9911796707
TMI Blog1998 (8) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1993, settled the case of the firm by determining its income on an estimated basis. The Assessing Officer passed the assessment orders in respect of the firm on December 7, 1993, relating to the assessment years 1986-87, 1987-88 and 1988-89 in compliance with the directions of the Settlement Commission. The orders so issued were described as one issued as per the order under section 245D, dated November 10, 1993 (exhibits P-2 to P-4). As per the original return filed by the firm for the assessment years 1986-87 and 1988-89, there was no taxable income in the hands of the petitioners. Therefore, the petitioners did not file the returns for these two assessment years. However, the petitioners filed the returns for the assessment year 1987-88 declaring the share income of Rs. 16,530. The respondent issued notices dated March 21, 1994 (exhibits P-5 to P-8), under section 148 of the Act for the assessment years 1986-87 and 198889 and served on the petitioners on March 29, 1994. The petitioners did not respond to the said notices, as accordingly to them, the firm was facing great financial difficulties and ultimately it was closed in 1995. It is stated that no further notice under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akulam Range, as per section 151 and that since these notices were also remained unresponded by the petitioners, follow up actions were taken by the issue of notices under section 142(1) dated August 6, 1997 and September 22, 1997, and by covering letters dated August 27, 1997 and August 19, 1997, etc., as per exhibits P-13 to P-16. It is stated that the petitioners continued their non-co-operation till the final hearing fixed on October 7, 1997. The petitioners also did not respond to the hearing notice and, therefore, orders under section 144 have been passed in respect of the petitioners for the years 1986-87 and 1988-89 on October 7, 1997, as already proposed in the letters as per exhibits P-15 and P-16. The said orders and demand notices with challans and penalty notices were despatched on the next day, i.e., on October 8, 1997. The details of the same are furnished as follows : Name of the Assessment year/ Total Demand D and C No. assessee date of order income raised (Rs.) (Rs.) Mrs. Nilofer Hameed 1986-87 2,79,230 5,22,785 I(3)-4 7-10-1997 97-98 1988-89 1,94,090 2,88,466 I(3)-5 7-10-1997 97-98 Mrs. Nahid Shaffi 1986-87 2,79,230 5,22,785 I(3)-6 7-10-1997 97 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis of the notices under section 148 dated March 21, 1994, does not debar the Department from issuing notices under section 148 on a second time. The time-limit for issuing notices under section 148 is dealt with in section 149 and that in the instant case sub-clause (iii) of clause (b) of sub-section (1) of section 149 applies in which case there is no bar or restriction on the number of proceedings that can be initiated under section 147 by issue of notice under section 148. It is pointed out that when a return is filed in pursuance of a valid notice and proceedings are pending, the Revenue cannot initiate fresh proceedings by issuing notices under section 148 on a second time and that in the instant case the petitioners neither filed the returns of income nor any proceedings initiated by issue of notice under section 148 are pending or in existence. No first assessment has been completed in the case of the petitioners and therefore the notices issued by the Revenue under section 148 on March 25, 1997 on a second time as per exhibits P-9 to P-12, it is stated, are valid and as such the Revenue can rightly issue notices for the follow up action by issuing notices under section 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act provides that if any person fails to make the return required under sub-section (1) of section 139 of the Act or fails to comply with all the terms of a notice issued under sub-section (1) of section 142, the Assessing Officer, after taking into account all the relevant materials which he has gathered, shall, after giving the assessee an opportunity of being heard, make the assessment of the total income or loss to the best of his judgment and determine the sum payable by the assessee on the basis of such assessment. Section 147 of the Act, as it stood during the assessment years concerned, reads as follows:-- "147. Income escaping assessment.-If-- (a) the Assessing Officer has reason to believe that, by reason of the omission or failure on the part of an assessee to make a return under section 139 for any assessment year to the Assessing Officer or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year, or (b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Assessing Officer has in consequence of inf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns for doing so. Section 149 of the Act provides the time-limit for notice as per which no notice under section 148 shall be issued for the relevant assessment year in the following cases :-- "(a) cases falling under clause (a) of section 147-- (i) for the relevant assessment year, if eight years have elapsed from the end of that year, unless the case falls under sub-clause (ii) ; (ii) for the relevant assessment year, where eight years, but not more than sixteen years, have elapsed from the end of that year, unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to rupees fifty thousand or more for that year ; (b) in cases falling under clause (b) of section 147, at any time after the expiry of four years from the end of the relevant assessment year." Section 151 of the Act providing for sanction for issue of notice reads as follows : "151. Sanction for issue of notice.--(1) No notice shall be issued under section 148 after the expiry of eight years from the end of the relevant assessment year, unless the Board is satisfied on the reasons recorded by the Assessing Officer that it is a fit case for the issue of such notice. (2) No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notices dated March 21, 1994 (exhibits P-5 to P-8), issued under section 148 of the Act for the aforesaid two years. It is also an admitted fact that the respondent did not complete the assessment of the petitioners for the aforesaid two years pursuant to the notices dated March 21, 1994. As per the provisions of section 153(2) of the Act, in the case falling under section 147(a) the assessment for the said two years should have been completed on or before March 31, 1998, as per the law as it stood for the relevant assessment years. As already stated, no assessments were made. The respondent issued fresh notices under section 148 of the Act on March 25, 1997 (exhibits P-9 to P-12). Since the petitioners did not respond to the said notices also the respondent issued notices dated August 6, 1997, and September 22, 1997, exhibits P-13 and P-14, respectively, asking the petitioners to file returns and documents. Two other notices dated August 27, 1997, and September 19, 1997 (exhibits P-15 and P-16), were also issued to the petitioners posting the assessments for final hearing. The question to be decided is as to whether the second notice under section 148 issued on March 25, 1997, is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , KEM Mohammad Ibrahim Maracair v. CIT [1964] 52 ITR 890 (Mad), Gurdayal Berlia v. CIT [19661 62 ITR 494 (Cal) and Ashok Kumar Dixit v. ITO [1992] 198 ITR 669 (All)). If an assessment is pending either by way of original assessment or by way of reassessment proceedings, the Assessing Officer cannot issue a notice under section 148 but if no proceedings are pending either by way of original assessment or by way of reassessment, he can issue a notice under section 148 within the time mentioned above. In this case, as already stated, the first notice under section 148 was issued on March 21, 1994, and served on March 29, 1994, and there was time till March 31, 1998, for completion of the assessment. So on the date of issuance of the second notice on March 25, 1997, the assessments for the two years were pending. In such circumstances, notice issued under section 148 on March 25, 1997, is invalid (See CIT v. K. Adinarayana Murthy [1967] 65 ITR 607 (SC)). For the reasons stated hereinabove, I hold that the notices dated March 25, 1997, exhibits P-9 to P-12, issued under section 148 of the Act and the further notices, exhibits P-13 to P-16, issued by the respondent are invalid and witho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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