2) of the present Act. Therefore, the Appellate Assistant Commissioner, in that case, set aside the assessment made by the Income- tax Officer for the reason that the assessment order was completed under section 23(3) of the Act without the issue of notice under section 23(2) and directed the Income-tax Officer to make a fresh assessment after issuing notice under section 23(2) of the Act, which was confirmed by the Appellate Tribunal. On a reference to the High Court, it was contended by the assessee that the Appellate Assistant Commissioner' s direction to make a fresh assessment was without jurisdiction, and further it was argued that once the assessment was completed without notice, it amounts to nullity in law and the assessment sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 143(2) of the Act is merely an irregularity and the Income-tax Officer, until and unless he gets the notices served, cannot complete the assessment. We find it difficult to hold that the Income-tax Officer has no jurisdiction in respect of the proceedings. As soon as the return is filed, he gets seisin over the case. He has jurisdiction over it, but on failure to comply with section 143(2) of the Act, the only limited restriction is that he cannot complete the assessment. In these circumstances, the assessment orders completed without service of notice under section 143(2) cannot be said to be ab initio void and when it is not so, the assessment order cannot be annulled." 21. We feel that the above two High Court judgments are similar to the facts of the present case and hence, we are agreeing with these judgments and we are of the view that there are only procedural irregularities committed by the Assessing Officer and hence the reassessment cannot be annulled. 22. Learned counsel for the assessee also relied on the Supreme Court judgment in the case of GKN Driveshafts (India) Ltd. v. ITO reported in [2003] 259 ITR 19 to support his contention that objections were not co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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